India’s banking sector has recorded a marked turnaround in financial health over the past decade, driven by sustained government-led reforms, timely recapitalisation, and stronger regulatory oversight. Data released by the Reserve Bank of India (RBI), Public Sector Banks (PSBs), and NABARD point to record profits, cleaner balance sheets, higher capital buffers, and renewed investor confidence across the system.
Record Profits and Strong Growth
During FY 2024–25, Scheduled Commercial Banks (SCBs) posted their highest-ever aggregate net profit of ₹4.01 lakh crore. Public Sector Banks followed suit, recording a record net profit of ₹1.78 lakh crore for the year. In the first half of FY 2025–26 alone, PSBs earned ₹0.94 lakh crore in net profit, underlining the momentum in earnings.
The balance sheet expansion has been equally strong. Global deposits of PSBs rose from ₹71.95 lakh crore in March 2015 to ₹146.27 lakh crore by September 2025, while global advances nearly doubled from ₹56.16 lakh crore to ₹114.85 lakh crore over the same period.
Asset Quality at Multi-Year Lows
Asset quality indicators show a sustained improvement. The gross non-performing assets (GNPA) ratio of SCBs declined to 2.05 percent (₹4.18 lakh crore) in September 2025 from 4.28 percent in March 2015, and from a peak of 11.18 percent in March 2018. For PSBs, the GNPA ratio fell to 2.30 percent (₹2.65 lakh crore) in September 2025, down sharply from 14.58 percent in March 2018.
Net NPAs have also compressed significantly. SCBs reported net NPAs of ₹0.94 lakh crore, or 0.47 percent, in September 2025, compared to ₹2.31 lakh crore (3.13 percent) in March 2015. PSBs reduced their net NPAs to ₹0.51 lakh crore, or 0.45 percent, from ₹2.15 lakh crore a decade earlier.
Higher Provisioning and Capital Buffers
Banks have strengthened their resilience through higher provisioning and capital adequacy. The Provisioning Coverage Ratio (PCR) of SCBs rose from 49.31 percent in March 2015 to 93.23 percent by September 2025. PSBs recorded a similar rise, with PCR increasing from 46.04 percent to 94.63 percent.
Capital adequacy has improved in parallel. The Capital to Risk-Weighted Assets Ratio (CRAR) of SCBs increased by 430 basis points to 17.24 percent, while PSBs improved their CRAR by 451 basis points to 15.96 percent over the same period.
Dividends, Market Fundraising and Investor Confidence
Reflecting improved profitability, PSBs declared dividends of ₹34,990 crore in FY 2024–25, with the Government of India’s share at ₹22,699 crore. Since FY 2014–15, PSBs have raised ₹24.86 lakh crore from the market through equity and bond issuances.
Investor confidence was further underscored by the State Bank of India’s record ₹25,000 crore Qualified Institutional Placement, the largest ever by an Indian bank, and its successful issuance of USD 500 million in overseas bonds at a competitive coupon of 4.5 percent.
The government has also mobilised resources through divestment, raising ₹2,627.52 crore from the offer for sale of Bank of Maharashtra shares and ₹1,419.36 crore from Indian Overseas Bank.
Governance Reforms and Customer-Centric Measures
The Banking Laws (Amendment) Act, 2025 strengthened governance standards, enhanced depositor and investor protection, improved audit quality in PSBs, and streamlined nomination and statutory reporting processes.
Complementing these reforms, the nationwide awareness campaign “आपकी पूँजी, आपका अधिकार” (Your Money, Your Right), conducted between October and December 2025, enabled restitution of unclaimed financial assets worth ₹4,500 crore to rightful owners.
Regional Rural Banks Show Turnaround
Regional Rural Banks (RRBs) have also seen a steady recovery. The GNPA ratio of RRBs declined to 5.4 percent in March 2025 from a peak of 10.8 percent in March 2019. Their PCR improved to 65.1 percent, and CRAR reached a record 14.4 percent. RRBs recorded their second-highest ever aggregate net profit of ₹6,820 crore in FY 2024–25.
The “One State, One RRB” amalgamation initiative reduced the number of RRBs from 43 to 28, improving scale efficiency, governance, and technology adoption.
Credit to Priority Sectors Exceeds Targets
Priority Sector Lending remains robust. In FY 2024–25, RRBs extended 88.44 percent of their Adjusted Net Bank Credit to priority sectors, well above the 75 percent target. Commercial banks achieved 42.10 percent, exceeding the mandated 40 percent, with enhanced focus on renewable energy, MSMEs, education, and social infrastructure.
Outlook
With cleaner balance sheets, strong capital positions, improved governance, and rising credit flow to productive sectors, India’s banking sector is firmly on an upward trajectory. Policymakers and regulators see the current cycle as a foundation for sustainable growth, financial stability, and long-term support to the real economy.
