The Finance Ministry announced that public sector banks saw a significant 11.1% rise in net profit, reaching a new high of Rs 1.98 lakh crore in FY 2025–26. This marks the fourth consecutive year of profitability, attributed to reforms and improved governance practices that have strengthened their balance sheets and operational resilience.
During the same fiscal year, public sector banks experienced enhanced asset quality, healthy credit expansion, and increased income, all contributing to their improved profitability. The aggregate business of these banks grew to Rs 283.3 lakh crore by March 31, 2026, showing a 12.8% increase from the previous year.
Asset quality of public sector banks notably improved in FY 2025–26, with the Gross NPA ratio dropping to 1.93% and the Net NPA ratio to 0.39% as of March 31, 2026. Each bank maintained a provisioning coverage ratio above 90%, indicating prudent provisioning practices and strengthened balance sheet resilience.
Fresh slippages continued to decrease during the fiscal year, with the slippage ratio reducing to 0.7%. Total recoveries, including those from written-off accounts, amounted to Rs 86,971 crore, showcasing improved recovery mechanisms and enhanced credit discipline across public sector banks.
Aggregate deposits in these banks rose by 10.6% year-on-year to Rs 156.3 lakh crore, reflecting ongoing depositor confidence and robust resource mobilization. Additionally, gross advances increased by 15.7% year-on-year to reach Rs 127 lakh crore, signaling sustained credit demand across various sectors of the economy.
