Rapid improvement in health of Indian banks, NPA expected to decline to 2.1% in FY25

Ronit Kawale
Ronit Kawale - Senior Editor
3 Min Read


Mumbai. Some time ago, the biggest challenge facing the Indian banking system was non-performing assets or NPA. However, now the asset quality of banks is improving rapidly. The gross NPA (GNPA) of the Indian banking system may come down to 2.1 percent by the end of the next financial year 2024-25. This estimate has been made in the report of domestic rating agency Care Ratings.

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GNPA is likely to be at 2.5-2.7 percent in the financial year 2023-24. The report says that by the end of the financial year 2024-25, this will improve and the total NPA of the banking system will reduce to 2.1-2.4 percent. According to the report, GNPAs increased from 3.8 per cent in FY 2013-14 to 11.2 per cent in FY 2017-2018 due to the AQR process in 2015-16, which prompted banks to recognize NPAs and reduce unnecessary restructuring. .

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Gross NPA is showing improvement since financial year 2018-19.
The report said that GNPA is showing improvement since the financial year 2018-19 and in the financial year 2022-23 it has come down to a decade low of 3.9 percent. It was 3 percent in the December quarter of the financial year 2023-24.

Good improvement in Agri and Industrial GNPA also
It said that asset quality has improved due to recovery of bad loans and higher write-offs by banks. From a sectoral perspective, the GNPA ratio of the agriculture sector declined to 7 per cent in September, 2023 as compared to 10.1 per cent in March, 2020, while the industrial sector recorded a GNPA ratio of 4.2 per cent in September, 2023 as compared to 14.1 per cent in March, 2020. Did. It was 22.8 percent in March 2018.

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What does NPA of banks mean?
Whenever it comes to losses incurred by banks, you must have heard about NPA. In simple words, NPA means bad loan i.e. bad loan on banks. When someone takes a loan from a bank and is unable to repay it, the loan amount given by the banks gets stuck. Increasing NPA is not considered good for the health of any bank.

Tags: Bank, Bank NPA, NPA

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