Banking System Sees Record Low in Non-Performing Assets
The Reserve Bank of India reported that the gross non-performing assets (NPAs) in the banking system fell to a multi-decade low of 2.3% by March 2025. Despite expected rises, proactive measures, including asset quality reviews and write-offs, have helped banks combat NPAs, especially in the agricultural sector.
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- India
The Reserve Bank of India announced a historic drop in gross non-performing assets (NPAs) for the Indian banking system, reaching a multi-decade low of 2.3% in March 2025. This decline is marked by proactive measures from the RBI alongside a slight expected rise in NPAs by 2027 to 2.6% for most banks.
The RBI's Financial Stability Report sheds light on the challenges surrounding NPAs, notably among shadow banks with projections of a rise in dud assets from 2.9% to 3.3% by March 2026. The report underscores loan write-offs as a key reason for the reduction in NPAs, with the write-offs to GNPA ratio jumping to 31.8% in FY25.
A sectoral breakdown revealed that agriculture contributed the most to GNPAs at 6.1%, while personal loans remained stable. However, public sector banks saw GNPAs in the credit card segment surge to 14.3%, spotlighting the ongoing risk and necessary vigilance required in certain lending areas.
(With inputs from agencies.)
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