Public Sector Banks Make Record Rs1.98 Lakh Crore Profit – Fourth Year in a Row

OVERVIEW

India’s public sector banks (PSBs) have done very well. In the financial year 2025–26, they made a combined net profit of ?1.98 lakh crore. This is the fourth consecutive year of profit. The Union Finance Ministry announced this historic performance. The banks’ operating profit reached ?3.21 lakh crore. Net profit grew by 11.1% compared to last year. The main reasons are better asset quality, strong credit growth, and higher income. Bad loans are now at very low levels. This shows a complete turnaround for government-owned banks.

PSBS REGISTER HISTORIC FINANCIAL PERFORMANCE

Public sector banks have achieved their strongest financial performance ever. Here are the key numbers for FY 2025–26:

• Combined net profit:  Rs1.98 lakh crore (record high)

• Operating profit:  Rs3.21 lakh crore

• Year-on-year net profit growth:  11.1%

The Finance Ministry said this is not just a one-year improvement. It signals a broader turnaround in India’s banking system. For many years, government-owned lenders struggled with bad loans. Now, they are showing strong growth.

STRONG CREDIT GROWTH PUSHES BANKING EXPANSION

PSBs have expanded their lending business aggressively. The numbers as of 31 March 2026:

The strong deposit growth shows customer trust in state-owned banks. The sharp rise in advances means more people and businesses are getting loans.

ASSET QUALITY IMPROVES TO HISTORIC BEST LEVELS

For many years, bad loans were the biggest problem for PSBs. That picture has changed completely.

• Gross NPA ratio:  Fell to  1.93%  (very low)

• Net NPA ratio:  Dropped to just  0.39%  (excellent)

These are among the lowest stressed asset levels seen in recent years.

Other positive indicators:

• Provisioning coverage ratio:  Above 90% for every PSB – meaning banks are financially ready to handle risky assets.

• Slippage ratio:  Came down to  0.7%  – fresh loan defaults have reduced sharply, showing better lending discipline.