Bank Profitability Soars as Bad Debts Hit 13-Year Low

Bank profitability in India improved for the sixth consecutive year, with gross bad debts dropping to a 13-year low, according to RBI data. Strong macroeconomic fundamentals bolstered the banking sector. Return on assets reached 1.4%, while return on equity hit 14.6% in 2023-24.

India's banking sector is basking in profitability for the sixth consecutive year, as gross bad debts or non-performing assets have plummeted to a 13-year low of 2.7%, according to the RBI data unveiled Thursday.

The robust health of India's macroeconomic environment has played a pivotal role in reinforcing the efficacy and strength of both domestic banking and nonbanking financial sectors.

The return on assets (RoA) climbed to 1.4%, and return on equity (RoE) improved to 14.6% during 2023-24, as stated in the Report on Trend and Progress of Banking in India 2023-24. Asset quality showed significant advancement, with the GNPA ratio falling markedly by the end of both March and September 2024.

(With inputs from agencies.)