Monsoon Session: PSBs' profit nearly trebled in 5 years, says FinMin

Public sector banks posted a record ₹1.98 trillion profit in FY26 as bad loans hit a historic low and credit growth remained strong across retail, MSMEs and agriculture

Net profit of India’s public-sector banks (PSBs) nearly trebled over the past five years to a record ₹1.98 trillion in 2025-26 (FY26), driven by a sharp improvement in asset quality and sustained lending growth across key sectors of the economy, the finance ministry informed Parliament on Tuesday.

 

“The financial health of PSBs has shown significant improvement, with healthy balance sheets, historically high profits, and a multi-decadal low level of gross non-performing assets (GNPAs),” Minister of State for Finance Pankaj Chaudhary said in a written reply to a question in the Rajya Sabha.

 

“Further, PSBs have recorded sustained credit growth across different sectors of the economy,” he added.

 

During the period, the GNPA ratio declined to an all-time low of 1.9 per cent as of March 31, 2026, from 7.3 per cent as of March 31, 2022.

 

Their capital adequacy ratio also improved to 16.6 per cent at the end of FY26 from 14.6 per cent at the end of FY22. Chaudhary said the improvement reflected stronger balance sheets and sustained credit expansion by PSBs. 

 

The aggregate business of state-owned banks rose to ₹283.3 trillion as of March 31, 2026, from ₹251.7 trillion a year earlier, with deposits increasing to ₹156.3 trillion and advances to ₹127 trillion.

 

Credit growth remained broad-based during FY26. Lending to the retail segment grew 19.8 per cent year-on-year, followed by loans to micro, small, and medium enterprises (MSMEs), which rose 19.6 per cent, and agriculture credit, which grew 16.2 per cent. Infrastructure lending expanded 4.9 per cent during the year.

 

Chaudhary also highlighted the government's Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, launched in May to ease liquidity stress arising from the West Asia crisis.

 

According to data released by the finance ministry earlier this month, the government has so far issued over 140,000 guarantees under ECLGS 5.0, worth more than ₹1.55 trillion. Around 98 per cent of the guarantees and 82 per cent of the total guaranteed amount were for MSMEs.

 

The Union Cabinet approved ECLGS 5.0 with an outlay of ₹18,100 crore to provide credit support to MSMEs, airlines, and other businesses facing higher working capital requirements amid rising costs triggered by the West Asia crisis. The scheme aims to help businesses, particularly MSMEs and airlines, maintain operations, protect jobs, and sustain supply chains. It is also expected to facilitate additional credit flow of ₹2.55 trillion, including ₹5,000 crore earmarked for scheduled passenger airlines.