PIB TrackerPublic sector banks: bad loans at 1.9%, profits at a record
Gross non-performing assets of public sector banks fell to a multi-decadal low of 1.9% in FY2025-26 even as net profit hit a record ₹1.98 lakh crore and aggregate business crossed ₹283 lakh crore — the completion of a decade-long clean-up.
What happened
- PSB gross NPAs fell to a multi-decadal low of 1.9% in FY2025-26 (from 7.3% in March 2022).
- Net profit hit a record ₹1.98 lakh crore; total business crossed ₹283.3 lakh crore.
- Capital adequacy (CRAR) strengthened to 16.6%.
- MSME credit grew 19.6% and retail credit 19.8% year-on-year.
- It caps a decade of AQR, recapitalisation, the IBC and bank mergers.
For Prelims
- GNPA: Gross Non-Performing Assets as a share of advances — down to 1.9% for PSBs in FY2025-26.
- Record profit: PSB net profit of ₹1.98 lakh crore; total business ₹283.3 lakh crore.
- CRAR: the Capital to Risk-weighted Assets Ratio — at 16.6%, above the regulatory minimum.
- Credit growth: MSME 19.6%, retail 19.8% year-on-year.
- The clean-up toolkit: the RBI's Asset Quality Review, recapitalisation, the IBC (2016) and PSB mergers.
- Twin balance sheet: the stressed-banks-and-firms problem this turnaround addressed.
For UPSC: A banking-sector staple. Use it for the NPA cycle and the twin-balance-sheet problem, the IBC and asset-quality reform, PSB recapitalisation and consolidation, and the link between bank health and credit for investment.
What it is NOT: This is the reported financial performance of public sector banks — not a claim that credit risk has ended; fast retail and unsecured credit growth remains a regulatory watch-point.
For Mains
Syllabus: GS3.1 · GS3.3 · Linkage L2
Anchor
The bad-loan era closes — public banks report their cleanest books in decades.
Substantiation (data)
GNPAs at 1.9% (from 7.3% in 2022), record ₹1.98 lakh crore net profit, ₹283.3 lakh crore business and CRAR of 16.6%.
Exemplification
MSME and retail credit growing near 20% shows repaired balance sheets translating into lending.
Problematisation
Rapid retail/unsecured credit growth, deposit mobilisation and concentration risks need watching even in good times.
Way-forward
Sustain governance and risk management, deepen credit to productive sectors, and keep provisioning and capital buffers strong.
Position
Healthy banks are a precondition for financing investment-led growth — the gains must not be squandered in the next cycle.
Deploys into: Economy + fiscal/financial sector (GS3.1, GS3.3) · the NPA cycle and twin balance sheet, the IBC, PSB recapitalisation and consolidation, and credit growth.
Ministry of Finance · 2026-07-28 · PRID 2290384 · PIB source ↗