Decline to Decades: Banking System's NPAs Hit Multi-Decadal Low

The Reserve Bank of India reports a decline in gross non-performing assets (NPAs) in the banking system, reaching a low of 2.3% as of March 2025. Despite forecasts indicating an increase by March 2027, the banking system is showing signs of recovering from challenges faced in the previous decade.

The Reserve Bank of India (RBI) has announced a significant decline in the gross non-performing assets (NPAs) of the country's banking system, hitting a multi-decadal low of 2.3% in March 2025. This marks an improvement from the 2.6% recorded in September 2024.

The half-yearly Reserve Financial Stability Report anticipates a potential increase in NPAs for 46 banks, projecting a rise to 2.6% by March 2027. This development suggests ongoing challenges within certain sectors, despite the overall positive trend.

Over the past few years, the banking system has grappled with the issue of dud assets. However, recent improvements in key financial ratios highlight a steady recovery from the difficulties encountered over the latter part of the previous decade.

(With inputs from agencies.)