Banking System Achieves Multi-Decadal Low in NPAs

The Reserve Bank of India reports a decline in gross non-performing assets (NPAs) to a record low of 2.3% in March 2025. The improvement is attributed to loan write-offs and regulatory measures. Despite improvements, challenges remain, particularly in the agricultural and credit card segments.

The Reserve Bank of India announced a significant decline in the country's gross non-performing assets (NPAs), reaching a multi-decadal low of 2.3% as of March 2025. This marks a notable improvement from the 2.6% NPAs recorded in September 2024, according to the latest Financial Stability Report.

The report highlights that regulatory measures and loan write-offs played critical roles in the reduction of NPAs. Specifically, the write-offs to GNPA ratio for scheduled commercial banks rose to 31.8% in the fiscal year 2025, with private sector banks and foreign banks leading the charge, while public sector banks showed a slight decline in write-offs.

Despite these positive trends, certain sectors continue to face challenges. The agricultural sector contributed 6.1% to the GNPAs, while the credit card segment for public sector banks saw a significant rise to 14.3% of GNPAs. None of the top-100 borrowers have been classified as NPAs, with their loan share remaining stable.