New Delhi: Public sector banks (PSBs) in India have achieved a historic milestone by reporting a record net profit of ₹1.98 lakh crore in FY26, marking their fourth consecutive year of profitability, according to the Finance Ministry.
The strong performance reflects improved asset quality, steady credit growth, and rising income across the banking sector.
Record Profitability and Strong Financial Performance
In FY26, PSBs delivered their best-ever financial results, driven by robust business expansion and operational efficiency.
Key highlights include:
- Net profit: ₹1.98 lakh crore (up 11.1% year-on-year)
- Operating profit: ₹3.21 lakh crore
- Continuous profitability for 4 consecutive years
The Finance Ministry stated that this performance reflects the resilience and institutional strength of public sector banks.
Read also: Public Sector Banks Post Record Rs 52,603 Crore Profit in Q3 FY26, SBI Leads Growth
Strong Growth in Banking Business
The overall business of PSBs grew significantly during the year:
- Total business: ₹283.3 lakh crore (12.8% growth)
- Deposits: ₹156.3 lakh crore (10.6% growth)
- Gross advances: ₹127 lakh crore (15.7% growth)
This indicates strong credit demand and continued depositor confidence in the banking system.
Sharp Improvement in Asset Quality
Asset quality of PSBs improved substantially in FY26:
- Gross NPA ratio: 1.93%
- Net NPA ratio: 0.39% (historic low levels)
- Provision coverage ratio: above 90% across all PSBs
Fresh slippages also declined, with the slippage ratio reducing to 0.7%, showing better credit discipline and risk management.
Strong Recovery and Risk Management
PSBs demonstrated improved recovery performance:
- Total recoveries: ₹86,971 crore
- Includes recoveries from written-off accounts
- Stronger credit monitoring and recovery systems
These improvements reflect tighter underwriting standards and enhanced financial discipline.
Banking Sector Reforms Driving Growth
The Finance Ministry attributed the strong performance to sustained reforms, including:
- Improved governance frameworks
- Digital and technology adoption
- Stronger credit monitoring systems
- Wider access to formal credit
These reforms have strengthened operational efficiency and reduced stressed assets across banks.
PSBs Positioned for Long-Term Growth
According to the government, public sector banks are now:
- Well-capitalised
- Highly profitable
- Institutionally stronger
This positions them to support India’s long-term economic growth and contribute to the vision of Viksit Bharat 2047.
The record performance of public sector banks in FY26 highlights a stable and resilient banking system in India. Strong growth in business, improved asset quality, and consistent profitability underline the sector’s crucial role in supporting the country’s expanding economy.
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