FinMin reviews PSBs’ Q1 performance, urges lending priorities

The finance ministry on Wednesday convened a review meeting with the heads of public sector banks (PSBs) to assess their financial performance in the first quarter of FY2025-26. The three-hour-long meeting, chaired by Financial Services Secretary M Nagaraju, focused on profitability trends and strategies to boost lending to the productive sectors of the economy, according to sources.

According to information,in Q1 FY26, PSBs collectively reported a record profit of Rs44,218 crore, an 11 per cent year-on-year increase compared to Rs39,974 crore in the June quarter of FY25. The rise translates into an absolute profit growth of Rs4,244 crore across the sector.Market leader State Bank of India (SBI) contributed significantly to the earnings, accounting for nearly 43 per cent of the total profits. SBI reported a net profit of Rs19,160 crore, up 12 per cent from the year-ago period, further consolidating its dominant position in the country’s public banking landscape.

Among smaller lenders, Indian Overseas Bank (IOB) recorded the sharpest growth, with net profit surging 76 per cent to Rs1,111 crore. Punjab & Sind Bank followed with a 48 per cent increase, posting profits of Rs269 crore.However, not all PSBs witnessed an upward trajectory. Punjab National Bank (PNB) reported a steep 48 per cent decline in profit, slipping to Rs1,675 crore from Rs3,252 crore in the same quarter last year.Other lenders recorded steady growth: Central Bank of India saw its net profit rise 32.8 per cent to Rs1,169 crore, Indian Bank posted a 23.7 per cent increase to Rs2,973 crore, and Bank of Maharashtra logged a 23.2 per cent improvement at Rs1,593 crore.

The finance ministry emphasized the need for PSBs to step up credit disbursement in key sectors to sustain economic momentum,according to sources.Secretary Nagaraju underlined that strong profitability must be complemented with proactive lending to ensure inclusive growth.The meeting also discussed operational efficiency, asset quality, and steps needed to strengthen financial resilience as PSBs head into the remainder of the fiscal year.

(Business Correspondent)