PSBs log record ₹1.98 lakh crore profit, GNPA falls to historic low of 1.9% in FY26
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Public sector banks (PSBs) and regional rural banks (RRBs) delivered a strong financial performance in FY26, with PSBs reporting their lowest-ever gross non-performing asset (GNPA) ratio of 1.9% and a record net profit of ₹1.98 lakh crore, while RRBs posted their highest-ever consolidated net profit of ₹10,177 crore, according to data shared by the Finance Ministry in Parliament on Tuesday.
The combined performance highlights the continued strengthening of the public banking ecosystem, driven by robust credit growth, improved asset quality and higher capital buffers.
PSBs' aggregate business expanded to ₹283.3 lakh crore as of March 31, 2026, up from ₹251.7 lakh crore a year earlier. Deposits grew to ₹156.3 lakh crore, while loans and advances rose to ₹127 lakh crore. Their capital adequacy ratio (CRAR) also improved to 16.6% from 16.1% in FY25, reflecting stronger balance sheets.
Credit growth remained broad-based across sectors. Retail loans grew 19.8% year-on-year in FY26, while lending to micro, small and medium enterprises (MSMEs) increased 19.6%. Agriculture and allied activities recorded a 16.2% rise in credit, while infrastructure lending expanded 4.9%.
To support businesses affected by the West Asia crisis, the government introduced the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 in May 2026. The scheme provides 100% guarantee cover for MSMEs and 90% for eligible non-MSMEs and scheduled passenger airlines, with an overall credit flow ceiling of ₹2.55 lakh crore.
Meanwhile, RRBs also registered improvement across key financial indicators. Deposits rose to ₹7.69 lakh crore in FY26 from ₹7.14 lakh crore in the previous year, while outstanding loans increased to ₹5.78 lakh crore from ₹5.24 lakh crore. Their credit-deposit ratio improved to 75.2% from 73.4%, indicating stronger credit deployment.
Asset quality also strengthened, with RRBs' GNPA ratio declining to 5.3% in FY26 from 5.4% a year earlier. Their CRAR improved to 15%, while net worth increased to ₹74,086 crore.
The Finance Ministry said the government has been regularly reviewing the financial health and operational performance of RRBs through national and regional meetings. The focus areas include technology upgradation, expanding MSME lending, diversification towards agriculture-allied and retail credit, and strengthening financial inclusion through schemes such as Pradhan Mantri Jan-Dhan Yojana, Mudra Yojana, Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Atal Pension Yojana.