Gross non-performing assets (NPAs) of Scheduled Commercial Banks (SCBs) for domestic operations declined to a historic low of 2.15% as of the end of September 2025, provisional data released by the Reserve Bank of India showed. The level is lower than that recorded in 2010–11 and marks a sustained improvement over the past eight financial years.
According to the RBI, the gross NPA ratio for Public Sector Banks (PSBs) stood at 2.50% as of September 30, 2025, while Private Sector Banks recorded a ratio of 1.73% and Foreign Banks 0.80%. PSBs have seen a sharper decline in NPAs compared with private and foreign banks since March 2018, reflecting the impact of systemic reforms and balance-sheet strengthening.
The decline in NPAs has led to lower provisioning requirements for banks, improving profitability and supporting business growth. It also points to improved asset quality and stronger underwriting standards, particularly in PSBs, backed by healthier balance sheets and sustained earnings.
The government attributed the improvement to a series of coordinated measures taken with the RBI, including the Asset Quality Review initiated in 2015 and the subsequent 4R strategy—recognition, resolution, recapitalisation, and reforms. These steps helped transparently identify stressed assets, strengthen recovery mechanisms, recapitalise PSBs, and reform the broader banking and financial ecosystem.
The slippage ratio, which measures fresh accretion of NPAs, has also improved significantly. For PSBs, the ratio declined to 0.8% in September 2025, compared with 1.8% for private sector banks, indicating better stress detection and credit monitoring in state-owned lenders.
Key initiatives cited include automated early warning systems in PSBs, the shift to a ‘creditor-in-control’ regime under the Insolvency and Bankruptcy Code (IBC), amendments to the SARFAESI Act and recovery laws, strengthening of Debt Recovery Tribunals, and the establishment of specialised stressed-asset management verticals within PSBs. As of March 2025, over 30,000 default cases involving ?13.78 lakh crore were settled at the pre-admission stage under the IBC, reflecting its deterrent and resolution impact.
The information was provided by Pankaj Chaudhary, Minister of State in the Ministry of Finance, in a written reply to a question in the Lok Sabha.