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Gross NPAs of Public Sector Banks (PSBs) fell to a historic low of 1.9% as of 31.3.2026, from 7.3% in FY2022, while net profit rose to a record ₹1.98 lakh crore and aggregate business crossed ₹283 lakh crore, the Finance Ministry told the Rajya Sabha.
MSME loans grew 19.6% and retail loans 19.8% year-on-year in FY2025-26, with Capital Adequacy (CRAR) improving to 16.6%.
Separately, Regional Rural Banks (RRBs) posted their highest-ever consolidated net profit of ₹10,177 crore in FY2025-26, with total deposits of ₹7,68,621 crore and CRAR of 15.0%, per NABARD data placed before Rajya Sabha the same day.
The Government launched ECLGS 5.0 in May 2026 with ₹2,55,000 crore guarantee coverage (including ₹5,000 crore for scheduled passenger airlines) to ease liquidity stress from the West Asia Crisis.
Provide guaranteed additional credit to businesses facing short-term liquidity mismatches from the West Asia Crisis
Key: Launched May 2026; guarantee via NCGTC; 100% cover for MSMEs, 90% for non-MSMEs/airlines; total ceiling ₹2,55,000 crore incl. ₹5,000 crore for airlines; airline borrowers eligible up to 100% of Q4 FY25-26 peak credit outstanding, capped at ₹1,500 crore per borrower
India's 'bad bank' — acquires and resolves large stressed/NPA assets from banks
Key: Incorporated July 2021, RBI licence October 2021; part of the broader clean-up that has driven PSB GNPA down alongside IBC resolutions and PCA-driven discipline
Consolidate Regional Rural Banks for scale and stronger balance sheets
Key: 26 RRBs amalgamated across 10 States and 1 UT effective 1 May 2025, taking the total number of RRBs in India to 28
Statutory basis for RRBs; ownership split 50% Centre : 35% Sponsor Bank : 15% State Government; the first RRB was Prathama Bank (Moradabad, sponsored by Syndicate Bank)
Time-bound resolution mechanism that, alongside the PCA framework and NARCL, has been a key driver of the fall in PSB gross NPAs since 2018
Early-intervention mechanism triggered by breaches in capital adequacy, asset quality (NNPA) and leverage; restricts branch expansion, dividends and lending till a bank's financials recover
| Metric | PSBs (31.3.2026) | RRBs (FY2025-26) |
|---|---|---|
| Net Profit | ₹1.98 lakh crore (highest-ever) | ₹10,177 crore (highest-ever) |
| Gross NPA | 1.9% | 5.3% |
| CRAR | 16.6% | 15.0% |
| Governing framework | Banking Regulation Act, 1949 / Basel III | Regional Rural Banks Act, 1976 |
Gross NPA is the total value of loans overdue beyond 90 days as a share of total advances, before deducting provisions already set aside for expected losses. Net NPA subtracts those provisions, showing the bank's real residual exposure
Simple Analogy: Gross NPA is the total unpaid bill; Net NPA is what's left after subtracting the money already kept aside (provisioned) to cover it
GS Paper 3 > Indian Economy > Banking & Financial Sector
Banking Awareness > NPA, CRAR & Regulatory Framework
Recurring — bank-health data is placed before Parliament almost every session
RBI's early-intervention mechanism restricting a weak bank's operations based on capital, asset-quality and leverage triggers
National Asset Reconstruction Company Limited — India's 'bad bank' for large stressed-asset resolution, incorporated July 2021