The Union Finance Ministry conducted a comprehensive review of public sector banks' performance for the April-September period of the current financial year during a high-level meeting on Wednesday. The session, led by Financial Services Secretary M. Nagaraju, assessed critical banking parameters and future strategies.
Strong Financial Performance Metrics
Public sector banks demonstrated impressive financial results during the first half of FY26. The collective net profit reached ₹93,675 crore, showing consistent year-on-year growth. The aggregate business volume stood at an impressive ₹261 trillion as of September 2025, with advances growing by 12.3% and deposits increasing by 9.6% compared to the previous year.
Asset quality showed remarkable improvement with the gross non-performing assets ratio declining to 2.30% and net NPAs dropping to 0.45%. The banking sector also achieved a return on assets of 1.08% while the cost of funds improved to 4.97%, indicating enhanced operational efficiency and profitability.
Digital Transformation and AI Integration
The meeting featured significant discussions on technological advancements in banking. The Unique Identification Authority of India presented insights on Aadhar integration for digital identity verification and de-duplication processes. Banks showcased their progress in digital banking services through live demonstrations highlighting improved user interfaces, multilingual options, and transaction efficiency.
Secretary Nagaraju emphasized the importance of maintaining inclusive and secure digital banking services while urging banks to strengthen cyber resilience and ensure operational continuity. The adoption of responsible artificial intelligence and data analytics was encouraged to enhance customer service delivery.
Government Schemes and Future Roadmap
The review included detailed assessment of key government initiatives implementation. Banks received directives to strengthen execution of PM Surya Ghar Muft Bijli Yojana, PM Vidya Lakshmi Yojana, PM Vishwakarma Yojana, and JanSamarth digital lending platforms. Emphasis was placed on reducing application processing time and expanding assisted services through business correspondents.
On the recovery front, National Asset Reconstruction Company Ltd acquired debt totaling ₹1.62 trillion and achieved substantial recoveries during the first half. Banks were advised to utilize digital platforms like BAANKNET for faster and transparent resolutions while maintaining robust early warning systems.
Aligning with the Viksit Bharat 2047 vision, public sector banks detailed their progress in champion sectors including renewable energy, green infrastructure, food processing, tourism, and data centers. The meeting concluded with the launch of the Startup Loans module on JanSamarth portal and the release of PSB Manthan 2025 report, outlining the collective roadmap for public sector banks.
