# Ministry of Finance defends banking sector amid opposition attacks, reports ₹2 lakh crore profit in a year

> The Ministry of Finance has responded to criticism over the state of the banking system by releasing robust financial data. The government stated that public sector banks have earned record profits and non-performing assets have dropped significantly due to sustained reforms.

**Type:** article · **Category:** Business · **Published:** 2026-10-17 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/business/sarvajanika-bainko-ki-sehata-para-vipaksha-ke-hamalo-ke-bicha-vitta-mntralaya-ka-bara-dava-salabhara-men-hua-2-lakha-karora-ka-mun-48681 · **Language:** English
**Tags:** Ministry of Finance, public sector banks, Akhilesh Yadav, banking reforms, NPA, demonetization, Reserve Bank of India

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.

## What this means for you
The data and clarifications issued by the Ministry of Finance have direct practical implications for everyday bank customers and financial stakeholders across the country.

- **Across India:** Ordinary savings account holders in most public sector banks are now shielded from heavy penalty charges for failing to maintain minimum balances, as banks have either waived or reduced these fees.
- **Across India:** Stricter oversight on loan recovery procedures provides customers with legal protection against intimidation, harassment, or improper pressure from aggressive collection agents.
- **Across India:** The expansion of banking service centers within a five-kilometer radius ensures that rural citizens can access essential financial services closer to their homes without traveling long distances.
- **Across India:** Clear regulatory accountability for the loss of valuables stored in bank safety lockers strengthens the legal recourse available to customers facing deficiencies in banking services.

## Why this happened
The turnaround in public bank profitability and the drop in non-performing assets stem directly from targeted policy interventions and structural measures implemented over recent years.

- **Banking Reforms:** Sustained government intervention and aggressive resolution of bad loans cleaned up bank balance sheets, enabling institutions to post record net earnings.
- **Digital Infrastructure:** The push toward formalization through policy measures and the rapid adoption of digital payment systems like UPI expanded the organized financial network.
- **Regulatory Control:** Strict guidelines and oversight enforced by the Reserve Bank of India regarding customer services and recovery protocols improved accountability and transparency across institutions.

## Questions & Answers

### 1. What net profit did public sector banks record in the 2025-26 fiscal year?
Public sector banks recorded a record net profit of 1.98 lakh crore rupees during this period.

### 2. What is the current gross NPA level of public sector banks?
The total gross NPA of public sector banks has dropped to a multi-decade low of 1.93 percent.

### 3. What were the main allegations raised by Akhilesh Yadav against the government?
He criticized the government over minimum balance penalties, demonetization, service charges, loan write-offs, and alleged the banking system had worsened.

### 4. What is the policy regarding penalties for failing to maintain a minimum balance?
Most public sector banks have either completely waived or substantially reduced penalty charges for not maintaining minimum balances in regular savings accounts.

### 5. What are RBI guidelines regarding bank recovery agents?
The RBI has made it clear that recovery agents are strictly prohibited from intimidating, harassing, or troubling customers.

### 6. Who is liable if valuables disappear from a bank locker?
If items are lost from a locker due to a deficiency in banking services, the bank is liable to compensate the customer.

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