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The Union finance ministry on Wednesday held a meeting with the top officials of public sector banks (PSBs) to review their performance during the April-September period of the ongoing financial year.The meeting, chaired by M. Nagaraju, secretary of the department of financial services, reviewed key areas including financial performance, asset quality, recovery and resolution, digital transformation and progress under government flagship schemes, according to a finance ministry statement.During the meeting, the Unique Identification Authority of India (UIDAI) made a presentation on the usage of Aadhar for digital identity integration and de-duplication. Discussions were also held on human-artificial intelligence (AI) convergence in banking.At the meeting, PSBs shared their performance report. PSBs reported a net profit of ₹93,675 crore during H1 FY26, reflecting steady year-on-year growth. Aggregate business stood at ₹261 trillion as of September 2025, with advances growing by 12.3% (y-o-y) and deposits by 9.6% (y-o-y). The gross non-performing assets (NPA) ratio of PSBs declined to 2.30% and net NPAs to 0.45% , indicating continued improvement in asset quality. The return on assets was 1.08%, while the cost of funds improved to 4.97%, reflecting better efficiency and profitability.Nagaraju appreciated the consistent performance of PSBs and stressed the need to sustain momentum in low-cost deposit mobilisation and credit growth, particularly in the micro, small, and medium enterprises (MSME) and agriculture sectors. Banks were advised to further strengthen risk management, underwriting practices, and operational resilience to sustain profitability in an evolving financial environment.The state-run banks also showcased advancements in digital banking and mobile app services. A live demonstration highlighted improvements in user interface, multilingual options and transaction efficiency. Nagaraju emphasised that digital banking must remain inclusive and secure, urging banks to enhance cyber resilience, ensure operational continuity and improve the quality and timeliness of grievance redressal. Adoption of responsible AI and data analytics was encouraged to improve customer service delivery.The progress under key government schemes was reviewed in detail. Banks were advised to strengthen implementation of the PM Surya Ghar Muft Bijli Yojana, PM Vidya Lakshmi Yojana, PM Vishwakarma Yojana, and JanSamarth digital lending initiatives, with emphasis on reducing application turnaround time and expanding assisted journeys through business correspondents and State Level Bankers' Committee (SLBC) coordination.The secretary also emphasised the importance of the ongoing “Aapki Poonji, Aapka Adhikar” campaign. Directions were given to ensure seamless implementation, enhance public awareness of the integrated unclaimed asset portal and intensify outreach in underserved and aspirational districts.On the asset quality front, it was noted that PSBs continued to register improvement in recoveries. The National Asset Reconstruction Company Ltd (NARCL) has acquired debt aggregating ₹1.62 trillion and achieved significant recoveries during the first half of the year. Banks were advised to leverage digital platforms such as BAANKNET for faster and transparent resolutions and to maintain focus on strengthening early warning systems.In alignment with the government’s vision of Viksit Bharat by 2047, PSBs detailed progress under identified champion sectors such as renewable energy, green infrastructure, food processing, tourism and data centres. Banks were encouraged to scale up credit in these sectors, adopt sustainable financing practices and enhance preparedness for the transition to the expected credit loss (ECL) framework through robust models and data-driven provisioning.Nagaraju urged PSBs to sustain financial discipline, deepen customer-centricity, and lead India’s banking transformation with prudence, innovation and inclusion as guiding principles. The meeting also witnessed the launch of the Startup Loans module on the JanSamarth portal and the release of the report of PSB Manthan 2025, outlining the public sector banks’ collective vision and roadmap towards Viksit Bharat 2047.
