DFS praises PSU Banks for Strong Perfomance, Read Highlights of Review Meeting
The Department of Financial Services (DFS) Secretary, Shri M. Nagaraju, chaired a high-level review meeting in New Delhi with the Managing Directors and Chief Executive Officers of Public Sector Banks (PSBs) to evaluate their performance for the first half (H1) of FY 2025–26.
The meeting focused on key performance areas, including financial results, asset quality, recovery and resolution, digital transformation, and the progress of various government flagship schemes. The UIDAI also made a presentation on the use of Aadhaar for digital identity integration and de-duplication, while discussions were held on the theme of human-AI convergence in banking.
Strong Financial Performance and Improved Asset Quality
Public Sector Banks reported a net profit of ₹93,675 crore in H1 FY 2025–26, marking a steady year-on-year growth. The aggregate business of PSBs stood at ₹261 lakh crore as of September 2025, supported by a 12.3% growth in advances and a 9.6% rise in deposits.
Asset quality continued to improve, with Gross NPAs declining to a multi-year low of 2.30% and Net NPAs at just 0.45%. The Return on Assets (RoA) was 1.08%, while the cost of funds dropped to 4.97%, reflecting enhanced efficiency and profitability.
Shri Nagaraju commended the consistent performance of PSBs and urged them to maintain momentum in low-cost deposit mobilisation and credit growth, especially in the MSME and agriculture sectors. He also emphasised the need for stronger risk management, sound underwriting practices, and operational resilience amid changing market dynamics.
Push for Digital Banking and Cybersecurity
The meeting showcased the digital progress of PSBs, including upgrades in mobile banking applications, multilingual user interfaces, and faster transaction capabilities.
The DFS Secretary stressed that digital banking must remain inclusive, accessible, and secure. He urged banks to further strengthen cybersecurity frameworks, improve grievance redressal systems, and enhance operational continuity. The adoption of responsible Artificial Intelligence (AI) and data analytics was encouraged to deliver personalised and efficient customer service.
Review of Government Schemes and Financial Inclusion
Progress under key government schemes was reviewed in detail, including the PM Surya Ghar Muft Bijli Yojana, PM Vidya Lakshmi Yojana, PM Vishwakarma Yojana, and JanSamarth digital lending initiatives. Banks were advised to reduce loan processing time, expand assisted journeys through Business Correspondents, and coordinate effectively with SLBCs for wider outreach.
The Secretary also reviewed financial inclusion programmes such as PMJDY, PMJJBY, PMSBY, APY, PMMY, and PM SVANidhi. He highlighted the importance of the “Aapki Poonji, Aapka Adhikar” campaign, directing banks to ensure seamless implementation and public awareness of the integrated unclaimed asset portal, especially in underserved and aspirational districts.
Focus on Recovery and Resolution
On the asset recovery front, the Secretary noted that PSBs had achieved steady improvements in recoveries. The National Asset Reconstruction Company Limited (NARCL) has already acquired debts worth ₹1.62 lakh crore and achieved significant recoveries during H1 FY 2025–26.
Banks were advised to use digital platforms like BAANKNET for faster and more transparent resolutions, while strengthening early warning systems to prevent future stress.
Champion Sectors and Sustainable Financing
In line with the government’s vision of Viksit Bharat @2047, PSBs shared updates on their credit expansion in Champion Sectors — including Renewable Energy, Green Infrastructure, Food Processing, Tourism, and Data Centres.
The DFS Secretary encouraged banks to scale up credit in these growth sectors, promote sustainable finance, and prepare for the transition to the Expected Credit Loss (ECL) framework using robust data-driven models.
Launch of Startup Loans Module and PSB Manthan 2025 Report
The meeting also saw the launch of the Startup Loans module on the JanSamarth Portal, designed to simplify digital access to credit for startups. Additionally, the report of PSB Manthan 2025 was released, outlining a collective roadmap for PSBs towards the vision of Viksit Bharat @2047.
