The financial health of public sector banks in the country has recently become a subject of intense political debate. While the opposition has raised serious questions regarding the functioning and policies of the banking system, the government has responded with detailed data to counter these criticisms. The Ministry of Finance clarified that structural reforms and policy adjustments implemented over the past few years have placed public banks in a much stronger position. According to data released by the ministry, these concerted reforms enabled all public sector banks to register a massive net profit of nearly two lakh crore rupees during the past year. The government added that cleaning up bank balance sheets has successfully reduced accumulated bad loans, which in turn is driving up profitability across the board.
Ministry responds to criticism from Akhilesh Yadav
This political exchange follows strong criticism from Samajwadi Party chief Akhilesh Yadav, who targeted the government over the state of the country's banking apparatus. Expressing sharp disagreement through public statements and social media, he alleged that the government's handling had made the banking system worse than usury. He criticized the approach to managing banking reforms since 2014, raising numerous issues including penalties for failing to maintain minimum account balances, the demonetization drive, service charges, loan write-offs, access to credit, and the treatment of bank employees. In response to these concerns, the Ministry of Finance highlighted that public sector banks posted a record net profit of 1.98 lakh crore rupees in the 2025-26 fiscal year. The ministry posted on the social media platform X that these banking reforms have pushed the total gross non-performing assets ratio down to a multi-decade low of 1.93 percent.
Addressing minimum balance and recovery agent regulations
Addressing the controversy surrounding minimum balance requirements, the government noted that most public sector banks have either completely waived or substantially reduced penalty charges for failing to maintain minimum balances in regular savings accounts. Furthermore, the ministry highlighted stringent controls implemented over bank recovery agents. The Reserve Bank of India has issued explicit guidelines stating that agents are strictly prohibited from intimidating, harassing, or troubling customers during the recovery process. To ensure that banking services reach every citizen, banking service centers have been established within a five-kilometer radius, connecting villages across the country to formal banking infrastructure. Regarding the implementation of demonetization, the ministry defended it as a critical economic measure designed to curb black money, counterfeit currency, and illicit cross-border financing.
Formalizing the economy and accountability for bank lockers
The ministry explained that demonetization brought a larger volume of transactions into the formal financial framework and provided a major boost to digital payment platforms like UPI. By formalizing economic activities and expanding digital infrastructure, the policy helped integrate India's vast informal economy into the organized banking system while promoting long-term transparency. Addressing allegations regarding the disappearance of precious metals, investment certificates, and heirloom items kept in bank lockers, the ministry stated that the loss of items stored in safety lockers is an extraordinary occurrence. It emphasized that if such an incident happens due to a deficiency in banking services, the concerned bank is fully liable to compensate the customer for the loss.
