PSBs' metrics improved, profits at record highs: Finance min, Pg17

Key Highlights:

• Public Sector Banks (PSBs) reported record-high profits and multi-decadal low bad loans in 2025-26.
• PSBs' net profit reached Rs 1.98 lakh crore in 2025-26, an 11% increase from the previous year.
• Since 2021-22, PSBs' profits have nearly tripled, demonstrating significant financial improvement.
• PSBs recorded a 16% loan growth in 2025-26, with lending increasing by 71% over four years.
• Regional Rural Banks (RRBs) achieved a record profit of Rs 10,177 crore in 2025-26, a 49% rise.

Detailed Insights:

• The financial health of PSBs is characterized by healthy balance sheets and sustained credit growth across various sectors of the economy.
• Gross Non-Performing Assets (GNPA) for PSBs are at their lowest level in several decades, indicating improved asset quality.
• While PSB loan growth was robust, deposit growth (46% over March 2022) lagged behind loan growth (71% over four years).
• Retail and MSME segments were primary drivers of PSB loan growth, both increasing by almost 20% year-on-year.
• Infrastructure loans to industries showed slower growth for PSBs, increasing by only 4.9% year-on-year at the end of 2025-26.
• RRBs also demonstrated consistent improvement in key financial parameters like Capital to Risk Weighted Asset Ratio (CRAR), deposits, and advances.
• Similar to PSBs, RRBs experienced deposit growth (7.7%) that was lower than their loan growth (10.3%).

Key Concepts Involved:

• Public Sector Banks (PSBs): Banks where the majority stake (more than 50%) is held by the government.
• Regional Rural Banks (RRBs): Banks established to provide credit and other banking facilities to rural areas and small farmers.
• Gross Non-Performing Assets (GNPA): The total value of loans for which the principal or interest payment has been overdue for 90 days or more.
• Capital to Risk Weighted Asset Ratio (CRAR): A measure of a bank's financial strength, expressing its capital as a percentage of its risk-weighted assets.
• Credit-Deposit Ratio (CD ratio): The ratio of a bank's total loans to its total deposits, indicating how much of its deposits are given out as loans.