Finance Ministry To Review PSB Operations, MSME & Agriculture Credit Flow

New Delhi, May 28 (KNN) The government is set to review credit flow and banking operations with heads of public sector banks, even as state-owned lenders posted their strongest financial performance in years.

The Finance Ministry will convene a meeting of heads of all public sector banks (PSBs) on May 29, to be chaired by Financial Services Secretary M. Nagaraju — notably, a day before his retirement, PTI reported.

The review will assess credit flow to the agriculture and MSME sectors and examine banking operations in the light of the ongoing Middle East crisis.

Key Agenda Items

The meeting will cover a wide range of operational and strategic issues, including the functioning and financial performance of Regional Rural Banks (RRBs), progress on the Jan Samarth portal for credit-linked government schemes, the adoption of artificial intelligence and rising digital fraud risks, and recovery mechanisms under Debt Recovery Tribunals (DRTs) and the SARFAESI Act, according to sources cited by PTI.

PSBs Post Record Profits in FY26

The meeting follows a landmark year for Indian public sector banks, which reported a combined net profit of Rs 1.98 lakh crore in FY26—the fourth straight year of profitability—driven by improved asset quality, steady credit growth and higher income. 

During the year, aggregate operating profit stood at Rs 3.21 lakh crore, while net profit grew 11.1 per cent year-on-year. Total business rose 12.8 per cent to Rs 283.3 lakh crore as of March 31, 2026, with deposits increasing 10.6 per cent to Rs 156.3 lakh crore and gross advances expanding 15.7 per cent to Rs 127 lakh crore.

Asset Quality at Multi-Year Best

Asset quality across PSBs improved significantly during the year. The gross NPA ratio declined to 1.93 per cent, while the net NPA ratio fell to just 0.39 per cent — reflecting sustained progress in resolving stressed assets. Fresh slippages also eased, with the slippage ratio declining to 0.7 per cent. Total recoveries, including written-off accounts, stood at Rs 86,971 crore.

(KNN Bureau)