Public Sector Banks (PSBs) posted their strongest financial performance on record in FY2025-26, with gross non-performing assets (GNPAs) declining to a historic low of 1.9 per cent, while aggregate net profit rose to an all-time high of Rs 1.98 lakh crore, according to information shared by Minister of State for Finance Pankaj Chaudhary in the Rajya Sabha.
The combined business of PSBs crossed Rs 283 lakh crore as of March 31, 2026, driven by sustained growth in both deposits and advances. Total business increased to Rs 283.3 lakh crore from Rs 251.7 lakh crore a year earlier, while deposits rose to Rs 156.3 lakh crore and loans and advances climbed to Rs 127 lakh crore.
The improvement in asset quality continued for the fifth consecutive year. Gross NPAs declined sharply from 7.3 per cent in FY22 to 1.9 per cent in FY26, reflecting stronger balance sheets and improved credit discipline.
At the same time, the Capital to Risk-Weighted Assets Ratio (CRAR) improved to 16.6 per cent in FY26 from 16.1 per cent a year earlier, indicating enhanced capital strength, the MoS said.
PSBs also recorded healthy credit growth across key sectors of the economy during FY26. Retail loans expanded 19.8 per cent year-on-year, while lending to micro, small and medium enterprises (MSMEs) grew by 19.6 per cent.
Credit to agriculture and allied activities registered growth of 16.2 per cent, while infrastructure loans increased by 4.9 per cent.
The MoS for Finance attributed the sustained credit flow partly to policy measures, including the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, launched in May 2026 to address liquidity challenges arising from the West Asia crisis.
Under the scheme, the government provides 100 per cent guarantee coverage for MSMEs and 90 per cent coverage for non-MSMEs and the scheduled passenger airline sector, with a total credit flow of up to Rs 2.55 lakh crore, including Rs 5,000 crore earmarked for airlines.
For the aviation sector, eligible borrowers can receive assistance of up to 100 per cent of their peak credit outstanding during the fourth quarter of FY26, subject to a maximum loan amount of Rs 1,500 crore per borrower.
The MoS for Finance further said that the financial health of Regional Rural Banks (RRBs) has improved in recent years. RRBs posted their highest-ever consolidated net profit of Rs 10,177 crore during FY2025-26.
RRBs have also shown consistent improvement in key financial parameters such as the Capital to Risk-Weighted Assets Ratio (CRAR), deposits, advances, non-performing assets (NPAs), and the Credit-Deposit (CD) ratio.