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Govt Banks Post Record Rs 1.98 Lakh Crore Net Profit in FY26

Public Sector Banks reported an all-time high aggregate net profit of Rs 1.98 lakh crore in FY 2025-26, marking the fourth consecutive year of profitability. Asset quality improved significantly with gross NPA ratio declining to 1.93% and net NPA ratio falling to 0.39%. Credit growth remained broad-based across retail, agriculture and MSME segments, with advances rising over 15% in these categories. The Finance Ministry attributed the improved performance to reforms, governance improvements and technology adoption.

Key Points: PSBs Record Rs 1.98 Lakh Crore Net Profit in FY26

  • Record net profit of Rs 1.98 lakh crore
  • Gross NPA ratio declines to 1.93%
  • Credit growth broad-based across retail, agriculture, MSME
  • Capital adequacy ratio improves to 16.6%
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Govt Banks report record Rs 1.98 lakh crore net profit in FY26, improved asset quality: Finance Ministry

Public Sector Banks hit all-time high net profit of Rs 1.98 lakh crore in FY26, with improved asset quality and credit growth, says Finance Ministry.

"Today, PSBs are well-capitalised, profitable and institutionally stronger, enabling them to effectively support India's growth aspirations - Finance Ministry"

New Delhi, May 12

Public Sector Banks reported an all-time high aggregate net profit of Rs 1.98 lakh crore in FY 2025-26, registering the fourth consecutive year of profitability, supported by credit growth, improved asset quality and higher income.

According to the Ministry of Finance, aggregate operating profit of PSBs stood at Rs 3.21 lakh crore during the fiscal, while net profit rose 11.1 per cent year-on-year.

The aggregate business of PSBs increased to Rs 283.3 lakh crore as of March 31, 2026, up 12.8 per cent from the previous year. Deposits rose 10.6 per cent to Rs 156.3 lakh crore, while gross advances increased 15.7 per cent to Rs 127 lakh crore.

Credit growth remained broad-based across retail, agriculture and MSME segments, with advances in these categories rising 18.1 per cent, 15.5 per cent and 18.2 per cent, respectively.

Asset quality improved during the year, with gross non-performing assets (NPA) ratio declining to 1.93 per cent and net NPA ratio falling to 0.39 per cent as of March-end 2026. The ministry said all PSBs maintained a provisioning coverage ratio of above 90 per cent.

"Improved asset quality, healthy credit expansion and higher income contributed to improved profitability of PSBs during FY 2025-26," the ministry noted.

Fresh slippages declined during the year, with slippage ratio reducing to 0.7 per cent. Total recoveries, including those from written-off accounts, stood at Rs 86,971 crore.

The capital position of PSBs remained stable, with aggregate capital to risk weighted assets ratio (CRAR) improving to 16.6 per cent, supported by internal accruals, retained earnings and capital raising of Rs 50,551 crore during FY26.

Operational efficiency also improved, with cost-to-income ratio easing to 49.67 per cent, reflecting gains from cost management and technology adoption.

The ministry said the continued improvement in PSB performance reflected reforms undertaken to strengthen the banking sector, including governance improvements, technology adoption and wider access to formal credit.

"Today, PSBs are well-capitalised, profitable and institutionally stronger, enabling them to effectively support India's growth aspirations and contribute meaningfully towards the vision of Viksit Bharat by 2047," the ministry noted.

- ANI

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Reader Comments

S
Sarah B
Impressive numbers indeed! But I'm a bit skeptical - how much of this profit comes from actual banking operations vs one-time gains like selling investments or property? Also, deposits grew at only 10.6% while advances grew at 15.7% - that credit-deposit ratio gap is worrying. Banks are lending faster than they're getting deposits, which could lead to liquidity issues down the road. Just my two paise!
K
Kavya N
Finally our tax money is being put to good use! Remember when we had to bail out banks with 2.5 lakh crore? Now they're making profit on their own. MSME lending up 18.2% is a big thumbs up - small businesses are the backbone of our economy. But I still see so much harassment of borrowers in my village by bank managers for small loans. The system still needs human touch reforms!
R
Rahul R
Good news but let's not get carried away. PSBs are still burdened with legacy staff costs and outdated technology compared to private banks. The cost-to-income ratio of 49.67% is still high - HDFC or ICICI are at 40-42%. Also, where's the dividend payout? As a taxpayer who funded their recapitalization, I want to see some returns! But yes, improvement is improvement. Cheers to the banking reforms! 🎉
M
Michael C
Respectable performance. PSBs have come a long way from the NPA crisis days. But the real test will be when interest rates rise or the economy slows - can they maintain asset quality? The gross NPA ratio of 1.93% is lowest in a decade, but fresh slippages could spike if we see rural distress or global recession. Also hope the MSME lending is actually generating jobs, not just balance sheet numbers.

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