Public Sector Banks Report Record Rs 1.98 Lakh Crore Net Profit in FY26

New Delhi, May 12 (KNN) Public Sector Banks (PSBs) recorded an all-time high aggregate net profit of Rs 1.98 lakh crore in FY 2025–26, marking the fourth consecutive year of profitability amid strong credit growth, improved asset quality and enhanced operational efficiency.

According to official data, the total business of PSBs rose 12.8 per cent year-on-year to Rs 283.3 lakh crore as of March 31, 2026. Aggregate deposits increased 10.6 per cent to Rs 156.3 lakh crore, while gross advances grew 15.7 per cent to Rs 127 lakh crore, reflecting sustained credit demand across sectors.

Credit growth remained broad-based across Retail, Agriculture and MSME (RAM) segments during the financial year. Retail advances grew 18.1 per cent, agriculture advances rose 15.5 per cent and MSME lending increased 18.2 per cent, highlighting the continued role of PSBs in supporting entrepreneurship, financial inclusion and economic activity.

Asset quality improved significantly during FY26, with the Gross Non-Performing Asset (NPA) ratio declining to 1.93 per cent and the Net NPA ratio falling to 0.39 per cent as of March 31, 2026  the lowest levels recorded historically for PSBs. Fresh slippages also declined, with the slippage ratio reducing to 0.7 per cent during the year.

The banks reported total recoveries of Rs 86,971 crore, including recoveries from written-off accounts, reflecting improved recovery mechanisms and credit discipline.

 Provisioning coverage ratio remained above 90 per cent across all PSBs, indicating stronger provisioning practices and balance sheet resilience.

Aggregate operating profit of PSBs stood at Rs 3.21 lakh crore during FY26. Improved profitability was supported by healthy credit expansion, stronger income growth and improved operational efficiency. The cost-to-income ratio improved to 49.67 per cent, aided by technology adoption and digital transformation initiatives.

The capital position of PSBs also remained strong, with aggregate Capital to Risk (Weighted) Assets Ratio (CRAR) improving to 16.6 per cent as of March 31, 2026. During the year, PSBs raised Rs 50,551 crore in capital, while all banks maintained CRAR levels well above the regulatory requirement of 11.5 per cent.

The government attributed the improved performance of PSBs to continued reforms focused on governance, technology adoption, enhanced credit discipline and strengthening institutional capacity.

Officials stated that the healthier balance sheets and stronger financial position of PSBs would support India’s long-term economic growth and the vision of Viksit Bharat by 2047.

(KNN Bureau)