India
Banking sector profile — Asia-Pacific
Data as of September 2026 • TGB Intelligence Unit
Policy rate as of 7 October 2026: 5.50% (source: Reserve Bank of India)
Banking sector at a glance
Structure and performance
India's banking system is dominated by state ownership. At end-March 2025 there were 139 commercial banks: 12 public sector banks, 21 private sector banks, 44 foreign banks, 11 small finance banks, six payments banks, 43 regional rural banks and two local area banks. Public sector banks held 54.9% of the consolidated balance sheet of scheduled commercial banks and private banks 37.1%. State Bank of India is by far the largest lender, followed by HDFC Bank and ICICI Bank. Regional rural banks were consolidated to 28 from May 2025.
Banks are overwhelmingly deposit-funded: deposits of ₹241.5 lakh crore made up 77% of scheduled commercial banks' liabilities at end-March 2025, with term deposits accounting for more than 60%. Loans of ₹191.2 lakh crore and investments of ₹79.4 lakh crore, largely government securities held partly to meet the 18% statutory liquidity ratio, dominate assets. In 2025-26 credit grew 14.5% against deposit growth of 11.5%, led by personal and services loans, while net interest margins held broadly stable despite policy easing.
Balance sheets are the strongest in decades. The gross NPA ratio fell to 1.8% in March 2026 and the annual slippage ratio to 1.2%, with provision coverage of 75.6%. The capital adequacy ratio reached 17.7% and the CET1 ratio 15.3%, with a Tier 1 leverage ratio of 8.2%, a liquidity coverage ratio of 124.2% and a net stable funding ratio of 122.1%. Profit after tax rose to ₹4.05 lakh crore in 2025-26 from ₹3.78 lakh crore a year earlier.
The key risks are funding pressure as credit outpaces deposits, rapid growth in personal loans, and elevated write-offs at private and foreign banks. Agriculture carries the highest sectoral NPA ratio, at 5.1%, and accounted for 37.2% of gross NPAs in March 2026. The West Asia conflict has raised fuel and food inflation and weakened the rupee to about ₹96 per US dollar by September 2026; the Monetary Policy Committee held the repo rate at 5.25% until October 2026, when it raised it by 25bp to 5.50%.
Structural trends
The shifts shaping banking in India.
Credit outpacing deposits: scheduled commercial banks' credit grew 14.5% in 2025-26 against deposit growth of 11.5%, driven by personal and services loans.
Asset-quality repair: the gross NPA ratio fell from 2.2% in March 2025 to a multi-decadal low of 1.8% in March 2026.
Policy easing: the RBI cut the repo rate by a cumulative 125bp between February and December 2025 to 5.25% and lowered the cash reserve ratio to 3.0%.
Rural bank consolidation: under 'One State-One RRB', regional rural banks were amalgamated from 43 to 28 with effect from 1 May 2025.
Leading institutions
Largest banks in India by total assets.
| # | Bank | Total assets (US$) | Type |
|---|---|---|---|
| 1 | State Bank of India | US$890.2bn | State-owned |
| 2 | HDFC Bank | US$525.0bn | Commercial |
| 3 | ICICI Bank | US$311.8bn | Commercial |
| 4 | Bank of Baroda | US$224.8bn | State-owned |
| 5 | Punjab National Bank | US$217.5bn | State-owned |
| 6 | Axis Bank | US$208.2bn | Commercial |
| 7 | Canara Bank | US$201.9bn | State-owned |
| 8 | Union Bank of India | US$169.8bn | State-owned |
Total assets, latest audited financial year (FY2025/26, year to 31 March 2026)
Supervision and capital rules
The RBI regulates and supervises commercial, small finance, payments and co-operative banks and sets monetary policy through its Monetary Policy Committee. Basel III applies with a minimum capital ratio of 9% (11.5% including the capital conservation buffer) and a Tier 1 minimum of 7%, one percentage point above Basel norms; the leverage ratio floor is 4% for domestic systemically important banks and 3.5% for others. The DICGC insures deposits up to ₹5 lakh per depositor. In 2026 the RBI proposed dropping the Investment Fluctuation Reserve, consolidated its supervisory instructions, introduced compensation of up to ₹25,000 for small-value fraud losses, and issued draft guidelines to resume licensing of urban co-operative banks.
What changed in 2026
- In February 2026 the RBI proposed compensating customers up to ₹25,000 for small-value fraud losses, doubling the collateral-free MSME loan limit to ₹20 lakh and allowing bank lending to REITs.
- In April 2026 the RBI proposed removing the Investment Fluctuation Reserve requirement and easing conditions for counting quarterly profits in regulatory capital.
- In June 2026 the RBI's Financial Stability Report put the banks' gross NPA ratio at 1.8% and capital adequacy at a multi-decadal high of 17.7%.
- In August 2026 the Monetary Policy Committee unanimously held the repo rate at 5.25%, and the RBI issued draft guidelines to resume licensing of urban co-operative banks; on 7 October 2026 the Committee raised the repo rate by 25bp to 5.50%.
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