Public sector banks post record Rs 1.78 lakh crore profit in FY25, driven by reforms

Public sector banks (PSBs) reported a record cumulative net profit of Rs 1.78 lakh crore for the fiscal year ended March 2025, marking a 26 per cent increase over the previous year, according to data published on stock exchanges.All 12 PSBs posted a profit, reflecting the sector’s continued turnaround since its losses in FY18.In FY24, the total profit stood at Rs 1.41 lakh crore. The year-on-year growth in absolute terms for FY25 was approximately Rs 37,100 crore, news agency PTI reported. The country’s largest lender, State Bank of India (SBI), accounted for over 40 per cent of the total PSB earnings, with a standalone net profit of Rs 70,901 crore—16 per cent higher than the Rs 61,077 crore it posted in FY24.Punjab National Bank registered the highest percentage growth among all PSBs, with a 102 per cent rise in net profit to Rs 16,630 crore. It was followed by Punjab & Sind Bank, which recorded a 71 per cent increase to Rs 1,016 crore.Several other PSBs also posted significant profit jumps:The banking sector's turnaround from a cumulative loss of Rs 85,390 crore in FY18 to record profits in FY25 is attributed to a series of reforms and initiatives by the central government.The transformation was guided by the Modi government's implementation of the 4R strategy — Recognising NPAs transparently, Resolution and recovery, Recapitalising PSBs, and Reforms in the financial ecosystem.Between FY17 and FY21, the government infused Rs 3,10,997 crore into PSBs under its recapitalisation plan. This effort helped stabilise the sector, enabling banks to strengthen their balance sheets and avoid defaults.In addition to capital support, reforms such as responsible lending, improved governance, digitisation, and consolidation of PSBs contributed to the sector’s resurgence.