New Delhi, February 8 Encouraged by the good performance of public sector banks (PSBs), Financial Services Secretary M Nagaraju has expressed confidence that the combined profits of these banks will exceed Rs 2 lakh crore in the current financial year.
Emphasizing that the Indian banking sector is in good shape, he said that the credit growth of PSBs is at 12 per cent this year, which is "tremendously good," while the deposit growth at 10 per cent is also reasonably very good.
"As I said, banks are an indicator of the strength of the economy. Therefore, they are resilient. We have very prudent management systems in place under the regulator, RBI. So we are not much worried about external factors negatively impacting our banking sector," he told PTI in an interview.
Asked about the profitability of PSBs, he said, "this year (the ongoing financial year) we will exceed Rs 2 lakh crore. We have already reached almost Rs 1 lakh crore in the first half...I think we will exceed Rs 2 lakh crore."
The combined profits of PSBs will double in three years. PSBs' profits rose from Rs 1 lakh crore to Rs 1.05 lakh crore in FY23, reached another high of Rs 1.41 lakh crore in 2023-24, and subsequently reached Rs 1.78 lakh crore in FY25 due to significant improvements in asset quality, credit growth, a healthy capital adequacy ratio, and rising return on assets.
Regarding the asset quality of PSBs, gross NPA is at a record low of 2.30 per cent, and net NPA at 3 per cent as of September 2025. The provisioning coverage ratio (PCR) improved to 94.63 per cent as of September 2025, while the capital adequacy ratio of PSBs stood at 15.96 per cent at the end of the first half of the current fiscal.
PSBs declared a dividend of Rs 34,990 crore (Government share of Rs 22,699 crore) in FY 2024-25, compared to a total dividend of Rs 27,830 crore to shareholders (Government of India share of Rs 18,013 crore) in FY 2023-24.
During the current financial year, the Government of India has successfully mobilized resources through the divestment of its stake in select PSBs.
Amounts of Rs 2,627.52 crore and Rs 1,419.36 crore were raised through the Offer for Sale (OFS) of Government of India's shares in Bank of Maharashtra and Indian Overseas Bank, respectively.
The Finance Ministry is considering raising the foreign direct investment (FDI) limit in public sector banks (PSBs) to 49 per cent from the current 20 per cent to strengthen their capital base.
"We are still considering, and inter-ministerial consultations are underway to raise the FDI cap to 49 per cent," Nagaraju said.
Currently, FDI in PSBs is capped at 20 per cent, while private sector banks can receive up to 74 per cent foreign investment. In private banks, FDI up to 49 per cent is permitted through the automatic route, while investment beyond 49 per cent and up to 74 per cent requires government approval.
