Indian Banks Show Resilient Recovery in NPAs and Credit Growth

The Reserve Bank of India revealed that the gross non-performing assets (NPAs) ratio of Indian scheduled commercial banks dropped to 2% in December 2025, marking an improvement from 2.5% in the previous year. This progress reflects better asset management across sectors like retail, services, industry, and agriculture.

RBI Governor Sanjay Malhotra addressed concerns regarding potential stress from geopolitical conflicts and supply chain disruptions, stating that banks do not face systemic profitability or health issues. Despite specific challenges, the overall banking sector remains robust, with banks showcasing steady recoveries, upgrades, and write-offs.

Credit growth surged to 13.8% year-on-year by March 2026, driven by monetary policy easing and spirited economic activity. Foreign banks led with the highest credit growth, while private banks gained a larger share in incremental credit. The report also noted a slight dip in non-SLR investments as banks focus on supporting credit demand.