Overview
The PSBs have shown a dramatic improvement in financial health during FY 2025‑26. Their gross non‑performing assets fell to a historic low of 1.9%, while net profit surged to ₹1.98 lakh crore. At the same time, the Government introduced the ECLGS 5.0 to cushion liquidity stress.
Key Developments (FY 2025‑26)
- Gross GNPA fell to 1.9%, down from 7.3% in FY 2022‑23.
- Net profit of PSBs reached a record ₹1.98 lakh crore, up from ₹0.67 lakh crore in FY 2022‑23.
- Total business (deposits + loans) crossed **₹283 lakh crore**, a 56% rise over five years.
- Capital Adequacy Ratio (CRAR) improved to **16.6%**, exceeding the regulatory minimum.
- Credit growth remained robust: Retail loans grew **19.8%**, MSME loans **19.6%**, and agriculture loans **16.2%** YoY.
- Government launched ECLGS 5.0 with 100% guarantee for MSMEs and 90% for non‑MSMEs and scheduled passenger airlines, covering up to **₹2.55 lakh crore**.
Important Facts and Figures
Total Business (₹ lakh crore): 181.5 (2022), 203.2 (2023), 226.7 (2024), 251.7 (2025), **283.3** (2026).
Total Deposits (₹ lakh crore): 107.2 → **156.3** over the period.
Total Loans & Advances (₹ lakh crore): 74.3 → **127.0**.
Sector‑wise credit growth (YoY % in FY 2025‑26):
- Retail Loans: **19.8%**
- Agriculture & Allied Activities: **16.2%**
- MSME Loans: **19.6%**
- Infrastructure (Industries) Loans: **4.9%**
Exam Relevance
These trends illustrate the effectiveness of banking reforms and the role of public sector banks in achieving financial stability – a frequent topic in GS 3 (Economy). Understanding GNPA and CRAR helps answer questions on bank health, credit risk, and regulatory standards. The MSME focus of ECLGS 5.0 links to discussions on fiscal stimulus, crisis management, and sector‑specific guarantees.
Way Forward
- Maintain strict monitoring of asset quality to keep GNPA low.
- Encourage further capital infusion to sustain high CRAR levels.
- Leverage ECLGS 5.0 to support liquidity for MSMEs and airlines, while ensuring timely repayment to avoid future defaults.
- Promote diversified credit growth across sectors to balance risk and sustain economic expansion.