Public Sector Banks (PSBs) delivered a strong financial performance during FY 2025–26, registering record profitability, improved asset quality and robust business growth.
According to official data, the aggregate business of PSBs rose by 12.8% year-on-year to ₹283.3 lakh crore as on March 31, 2026. Aggregate deposits increased by 10.6% to ₹156.3 lakh crore, while gross advances grew by 15.7% to ₹127 lakh crore.
The Retail, Agriculture and MSME (RAM) segments recorded healthy growth during the financial year. Retail advances grew by 18.1%, agriculture advances by 15.5% and MSME lending by 18.2%.
PSBs also reported major improvement in asset quality. Gross Non-Performing Asset (NPA) ratio declined to 1.93%, while Net NPA ratio fell to 0.39% as on March 31, 2026, marking historically low stressed asset levels. All PSBs maintained provisioning coverage ratio above 90%.
Fresh slippages declined further during FY26, with slippage ratio reducing to 0.7%. Total recoveries, including recovery from written-off accounts, stood at ₹86,971 crore.
Driven by improved credit growth and healthier balance sheets, aggregate operating profit of PSBs reached ₹3.21 lakh crore during FY26. Aggregate net profit increased by 11.1% year-on-year to a record ₹1.98 lakh crore, making it the fourth consecutive year of profitability for public sector banks.
The capital position of PSBs also remained strong. Aggregate Capital to Risk Weighted Assets Ratio (CRAR) improved to 16.6%, supported by retained earnings and capital raising worth ₹50,551 crore during the year. All PSBs remained well above the regulatory CRAR requirement of 11.5%.
Operational efficiency improved further, with the cost-to-income ratio improving to 49.67%, reflecting gains from technology adoption, digital transformation and better cost management.
The government stated that sustained banking sector reforms, improved governance standards, enhanced credit discipline and wider access to formal credit have strengthened the overall financial position of PSBs.
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