Public sector banks have recorded net profit of over ₹1.78 lakh cr in FY25 while non-performing assets as a percentage of advances declined to a multi year low of 0.52 per cent, Finance Ministry said on Friday. Meanwhile, Finance Minister Nirmala Sitharaman has asked banks to go for more deposit mobilisation.

She chaired a meeting to review the performance of PSBs across key areas, including financial parameters, credit offtake, financial inclusion, customer service, grievance redressal, digital banking, and cyber security. In the meeting, it was noted the total business of PSBs rose to ₹251 lakh crore at the end of FY25 from ₹203 lakh crore in FY23, a Finance Ministry statement said.

During the same period, net NPAs declined to 0.52 per cent from 1.24 per cent and net profit increased to ₹1.78 lakh crore from ₹1.04 lakh crore. Dividend payouts grew from ₹20,964 crore to ₹34,990 crore. “FM was also apprised that the PSBs are adequately capitalised, with their CRAR (Capital to Risk-Weighted Assets Ratio) standing at 16.15 per cent as of Mar-2025,” the statement said.

Credit assessment

The Minister was apprised of the progress under the New Credit Assessment Model for MSMEs, launched on March 6, 2025, with 1.97 lakh MSME loans already sanctioned, amounting to ₹60,000 crore. Banks were directed to strengthen the implementation of the New Credit Assessment Model for MSMEs to broaden access to capital and expedite credit flow to small & medium businesses.

Sitharaman urged PSBs to proactively identify emerging commercial growth areas for the next decade, which can aid profitability and growth for the PSBs. She emphasised the need for sustained efforts to improve deposit mobilisation to support ongoing credit growth. PSBs were advised to undertake special drives, make effective use of their branch networks, and deepen outreach in semi-urban and rural areas, the statement said.

In line with the Budget 2025-26’s announcement to develop indigenously designed small modular nuclear reactors (SMR), banks were advised to develop credit models to support this critical sector. Banks were instructed to scale up efforts under key financial inclusion schemes, including PM MUDRA Yojana, PM Vishwakarma, PM Surya Ghar Muft Bijli Yojana, PM Vidyalaxmi, and the Kisan Credit Card (KCC) scheme.

Sitharaman directed the PSBs to participate actively in the upcoming 3-month Financial Inclusion saturation campaign, beginning July 1, 2025, covering 2.7 lakh gram panchayats and urban local bodies. This campaign would also focus on assisting the citizens with respect to KYC, re-KYC & unclaimed deposits. Banks were directed to ensure focused outreach, adequate manpower deployment, and effective publicity of this special campaign to further deepen financial inclusion under schemes such as PM Jan Dhan Yojana, PM Jeevan Jyoti Bima and PM Suraksha Bima Yojana.

Taking note of grievances regarding under staffing, the Minister emphasised that all existing and arising vacancies must be filled as soon as possible to deliver better service.

Published on June 27, 2025