India's Bank NPAs Hit Historic Low of 2.15%, Best in Over a Decade

The Reserve Bank of India (RBI) has apprised that the data on gross NPAs of banks is not collected by it on a monthly basis. However, as per the latest data available with the apex bank, as on September 30, 2025, for domestic operations, the gross NPA ratio of scheduled commercial banks was 2.15 per cent. In the case of public sector banks, the gross NPA ratio was 2.50 per cent, while for private sector banks it was 1.73 per cent, and for foreign banks the figure stood at 0.8 per cent.

Also, public sector banks recorded a higher decline in gross NPA ratio in comparison with private banks and foreign banks since March 2018, Minister of State for Finance Pankaj Chaudhary said in a written reply to a question in the Lok Sabha.

This continuous decline in gross NPAs of banks has led to reduced provisioning by them, which in turn has improved their profitability, thereby causing a positive impact on 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.

The RBI initiated the asset quality review in 2015, after 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 public sector banks, and reforms in banks and the 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 the banks, the minister said.

Comprehensive measures have been taken by the government and the RBI to prevent, reduce and recover NPAs. Due to this, the slippage ratio, which reflects the fresh accretion of NPAs as a percentage of standard advances, has been continuously improving for the last six financial years in respect of public sector banks in comparison with private banks.

The government and the RBI have also been working in coordination to strengthen the various recovery mechanisms available. These include filing of suits in civil courts or in Debts Recovery Tribunals, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, through negotiated settlements/compromise, and through sale of non-performing assets. In addition to these, various amendments have been proposed in IBC to address the delays in completion of CIRPs, which are under legislative approval, the minister added.

- IANS