The Ministry of Finance’s Department of Financial Services (DFS) closed 2025 with an expanded set of reforms that strengthened public sector banks, deepened financial inclusion and accelerated India’s transition to a digital payments economy. According to the year-ender report, DFS built on measures such as the Banking Laws (Amendment) Act 2025, the Your Money, Your Right campaign, EASE reforms, credit innovations and digital payment initiatives under the DigiDhan Mission.
A major storyline in 2025 was the health of India’s banking system. The gross non-performing asset ratio of scheduled commercial banks declined sharply to 2.22 percent, while public sector banks saw GNPA fall to 2.58 percent. Provision coverage ratios touched historic highs, with SCBs rising to over 93 percent and PSBs over 94 percent, reflecting stronger balance sheets and lower stress. Capital adequacy also improved, and the sector recorded its highest-ever aggregate net profit, with SCBs earning ₹4.01 lakh crore in 2024–25 and PSBs contributing ₹1.78 lakh crore.
DFS highlighted that reforms pursued through the EASE and EASENext agenda helped PSBs digitize customer journeys, build data capabilities, modernize cybersecurity, expand partnerships with fintechs and e-commerce platforms, and strengthen governance. The Banking Laws (Amendment) Act 2025 further modernized governance standards by enhancing depositor and investor protection, improving audit quality and shifting statutory reporting to the RBI. Investor confidence was illustrated by SBI’s record ₹25,000 crore QIP and overseas bond issuance.
On the citizen-facing front, 2025 saw a nationwide campaign titled “Your Money, Your Right” to help people reclaim unclaimed deposits, shares, dividends, mutual funds and insurance payouts. The campaign led to the restoration of ₹4,500 crore to rightful owners and standardised SOPs to simplify claims. DFS also pushed reforms in IBPS examinations, using Aadhaar-based voluntary verification and allowing candidates access to answer keys and response sheets from 2026–27 to enhance transparency.
Financial inclusion continued as a core priority through schemes such as PMJDY, PMSBY, PMJJBY, MUDRA, Stand Up India and the Atal Pension Yojana, expanding access to banking, credit, insurance and pensions for low-income and marginalized communities. On the payments side, the DigiDhan Mission sustained India’s global leadership in digital transactions, which rose to 22,831 crore transactions in FY 2024–25 at a CAGR of 41 percent, with transaction value increasing from ₹1,962 lakh crore in FY 2017–18 to ₹3,509 lakh crore.
DFS also documented improvements in Regional Rural Banks, which recorded their second-highest profits, strengthened asset quality, and achieved record capital adequacy. Structural reforms such as RRB amalgamations aligned with the “One State, One RRB” vision and enabled scale efficiencies. Pension amendments, central government nominees on RRB boards and digital upgrades further strengthened governance and service delivery.
Insurance sector reforms advanced through the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act 2025, which increased the FDI limit in Indian insurance companies to 100 percent, eased business conditions, reduced minimum entry capital for foreign reinsurers and established a Policyholders’ Education and Protection Fund to improve awareness.
In stressed asset resolution, the National Asset Reconstruction Company Limited (NARCL) accelerated acquisitions and recoveries. By December 2025, it had acquired 30 borrower entities involving ₹1.63 lakh crore in debt, recovered over ₹4,500 crore in 20 accounts and continued resolution efforts under a government-backed guarantee of ₹30,600 crore.
DFS concluded that the banking system has entered an upward credit-growth cycle supported by strong capital buffers, lower NPAs and enhanced digital capacity. Through reforms spanning governance, transparency, financial inclusion, asset resolution and digital innovation, the department positioned public financial institutions to support India’s economic ambitions and the broader Viksit Bharat 2047 roadmap.
