Strategic policy interventions by the Department of Financial Services (DFS) have significantly strengthened the financial position of India’s banking sector, with key indicators pointing to improved asset quality, profitability and digital adoption.
According to an official statement, the gross non-performing asset (NPA) ratio of scheduled commercial banks (SCBs) declined to 2.22 percent, while public sector banks (PSBs) recorded a gross NPA ratio of 2.58 percent, reflecting sustained balance sheet clean-up efforts across the sector.
The improvement is further reflected in the provision coverage ratio (PCR) of SCBs, which rose sharply from 49.31 percent in March 2015 to 93.14 percent by March 2025, indicating stronger buffers against potential loan losses.
Profitability indicators also showed a sharp upswing. During the financial year 2024–25, scheduled commercial banks posted their highest-ever aggregate net profit of ₹4.01 lakh crore. Public sector banks contributed ₹1.78 lakh crore to this figure, marking their strongest annual performance to date. In the first half of FY 2025–26 alone, PSBs reported a net profit of ₹0.94 lakh crore, maintaining the upward momentum.
Balance sheet expansion has accompanied the profit growth. Global deposits of PSBs increased from ₹71.95 lakh crore in March 2015 to ₹146.27 lakh crore by September 2025, while global advances rose from ₹56.16 lakh crore to ₹114.85 lakh crore over the same period, underscoring improved credit growth and depositor confidence.
Dividend payouts by PSBs also registered an increase. In FY 2024–25, public sector banks declared dividends amounting to ₹34,990 crore, of which the government’s share stood at ₹22,699 crore. This compares with a total dividend payout of ₹27,830 crore in FY 2023–24, including ₹18,013 crore as the government’s share.
The DFS has also strengthened its leadership role in digital financial infrastructure through the DIGIDHAN Mission. Official data shows that the volume of digital payment transactions surged to 22,831 crore in FY 2024–25, growing at a compound annual growth rate of 41 percent from 2,071 crore transactions in FY 2017–18. The total value of digital transactions increased from ₹1,962 lakh crore to ₹3,509 lakh crore during the same period.
Financial inclusion initiatives remain a key focus area. Government schemes such as the Pradhan Mantri Jan Dhan Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, MUDRA, Stand Up India, Atal Pension Yojana and NPS Vatsalya have expanded their reach substantially. As of 2025, these programmes have enabled millions of citizens, particularly from marginalised sections, to access banking, insurance and pension services, the statement said.
