SBI share price: Financial Services Secretary M Nagaraju has exuded confidence that the combined profit of public sector banks (PSBs) should cross ₹2 lakh crore in the current financial year (FY26), owing to the good health of these banks.
Stressing that the Indian banking sector is in good shape, Nagaraju said credit growth of PSBs is at 12% this year, which is tremendously “good”, while deposit growth at 10% is also reasonably very good.
“As I said, banks are the bellwether for the strength of the economy. Therefore, they are resilient. We have very prudent management systems in place under the regulator, the RBI. So we are not much worried about the external factors negatively impacting our banking sector,” he told PTI in an interview.
Asked about the profitability of PSBs, “This year (ongoing financial year), we will cross ₹2 lakh crore. We already touched almost ₹1 lakh crore in the first half…I think we will cross ₹2 lakh crore.”
The combined profit of PSBs would double in three years. PSBs’ profit crossed from ₹1 lakh crore to ₹1.05 lakh crore in FY23, touched another high of ₹1.41 lakh crore in 2023-24, and subsequently reached ₹1.78 lakh crore in FY25 on account of significant improvement in asset quality, credit growth, a healthy capital adequacy ratio, and rising return on assets.
As far as the asset quality of PSBs is concerned, gross NPA is at a record low of 2.30%, and net NPA is at 3% at the end of September 2025.
Provisioning coverage ratio (PCR) improved to 94.63% at the end of September 2025, while the capital adequacy ratio of PSBs stood at 15.96% at the end of the first half of the current fiscal.
PSBs declared a dividend of ₹34,990 crore (GoI share ₹22,699 crore) in FY 2024-25 against a total dividend of ₹27,830 crore to shareholders (GoI share ₹18,013 crore) in FY 2023-24.
During the current financial year, the Government of India has successfully mobilised resources through the divestment of its shareholding in select PSBs.
Amounts of ₹2,627.52 crore and ₹1,419.36 crore were realised through the Offer for Sale (OFS) of the Government of India’s shares in Bank of Maharashtra and Indian Overseas Bank, respectively.
The Finance Ministry is considering raising the foreign direct investment (FDI) limit in public sector banks (PSBs) to 49% from the current 20% to strengthen their capital base.
“We are still considering, and an inter-ministerial consultation is on for raising the FDI cap to 49%,” Nagaraju has said.
At present, FDI in PSBs is capped at 20%, while private sector banks can receive up to 74% foreign investment. In private banks, FDI up to 49% is permitted through the automatic route, while investment beyond 49% and up to 74% requires government approval.
FDI in public sector banks may rise to 49%
Recently, PTI reported that the Finance Ministry is contemplating hiking foreign direct investment in public sector banks to 49% from the current 20% to enhance their capital base.
“We are still considering, and an inter-ministerial consultation is on for raising the FDI cap to 49%,” Financial Services Secretary M Nagaraju said.
The FDI limit in public sector banks (PSBs) and private sector banks is 20% and 74%, respectively.
In the case of private sector banks, up to 49% of FDI is allowed through the automatic route, and beyond 49% and up to 74%, the government route is applicable.
The holding of the number of shares of union government in 12 PSBs has not declined since 2020.
Even though the number of shares held by the union government has not declined, the respective percentage of its shareholding has declined in some of these banks due to the raising of capital through the issuance of fresh shares by banks.
About the IDBI Bank strategic sale, the secretary said financial bids would be invited during this month or next month.
As regards big banks, Nagaraju said the Indian economy would need 3-4 big lenders.
“We need 3-4 big banks for a country of our size,” Nagaraju said.