New Delhi | Public Sector Banks (PSBs) have recorded an all-time high net profit of Rs 1.98 lakh crore in 2025-26 fiscal year, marking the fourth straight year of profitability, the finance ministry said on Tuesday.

Improved asset quality, healthy credit expansion and higher income contributed to improved profitability of PSBs during 2025-26, the ministry said.

Aggregate operating profit reached Rs 3.21 lakh crore, while aggregate net profit increased by 11.1 per cent y-o-y to a historic high of Rs 1.98 lakh crore, marking the fourth consecutive year of aggregate profitability for PSBs.

The aggregate business of PSBs increased to Rs 283.3 lakh crore as on March 31, 2026, registering growth of 12.8 per cent over the previous year.

Aggregate deposits rose 10.6 per cent year-on-year to Rs 156.3 lakh crore, reflecting continued depositor confidence and strong resource mobilisation by PSBs.

Gross advances registered growth of 15.7 per cent year-on-year at Rs 127 lakh crore, indicating sustained credit demand across sectors of the economy.

"Public sector banks (PSBs) continued to register strong financial performance during 2025-26, reflecting sustained business growth, improved asset quality, record profitability and strong capital position.

"The improved performance demonstrates the resilience, stability and enhanced institutional capacity of PSBs in supporting the credit needs of a fast-growing Indian economy," the ministry said in a statement.

Asset quality of PSBs improved significantly during 2025-26, with gross NPA ratio (non-perfuming assets) declining to 1.93 per cent and net NPA ratio to 0.39 per cent as on March 31, 2026, reflecting historically low levels of stressed assets.

Further, each PSB maintained provisioning coverage ratio of above 90 per cent, indicating prudent provisioning practices, improved underwriting standards, effective risk management mechanisms and strengthened balance sheet resilience, the ministry said.

Fresh slippages continued to decline during FY 2025'“26, with slippage ratio reducing to 0.7 per cent. Total recoveries, including recoveries from written-off accounts, stood at Rs 86,971 crore, reflecting improved recovery mechanisms and better credit discipline across PSBs.

The continued improvement in the performance of PSBs reflects the resilience of the Indian economy and the Government's sustained reforms aimed at strengthening the banking sector through improved governance, technology adoption, enhanced credit discipline and wider access to formal credit. These measures have contributed to lower stressed assets, improved operational efficiency and stronger financial position of PSBs, the ministry said.

"Today, PSBs are well-capitalised, profitable and institutionally stronger, enabling them to effectively support India's growth aspirations and contribute meaningfully towards the vision of Viksit Bharat by 2047," the ministry added.