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Banks’ asset quality improves with gross NPAs declining to 2%: RBI
Apr-09-2026

The Reserve Bank of India (RBI) has underscored the improvement in asset quality of Indian scheduled commercial banks and said that their gross non-performing assets (NPAs) ratio has declined further to 2% in December 2025. Gross NPAs represent the proportion of loans unpaid for over 90 days. The Gross NPAs ratio of the banking system was at 2.5% during year ago period. RBI noted that the quality of assets has improved across sectors, including retail loans, services, industry, and agriculture. It said that the NPAs in retail loans eased to 1%, services to 1.7%, industry to 1.8%, and agriculture to 5.7% in December 2025. It added that NPAs have been improving for many quarters, reflecting sustained recoveries, upgrades, and write-offs.

Besides, RBI has indicated that the West Asia conflict and the supply chain disruptions are unlikely to pose any systemic concerns to the banks’ profitability and health. However, it flagged that there will be pockets and sectors that will be hit because of the conflict. 

It said that a robust credit growth has been recorded during H2FY26, owing to monetary policy easing and strong economic activity. Meanwhile, the central bank's report said the credit growth of scheduled commercial banks accelerated to 13.8% year-on-year as on March 15, 2026 from 11% a year ago. Across bank groups, credit growth of foreign banks remained the highest at 14.7% year-on-year, followed by public sector banks and private banks. It highlighted that the public sector banks accounted for the largest share of incremental credit year-on-year as on March 15, 2026. 

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