Public Sector Banks Achieve Record Profits as NPA Cleanup Drives Strong Recovery

Overview

Indian Public Sector Banks (PSBs) have significantly improved their financial health, moving from a deep mess of Non-Performing Assets (NPAs) to record profits. In FY25, PSBs reported approximately ₹1.8 trillion in profits, with gross NPAs falling to 2.6% and net NPAs hitting a multi-year low of 0.5%. This turnaround is attributed to loan clean-up efforts, government recapitalization, and write-offs. The Nifty PSU Bank index has outperformed broader market indices over the past year, signalling strong investor confidence. Key banks like Bank of Baroda, Punjab National Bank, and Canara Bank are showing robust business growth and improving asset quality.