The PSBs posted a record net profit of ₹1.98 lakh crore in FY 2025‑26, marking the fourth consecutive year of profitability and the lowest asset‑quality ratios ever recorded.

Key Developments

Aggregate business rose to ₹283.3 lakh crore, a 12.8% YoY increase.
Gross advances grew 15.7% YoY** to ₹127 lakh crore**, driven by strong growth in the RAM categories (Retail +18.1%, Agriculture +15.5%, MSME +18.2%).

Deposits climbed 10.6% YoY** to ₹156.3 lakh crore**, reflecting robust depositor confidence.

Gross NPA fell to 1.93% and Net NPA to 0.39%, the lowest in history.

Provisioning Coverage Ratio stayed above 90% for every PSB, underscoring prudent provisioning.

Capital adequacy improved to a CRAR of 16.6%, well above the regulatory floor of 11.5%.

Cost‑to‑Income Ratio improved to 49.67%, indicating better operational efficiency.

Important Facts

Net profit rose 11.1% YoY** to the historic high of ₹1.98 lakh crore**.

Operating profit reached ₹3.21 lakh crore, supporting the profit surge.

Fresh slippages fell to a 0.7% slippage ratio**, showing fewer new stressed assets.

Recoveries, including from written‑off accounts, totalled ₹86,971 crore, reflecting stronger recovery mechanisms.

Capital raised during the year amounted to ₹50,551 crore, bolstering the balance sheet.

UPSC Relevance

The performance of PSBs illustrates the impact of structural reforms, governance upgrades and digitalisation on the Indian banking sector—core topics for GS‑3 (Economy) and GS‑4 (Ethics) papers. The decline in Gross NPA and the rise in CRAR demonstrate effective risk management, a point often asked in questions on financial stability and banking reforms.

Way Forward

To sustain this trajectory, the Ministry of Finance and the banking regulator should continue:

Strengthening governance and risk‑assessment frameworks in PSBs.

Promoting digital banking and cost‑efficiency measures to keep the Cost‑to‑Income Ratio below 50%.

Deepening credit outreach to the RAM segments, especially MSMEs, to sustain inclusive growth.

Maintaining high provisioning coverage to guard against future credit shocks.

These steps will reinforce the resilience of the banking system and support India’s ambition of a "Viksit Bharat" by 2047.