RBI’s Financial Stability Report June 2025
According to the Reserve Bank of India (RBI), gross non-performing assets (GNPAs) in the banking sector have decreased to a multi-decade low of 2.3% as of March 2025, down from 2.6% as of September 2024. However, the RBI warns that GNPAs could increase to 2.6% as of March 2027, according to its biannual Financial Stability Report (FSR). The reduction in bad loans is a result of ongoing improvement in asset quality, particularly in the post-AQR banking environment.
The June 2025 Financial Stability Report from the RBI indicates a major decline in gross NPAs to multi-decade low. The warning is of a moderated rise in GNPAs over the next two years. It reflects the long-term and sustained improvement in banking sector asset quality particularly following AQR and capital infusion to banks. It has significant policy implications for both banking health, credit growth, and resilience of the financial system.
Current Status of GNPAs (as of March 2025)
- GNPA ratio of Scheduled Commercial Banks (SCBs) dated 2.3%
- Percentage as of September 2024 2.6%
- GNPAs projected as of March 2027 2.6%
Key Factors Leading to the GNPA Reduction
- Private and foreign banks have aggressively written-off loan, so GNPAs continue to decrease.
- The rate of new asset slippages remains low: slippage ratio stable at 0.7%.
- Asset quality has improved, largely in the post-2015 AQR period.
- None of the top-100 borrowers have been classified as NPAs.
Sector-Wise GNPA Insights
- Agricultural sector: Highest GNPA at 6.1%.
- Personal loans: Stable GNPA at 1.2%.