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Indian Banking Sector Sees Record Profits, NPA Drop in 2025 Turnaround

The Indian banking sector recorded a strong performance in 2025 with a sharp decline in bad loans and record-breaking profits. Public Sector Banks achieved their highest-ever net profit of Rs 1.78 lakh crore, while digital payment transactions surged to over 22,000 crore in volume. Financial inclusion schemes like PM Jan Dhan Yojana expanded significantly, benefiting millions of citizens. The government's reforms, including the Banking Laws Amendment Act and the 'Your Money, Your Right' campaign, strengthened governance and returned unclaimed funds.

Key Points: Banking Sector Turnaround 2025: Record Profits, Lower NPAs

  • GNPA ratio falls to 2.22%
  • Public Sector Banks post record Rs 1.78L cr profit
  • Digital payment transactions hit 22,831 crore volume
  • Over Rs 4,500 crore unclaimed assets returned
  • Jan Dhan accounts cross 57 crore mark
2 min read

Banking sector records strong turnaround in 2025: Finance Ministry

India's banking sector reports record profits, sharp NPA decline, and digital payment surge in 2025, driven by government reforms and financial inclusion.

"The Indian banking sector witnessed a sharp improvement in asset quality - Finance Ministry Review"

New Delhi, January 10

The Department of Financial Services under the Ministry of Finance reported significant progress in banking reforms, digital payments, and financial inclusion during 2025, marking a year of strengthened financial stability and governance, according to a year-end review released on Saturday.

DFS continued its trajectory of momentous reforms in 2025, building on the robust and firm foundation established through initiatives like Your Money, Your Right Campaign, the Banking Laws (Amendment) Act, 2025, EASE 8.0 rechristened as EASE₹ise, 'Credit Line on UPI', 'Hello! UPI'- an AI-voice-enabled payment feature, NPA management, financial inclusion, customer service enhancement, digital transformation among others.

The Ministry said the Indian banking sector witnessed a sharp improvement in asset quality, with the Gross Non-Performing Asset (GNPA) ratio of Scheduled Commercial Banks declining to 2.22 per cent by March 2025, while Public Sector Banks (PSBs) recorded a GNPA ratio of 2.58 per cent. Provision Coverage Ratio also rose to a healthy 93.14 per cent, reflecting enhanced resilience in the sector.

In digital payments, the DFS has strengthened its leadership role, driving consistent growth through the DIGIDHAN Mission. The total digital payment transactions volume increased to 22,831 Crore in FY 2024-25 at CAGR of 41per cent from 2,071 crore in FY 2017-18. The value of transactions has grown from Rs 1,962 lakh crore to Rs 3,509 lakh crore, it said.

Public Sector Banks posted their highest-ever profits, with aggregate net profit touching Rs 1.78 lakh crore in FY 2024-25. Scheduled Commercial Banks reported record profits of Rs 4.01 lakh crore during the same period, driven by improved credit growth and lower stress levels.

Financial inclusion initiatives such as Pradhan Mantri Jan Dhan Yojana, PM Mudra Yojana, Atal Pension Yojana and insurance schemes further expanded their reach, benefiting millions of citizens, particularly from marginalised sections. As of December 2025, Jan Dhan accounts crossed 57 crore with deposits exceeding Rs 2.8 lakh crore.

The government also strengthened governance through legislative measures, including the Banking Laws (Amendment) Act, 2025, and insurance sector reforms that raised the foreign direct investment limit to 100 per cent.

Additionally, the nationwide "Your Money, Your Right" campaign facilitated the return of over Rs 4,500 crore of unclaimed financial assets to rightful owners.

- ANI

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Reader Comments

R
Rohit P
Record profits for PSBs is a welcome change from the NPA crisis days. Kudos to the reforms. However, I hope these profits translate into better service for us common people. Still waiting over an hour at my SBI branch last week.
A
Aman W
The digital transaction growth from 2,071 crore to 22,831 crore is mind-blowing! UPI has made life so easy. From chaiwalas to big stores, everyone accepts it. Truly a digital revolution.
S
Sarah B
As someone who works in fintech, the 100% FDI limit in insurance is a huge signal to global investors. The overall stability and clear governance framework are what the market needed. India is becoming a very attractive financial hub.
K
Karthik V
Good to see NPAs under control. That was a major headache for the economy. But what about the interest rates for savings accounts? Banks are making record profits, but the common saver is still getting very little return.
M
Meera T
The 'Your Money, Your Right' campaign returning Rs 4,500 crore is the most heartening part. So much money was just lying forgotten. This shows the system is working for the people. More awareness is needed though.

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