Gross NPAs of public sector banks fall to historic low of 1.9 per cent, net profit at record high
New Delhi, July 28
The financial health of public sector banks has shown significant improvement with healthy balance sheets, historically high profits and multi-decadal low levels of gross non-performing assets, the Parliament was informed on Tuesday.
Gross Non-Performing Assets (GNPA) of public sector banks have fallen to a historic low of 1.9 per cent in FY 2025-26, they have also achieved the highest-ever net profit of Rs 1.98 lakh crore, and aggregate business has crossed the Rs 283 lakh crore mark, according to data tabled by Minister of State for Finance Pankaj Chaudhary in a written reply to a question in the Rajya Sabha.
The credit growth of public sector banks has accelerated across key Sectors in FY 2025-26, with MSME and retail loans registering a robust growth of 19.6 per cent and 19.8 per cent, respectively. Credit to the agriculture sector has surged by 16.2 per cent, the figures showed.
The minister further stated that the government introduced the Emergency Credit Line Guarantee Scheme (ECLGS 5.0) in May 2026 to tide over any short-term liquidity mismatches faced by businesses due to the West Asia crisis. The scheme provides guarantee coverage to Member Lending Institutions (MLIs) through National Credit Guarantee Trustee Company Limited (NCGTC) for the amount in default under the additional credit facility extended to the eligible borrowers. The scheme provides 100 per cent guarantee coverage for MSMEs and 90 per cent guarantee coverage for non-MSMEs and the scheduled passenger airline sector, up to a credit flow of Rs 2,55,000 crore, which includes Rs 5,000 crore specifically earmarked for the scheduled passenger airline sector.
Under ECLGS 5.0, borrowers in the airline sector are eligible for assistance of up to 100 per cent of their total peak credit outstanding during the fourth quarter of FY 2025-26. The maximum loan amount available under ECLGS 5.0 for the airline sector is Rs 1,500 crore per borrower (of this, any amount beyond Rs 1,000 crore and up to Rs 1,500 crore shall be permitted only with a proportionate equity contribution from the promoters, the minister added.
— IANS
Reader Comments
Impressive numbers! But I wonder how much of this recovery is due to genuine improvements vs government accounting changes. The ECLGS 5.0 seems like another bailout for airlines. Need to see if these profits are sustainable in the long run. 🤔
As a small business owner, I'm happy to see MSME credit growing 19.6%! But ground reality is still tough for many. Hope banks actually pass on these benefits to genuine entrepreneurs instead of just large corporates. ECLGS 5.0 should focus more on small players. 💪🇮🇳
Record profits of Rs 1.98 lakh crore? Wow! But I'm a bit skeptical about how much of this is from core banking vs treasury operations. Also, agriculture credit at 16.2% growth is good but farmers need better interest rates and simpler processes. Still, this is a positive sign for economy overall! 🌾💰
Good to see PSBs finally turning around after years of NPA mess. But let's not forget this recovery happened partly due to massive recapitalization by taxpayers. The real test will be maintaining these levels when global economy faces headwinds. Also, airline sector bailout needs more scrutiny - Rs 1,500 crore per borrower is huge! ✈️📉
As a common citizen, these numbers sound great but I don't see much change in my local bank branch. Loan processes still take ages and there's too much paperwork. Hope this improved profitability means better customer service and faster digitalization in PSBs. Still, yay for lower NPAs!
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