Indian Public Sector Banks (PSBs) have achieved a remarkable milestone, reporting a record net profit of Rs 1.98 trillion in FY26, marking their fourth consecutive year of profitability and reflecting robust growth, improved asset quality, and enhanced operational efficiency.
Illustration: Dominic Xavier/Rediff
Key Points
- Indian Public Sector Banks (PSBs) recorded a net profit of Rs 1.98 trillion in FY26, an 11.2 per cent year-on-year increase, marking their fourth consecutive year of profitability.
- State Bank of India posted its highest-ever annual net profit of Rs 80,032 crore in FY26, while Bank of Baroda and Punjab National Bank also reported significant profits.
- The aggregate business of PSBs grew by 12.8 per cent to Rs 283.3 trillion, with advances increasing by 15.7 per cent and deposits by 10.6 per cent in FY26.
- Asset quality improved significantly, with the gross non-performing assets (NPA) ratio declining to 1.93 per cent and the net NPA ratio falling to 0.39 per cent as of March 2026.
- PSBs maintained a healthy Capital to Risk Weighted Assets Ratio (CRAR) of 16.6 per cent, well above regulatory requirements, supported by internal accruals and capital raising.
Public-sector banks (PSBs) have reported an 11.2 per cent year-on-year (Y-o-Y) rise in net profit to record Rs 1.98 trillion in 2025-26 (FY26), the Ministry of Finance said in a statement on Tuesday.
This is the fourth consecutive year of profitability for these lenders.
PSBs had reported net profit of Rs 1.41 trillion in FY24, Rs 1.04 trillion in FY23, and Rs 66,543 crore in FY22.
Leading Bank Performances
In FY26, State Bank of India, the country”s largest bank, posted its highest-ever annual net profit of Rs 80,032 crore, up 12.9 per cent Y-o-Y.
While Bank of Baroda, the second-largest PSB, reported a FY26 profit of Rs 20,021 crore, Punjab National Bank”s net profit stood at Rs 16,904 crore during FY26.
“PSBs continued to register strong financial performance during FY26, reflecting sustained business growth, improved asset quality, record profitability and strong capital position,” the ministry said.
It added that the improved performance demonstrates the resilience, stability, and enhanced institutional capacity of PSBs in supporting the credit needs of a fast-growing Indian economy.
Business Growth and Asset Quality
The aggregate business of PSBs increased to Rs 283.3 trillion, up 12.8 per cent Y-o-Y in FY26, with aggregate deposits rising 10.6 per cent Y-o-Y to Rs 156.3 trillion and advances increasing 15.7 per cent Y-o-Y to Rs 127 trillion.
“Credit growth in the retail, agriculture, and MSME (RAM) segments remained broad-based during FY26. RAM advances grew by 18.1 per cent, 15.5 per cent, and 18.2 per cent, respectively, reflecting the important role of PSBs in supporting entrepreneurship, strengthening financial inclusion, and enabling broad-based economic growth,” the ministry said.
While business growth remained robust, the asset quality of PSBs also improved in FY26, with the gross non-performing assets (NPA) ratio declining to 1.93 per cent and the net NPA ratio falling to 0.39 per cent as of March 2026, reflecting historically low levels of stressed assets.
In March 2025, the gross NPA ratio of PSBs stood at over 2 per cent, while the net NPA ratio was above 0.5 per cent.
Additionally, fresh slippages continued to decline during FY26, with slippage ratio reducing to 0.7 per cent.
Total recoveries, including recoveries from written-off accounts, stood at Rs 86,971 crore, reflecting improved recovery mechanisms and better credit discipline across PSBs, the statement said.
Capital Position and Operational Efficiency
Separately, their capital position remained healthy, with the Capital to Risk Weighted Assets Ratio (CRAR) improving to 16.6 per cent as of March, supported by internal accruals, retained earnings, and capital raising of Rs 50,551 crore during FY26.
All PSBs maintained CRAR well above the regulatory requirement of 11.5 per cent, providing an adequate cushion for continued lending growth.
The ministry also noted that the operational efficiency of PSBs improved in FY26, with the cost-to-income ratio improving to 49.67 per cent, reflecting better cost management and gains from technology adoption and digital transformation initiatives.
The ministry said the continued improvement in the performance reflects the Indian economy”s resilience and the government”s sustained reforms aimed at strengthening the banking sector through improved governance, technology adoption, enhanced credit discipline, and wider access to formal credit.
These measures have contributed to lower stressed assets, improved operational efficiency, and a stronger financial position for PSBs,” the ministry said.
It added that 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.
