Public sector banks' profit to exceed ₹2L crore in FY26
What's the story
Public sector banks (PSBs) are on the verge of a major financial milestone, with their combined profit expected to exceed ₹2 lakh crore in the current fiscal year. The prediction comes from M Nagaraju, Secretary of the Department of Financial Services (DFS), who attributed this growth to strong credit and deposit growth rates. He also noted that the Indian banking sector is resilient and well-managed under RBI regulations.
Financial performance
Combined profit of PSBs increasing every 3 years
Nagaraju's prediction is based on the first half of this fiscal year, where PSBs recorded a profit of nearly ₹1 lakh crore. He said, "this year (ongoing financial year) we will cross ₹2 lakh crore." The combined profit of PSBs has been increasing significantly every three years. In FY23, it reached between ₹1 lakh crore and ₹1.05 lakh crore; in 2023-24, it touched another high of ₹1.41 lakh crore; and in FY25, it hit around ₹1.78 lakh crore.
Financial health
PSBs in good financial shape
As of September 2025, the gross non-performing assets (NPAs) of PSBs stood at a record low of 2.30%. The provisioning coverage ratio (PCR) improved to 94.63%, while the capital adequacy ratio of these banks stood at a healthy 15.96%.
Policy changes
Government mobilizes resources through divestment of select PSB stakes
The Indian government has also been able to mobilize resources through divesting its stake in select PSBs during the current fiscal year. A sum of ₹2,627.52 crore and ₹1,419.36 crore were raised via the Offer for Sale (OFS) of GoI shares in Bank of Maharashtra and Indian Overseas Bank, respectively. The Finance Ministry is also mulling over increasing the foreign direct investment (FDI) limit in PSBs from 20% to 49% to further strengthen their capital base.