Banking Sector Shines: Multi-Decadal Low in Non-Performing Assets

The RBI report reveals that commercial banks performed strongly in 2024-25, with non-performing assets hitting a multi-decadal low. The banking industry showed resilience with strong balance sheets, double-digit credit growth, and robust profitability. Co-operative banks and non-banking financial companies also demonstrated substantial growth and improved asset quality.

In an impressive stride, commercial banks in India are reported to have achieved remarkable performance in the fiscal year 2024-25, as indicated by a Reserve Bank of India (RBI) report published on Monday. The gross non-performing assets (GNPA) ratio fell to a multi-decadal low of 2.2%, marking a robust comeback for the sector.

The banking industry maintained resilience throughout 2024-25, buoyed by solid balance sheets, sustained profitability, and upgraded asset quality, according to the RBI's Report on Trend and Progress of Banking in India 2024-25. Despite moderating growth, bank credit and deposit rates continued in double digits.

The report further highlights that the combined net profit of all scheduled commercial banks surged by 14.8% year-on-year, reaching Rs 4.01 lakh crore. This signifies slower growth compared to the previous year's 32.8% increase, yet a strong return on assets and equity was maintained. Asset quality improvements were also observed across urban co-operative banks and non-banking financial companies, showcasing a sector-wide trend of enhancement.

(With inputs from agencies.)