Secretary, Department Financial Services reviews performance of Public Sector Banks for FY 2025–26

1. At a Glance

• Annual stocktaking by the Department of Financial Services (DFS), Ministry of Finance of all Public Sector Banks (PSBs) — chaired on 29 May 2026 by DFS Secretary Shri M. Nagaraju. [S1][S2]
• PSBs posted highest-ever aggregate net profit of ₹1.98 lakh crore, aggregate business of ₹283 lakh crore, and GNPA at historic low of 1.93% in FY 2025–26 — fourth straight year of profitability. [S1][S2]
• Relevant for UPSC GS-III (Indian Economy — banking sector reforms, NPAs, financial inclusion) and Prelims (DFS, RBI prudential ratios, government schemes).

2. Why in the News

• 29 May 2026 review meeting with MDs/CEOs of PSBs. [S1]
• Launch of Coffee Table Book "आपकी पूँजी, आपका अधिकार (Your Money, Your Right)" on tracing/restitution of unclaimed financial assets. [S1]
• Launch of revamped DFS website with multilingual + accessibility features. [S1]

3. Background & Evolution

• DFS (under Ministry of Finance) is the nodal department for PSBs, public sector insurance companies and DFIs. [S1]
• PSB clean-up: AQR (Asset Quality Review, 2015) under RBI exposed hidden stress; GNPA peaked at 14.58% in March 2018. [S2]
• 4R strategy (Recognition, Recapitalisation, Resolution, Reform) + EASE (Enhanced Access & Service Excellence) reforms agenda from 2018.
• IBC, 2016 and PSB recapitalisation (~₹3.1 lakh crore cumulative) restored balance-sheet health.
• PSBs returned to aggregate profitability in FY 2022–23; FY 2025–26 marks 4th consecutive profitable year. [S2]

4. Core Static Facts

• Chair: Shri M. Nagaraju, Secretary, DFS. [S1]
• Parent ministry: Ministry of Finance → DFS. [S1]
• No. of PSBs: 12 (post 2019–20 mergers).
• Net profit FY26: ₹1.98 lakh crore (all-time high). [S1][S2]
• Aggregate business: ₹283 lakh crore (≈ ₹283.3 lakh crore) — growth 12.8% YoY. [S1][S2]
• Aggregate deposits: ₹156.3 lakh crore, +10.6% YoY. [S2]
• Gross advances: ₹127 lakh crore, +15.7% YoY. [S2]
• GNPA: 1.93% (down from peak 14.58% in Mar-2018). [S1][S2]
• CRAR: 16.6% (well above Basel III + CCB requirement of 11.5%). [S2]
• RBI norm reference: Minimum CRAR 9% + Capital Conservation Buffer 2.5%.

5. Multi-Dimensional Analysis

Economic - Record profitability strengthens credit supply for capex cycle; gross advances grew 15.7% YoY. [S2] - Lower GNPA reduces provisioning drag, freeing capital for lending. [S2] - Healthy CRAR (16.6%) means PSBs no longer need budgetary recapitalisation — fiscal positive. [S2]

Administrative / Governance - Annual DFS review is a performance-management ritual ensuring ownership oversight under Bank Nationalisation Acts, 1970 & 1980. - Unclaimed Deposits drive (DEA Fund, RBI's UDGAM portal) — coffee table book "Your Money, Your Right" institutionalises restitution. [S1]

Social / Financial Inclusion - PSBs anchor PMJDY, MUDRA, Stand-Up India, PM Vishwakarma, PM Surya Ghar Muft Bijli Yojana disbursements. - Multilingual + accessibility-enabled DFS website advances digital inclusion. [S1]

Legal / Regulatory - Operates under Banking Regulation Act, 1949; RBI supervision under RBI Act, 1934. - SARFAESI Act, 2002 and IBC, 2016 central to NPA resolution trajectory.

6. Recent Developments (last 12–18 months)

• 29 May 2026 — Annual PSB performance review chaired by DFS Secretary M. Nagaraju. [S1]
• FY 2025–26 net profit ₹1.98 lakh crore; GNPA 1.93%. [S1][S2]
• Coffee Table Book "आपकी पूँजी, आपका अधिकार" released. [S1]
• Revamped DFS website launched (multilingual, accessibility-compliant). [S1]
• H1 FY 2025–26 PSB review held earlier (PIB PRID 2189334). [S2]

7. Prelims Hooks

• PSB aggregate net profit FY 2025–26: ₹1.98 lakh crore — all-time high. [S1]
• PSB GNPA FY26: 1.93% vs peak 14.58% (Mar 2018). [S1][S2]
• PSB CRAR Mar 2026: 16.6%. [S2]
• Aggregate business: ₹283 lakh crore; deposits ₹156.3 lakh crore; advances ₹127 lakh crore. [S1][S2]
• DFS Secretary chairing review: Shri M. Nagaraju. [S1]
• DFS is under Ministry of Finance (not RBI). [S1]
• Coffee table book on unclaimed assets: "आपकी पूँजी, आपका अधिकार / Your Money, Your Right". [S1]
• Number of PSBs post-2020 mergers: 12.
• Unclaimed deposits transferred to DEA Fund maintained by RBI.
• RBI's portal for searching unclaimed deposits: UDGAM.
• PSBs returned to aggregate profit since FY 2022–23; FY26 = 4th consecutive profitable year. [S2]
• Bank Nationalisation Acts: 1970 (14 banks) and 1980 (6 banks).

8. Mains Relevance

• GS-III — Indian Economy: Mobilisation of resources; banking sector reforms; NPA management; financial inclusion.
• GS-II — Governance: Role of statutory regulators; citizen interface (accessibility, multilingual e-gov).

Question stems: 1. "The turnaround in Public Sector Banks reflects success of the 4R strategy more than cyclical recovery." Critically examine. 2. Discuss the institutional mechanisms for tracing and restitution of unclaimed financial assets in India. 3. Despite record profits, PSBs face structural challenges in competing with private banks. Analyse.

9. Related Topics to Study Next

• EASE Reforms Agenda — PSB performance benchmarking framework.
• Insolvency & Bankruptcy Code, 2016 — primary NPA resolution tool.
• PCA (Prompt Corrective Action) framework, RBI — supervisory trigger for weak banks.
• DEA Fund + UDGAM portal — unclaimed deposits ecosystem.
• PMJDY, MUDRA, PM Vishwakarma — financial-inclusion delivery via PSBs.
• NaBFID — DFI for infrastructure, complements PSB lending.
• Bank Nationalisation (1969, 1980) — historical roots.
• Basel III norms / CRAR — capital adequacy framework.

10. Common Errors / Trap Areas

• DFS vs DEA vs DoR: PSB ownership rests with DFS, not Department of Economic Affairs.
• GNPA vs NNPA: Headline 1.93% refers to Gross NPA ratio; NNPA is lower (~0.5%).
• Number of PSBs: 12 (not 21 — pre-2017 figure) post 4-stage consolidation ending 1 April 2020.
• Unclaimed deposits custodian: After 10 years they move to RBI's DEA Fund, not the parent bank.
• CRAR floor: 9% (RBI) + 2.5% CCB = 11.5%, not Basel global 8%.

11. Sources

• [S1] Press Release — Secretary, DFS reviews PSB performance FY 2025–26 (PRID 2266716) — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2266716 — (tier 1)
• [S2] PIB — PSBs record all-time high net profit ₹1.98 lakh crore FY 2025–26 (PRID 2260203) — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2260203 — (tier 1)
• [S3] PIB — DFS Secretary chairs PSB Review Meeting for H1 FY 2025–26 (PRID 2189334) — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2189334 — (tier 1)
• [S4] PIB — GNPA of PSBs declined from peak 14.58% Mar-2018 (PRID 2083695) — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2083695 — (tier 1)