PSU Banks Post Record Rs 1.98 Lakh Crore Net Profit; GNPA Hits Historic Low Of 1.9% In FY26

On Wednesday, Indian equity benchmarks traded higher, with the benchmark Nifty 50 index gaining 1.10 per cent to 24,250.05. The Bank Nifty index also advanced 0.78 per cent to 57,200.80, while the Nifty PSU Bank index rose 0.37 per cent to 8,314.85, as PSU banking stocks drew attention after the Ministry of Finance released data confirming that Public Sector Banks collectively posted their highest-ever net profit of Rs 1.98 lakh crore in FY26, alongside a historic low in gross non-performing assets.

Record Profitability And Aggregate Business

Public Sector Banks (PSBs) recorded a combined net profit of Rs 1.98 lakh crore in FY26, marking a YoY increase of approximately 11.2 per cent from Rs 1.78 lakh crore in FY25. This is the highest net profit ever reported by PSBs in a single financial year, according to data released by the Ministry of Finance citing the Reserve Bank of India.

Aggregate business of PSBs surpassed Rs 283 lakh crore, rising to Rs 283.3 lakh crore as of March 31, 2026, compared to Rs 251.7 lakh crore a year earlier, a growth of approximately 12.6 per cent YoY. Total deposits grew 10.1 per cent YoY to Rs 156.3 lakh crore from Rs 142 lakh crore, while total loans and advances expanded 15.7 per cent to Rs 127 lakh crore from Rs 109.8 lakh crore in the previous year.

GNPA At Multi-Decade Low; Capital Adequacy Strengthens

The Gross Non-Performing Assets (GNPA) ratio of PSBs declined to 1.9 per cent as of March 31, 2026, compared to 2.6 per cent in the preceding year and 7.3 per cent in FY22, representing a sustained improvement over a five-year period. This marks the lowest GNPA level recorded by Indian PSBs in recent decades, underscoring a structural turnaround in asset quality.

Capital adequacy, as measured by the Capital to Risk-Weighted Assets Ratio (CRAR), improved to 16.6 per cent in FY26 from 16.1 per cent in FY25, indicating that PSBs continue to maintain a healthy buffer above the regulatory minimum, providing headroom for further credit expansion.

Sector-Wise Credit Growth: MSME And Retail Lead

PSBs recorded broad-based credit growth across key segments of the economy in FY26. MSME loans registered a YoY growth of 19.6 per cent, a sharp acceleration from 9.8 per cent in FY25 and the highest growth rate for this segment over the five-year period tracked. Retail loans grew 19.8 per cent YoY, up from 17.7 per cent in the previous year, continuing their upward momentum.

Agriculture and allied activities loans grew 16.2 per cent YoY, recovering from 9.8 per cent growth in FY25 and approaching the 18.8 per cent pace seen in FY 2022-23. Infrastructure loans, pertaining to the industries sector, recorded a YoY growth of 4.9 per cent, compared to 2.2 per cent in FY25, though this segment continues to lag behind the growth rates seen in other verticals.

About Public Sector Banks

Public Sector Banks are government-owned banks in India in which the central government holds a majority stake. PSBs collectively form the backbone of India's institutional credit delivery system, serving retail, agricultural, MSME, and infrastructure segments across urban and rural geographies. Their performance metrics are periodically compiled and disclosed by the Reserve Bank of India.

The combined financial data of PSBs released by the Ministry of Finance reflects the aggregated position of all scheduled public sector commercial banks operating in the country.
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Disclaimer: The article is for informational purposes only and not investment advice.