India’s Public Sector Banks (PSBs) have delivered a stellar performance in the financial year 2025-26, recording their highest-ever annual net profit of approximately ₹1.98 lakh crore. The aggregate business of PSBs reached around ₹283.3 lakh crore as of March 31, 2026, reflecting strong growth and operational efficiency across the banking sector.
A comprehensive review of the performance of Public Sector Banks highlighted significant improvements in asset quality. Gross Non-Performing Assets (GNPA) declined to a historic low of 1.93 percent, while Net Non-Performing Assets (NNPA) fell to just 0.39 percent, demonstrating stronger balance sheets and effective risk management practices.
The review also assessed progress under key financial inclusion initiatives, including the Pradhan Mantri Jan Dhan Yojana (PMJDY), social security schemes, Pradhan Mantri Mudra Yojana (PMMY), PM Vishwakarma, and digital lending programmes. PSBs continue to play a crucial role in expanding financial access and strengthening last-mile banking services across the country.
The implementation of end-to-end digital lending journeys for small-value loans and welfare-linked schemes was also reviewed. Banks showcased initiatives such as paperless loan processing through e-KYC and digital documentation, Straight Through Processing (STP), and integration with government platforms to improve accessibility, efficiency, and customer experience.
Discussions further focused on strengthening digital banking infrastructure, enhancing cybersecurity frameworks, and improving credit access for Micro, Small and Medium Enterprises (MSMEs) and other productive sectors of the economy.
Officials emphasized the need for prudent expenditure management and austerity measures while maintaining resilience amid evolving global uncertainties. Banks were advised to extend proactive support to eligible borrowers under ECLGS 5.0, strengthen grievance redressal systems, improve operational efficiency, and explore new business opportunities to sustain profitability and long-term growth.
The banking sector was also urged to remain prepared for potential challenges arising from the ongoing crisis in the Middle East and other global developments.
Addressing the meeting, the Special Secretary, Department of Financial Services (DFS), stressed the importance of strengthening institutional capabilities, operational efficiency, and innovation-driven banking practices to meet the demands of a rapidly evolving financial ecosystem. He emphasized the responsible use of technology while maintaining a focus on inclusive growth, customer service, and long-term resilience.
The Secretary, DFS, highlighted the importance of robust grievance redressal mechanisms, strong governance standards, and operational preparedness to ensure that India’s banking system remains resilient, trusted, and aligned with the vision of Viksit Bharat 2047.
