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Indian Banks Hit Historic Low: Gross NPAs Fall to 2.15% in Sept 2025

The gross non-performing asset ratio for Scheduled Commercial Banks in domestic operations has fallen to a historic low of 2.15% as of September 2025. This marks a continuous decline over the last eight financial years, driven by government initiatives like the 4R strategy following the RBI's Asset Quality Review. Public Sector Banks have shown a higher decline in their NPA ratio compared to private and foreign banks since March 2018. The improvement has led to reduced provisioning, enhanced profitability, and indicates stronger asset quality and underwriting standards.

Key Points: Gross NPAs of Indian Banks Hit Historic Low of 2.15%

  • Historic low of 2.15% gross NPA ratio
  • Decline over eight financial years
  • PSBs show higher decline since 2018
  • Result of 4R strategy and RBI's AQR
2 min read

Gross NPAs of Scheduled Commercial Banks for domestic operations reach historic low of 2.15% as of September 2025

Gross NPAs for Indian banks reach a historic low of 2.15% as of September 2025, driven by government reforms and improved asset quality.

"This continuous decline... has led to reduced provisioning... and improved their profitability. - Minister Pankaj Chaudhary"

New Delhi, February 9

The gross NPA ratio, which is gross NPAs as a percentage of gross loans and advances of Scheduled Commercial Banks, for domestic operations, has been continuously declining during the last eight financial years.

They were at a historic low of 2.15 per cent as at the end of September 2025 (provisional data), which is lower than 2010-11 level, Minister of State in the Ministry of Finance Pankaj Chaudhary in a written reply to a question in Lok Sabha said on Monday.

The Reserve Bank of India (RBI) initiated the Asset Quality Review (AQR) in 2015, post which the Government initiated 4R's strategy of recognising NPAs transparently, resolving and recovering value from stressed accounts through clean and effective laws and processes, recapitalising PSBs, and reforms in banks and financial ecosystem to address the problem of rising NPAs and growing loan default.

Enabled by these initiatives, a large drop in gross NPAs was achieved by PSBs, the minister said in his written reply today.

RBI has apprised that the data on gross NPAs of SCBs is not collected by RBI on monthly basis.

However, as per the latest data available with RBI, as of September 2025, for domestic operations, the gross NPA ratio of SCBs was 2.15 per cent, PSBs was 2.50 per cent, Private Sector Banks (PVBs) was 1.73 per cent and Foreign Banks was 0.80 per cent. Also, PSBs have a higher decline in gross NPA ratio in comparison with the PVBs and Foreign Banks since March, 2018.

"This continuous decline in gross NPAs of SCBs, including PSBs, has led to reduced provisioning by them, which in turn has improved their profitability thereby causing positive impact on the business growth. It also indicates that the asset quality as well as underwriting has improved in PSBs supported by a strong balance sheet and sustained profitability," the minister said.

- ANI

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Reader Comments

P
Priya S
While the headline number is good, I'm a bit concerned. The data is provisional and from September 2025? We are in early 2026. Also, PSBs are still at 2.5% while private banks are at 1.73%. Shows there is still room for improvement in public sector banks' efficiency.
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Rohit P
As someone who works in a small manufacturing unit, this is very positive. When banks are profitable and have fewer bad loans, they are more willing to lend to genuine entrepreneurs like us. The IBC process has definitely helped recover money. Good step forward!
S
Sarah B
Interesting data. The decline since 2018 is impressive. However, I hope this improved profitability for PSBs also leads to better customer service and faster loan processing times for the common person. That's the real test of reform.
V
Vikram M
The Asset Quality Review in 2015 was a bitter but necessary medicine. It exposed the real problem. Glad to see sustained efforts are paying off. A strong banking sector is the backbone of a growing economy. Jai Hind!
K
Kavya N
This is good, but we must remain vigilant. Economic cycles can change. Banks must not become complacent in their lending practices. Strong underwriting is key to keeping this ratio low in the long run.

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