Bank Asset Quality Strengthens in Q1FY26
Banks' gross non-performing assets (NPAs) dropped in Q1FY26, marking an improvement in asset quality, per Care Edge Ratings. The GNPA ratio fell to 2.3% from 2.7% last year, while NNPAs remained steady. Challenges persist in microfinance and unsecured loans, despite overall sectoral progress.
- Country:
- India
The banking sector witnessed a significant improvement in asset quality as gross non-performing assets (NPAs) declined notably in the first quarter of FY26, according to a recent report by Care Edge Ratings. With the gross NPA (GNPA) ratio decreasing to 2.3% from 2.7% a year earlier, the industry's health is showing positive momentum.
In an analysis of key financial metrics, the report indicated a 9.5% year-on-year reduction in GNPAs, bringing the total down to Rs 4.18 lakh crore in Q1FY26. Concurrently, the net non-performing asset (NNPA) ratio remained stable at 0.5% for the second consecutive quarter, highlighting continuous stability in banks' core financial health.
However, the journey is not without its challenges. Sequentially, GNPAs in scheduled commercial banks increased by 0.5% quarter-on-quarter due to pressures in the microfinance and unsecured loan sectors. Nonetheless, public sector banks bucked the trend with declining GNPAs across most segments, attributed to improved asset quality and stringent retail lending norms, though the agriculture segment remains under stress.
(With inputs from agencies.)
Google News