Gross NPAs Plunge From 9.11% To 2.58% Between March 2021–March 2025: Govt

The gross NPA ratio of Indian banks has dropped from 9.11percent in March 2021 to 2.58 percent by March 2025, reflecting improved recoveries, write-offs, and tighter asset quality management by PSBs

Public Sector Banks have set up specialised stressed assets management verticals and branches for effective monitoring and focused follow-up of NPA accounts

Source : Unsplash

Gross non-performing assets (NPAs) of public sector banks have been declining during the last five financial years, the Centre told the Parliament on Tuesday.

The NPAs have reduced from 9.11 per cent to 2.58 from March 2021 to March 2025, said Minister of State for Finance Pankaj Chaudhary in a written reply in Rajya Sabha. Public sector banks saw a sharp decline in their gross NPAs from RS 6.17 lakh crore in March 2021 to RS 2.84 lakh crore in March 2025, he added.

Non-Performing Assets (NPA) are loans or advances for which the borrower has not made principal or interest payments for a predetermined amount of time, usually ninety days. While, Gross NPA refers to the total value of loans and advances in a bank's portfolio.

According to the MoS Finance, as of March 31, 2021, the gross NPA was Rs 6,16,616 crore, about 9.11 per cent, which witnessed a downturn at Rs 5,40,958 crore or 7.28 per cent in the same period 2022.

 In 2023, the gross NPA stood at Rs 4,28,197 crore, reaching at 4.97 per cent.

The gross NPA figures for the year 2024 further decelerated at Rs 3,39,541 crore, reaching at 3.47 per cent.

MoS Chaudhary apprised the House that the government and RBI have taken comprehensive measures to recover and reduce NPAs.

 As part of the reforms, a change in credit culture has been effected, with the Insolvency and Bankruptcy Code (IBC) fundamentally changing the creditor-borrower relationship, taking away control of the defaulting company from promoters/owners, and debarring wilful defaulters from the resolution process.

To make the process more stringent, a personal guarantor to a corporate debtor has also been brought under the ambit of IBC, the minister said

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Recovery of Debt and Bankruptcy Act have been amended to make them more effective.

Pecuniary jurisdiction of Debt Recovery Tribunals (DRTs) was increased from Rs 10 lakhs to Rs 20 lakhs to enable the DRTs to focus on high-value cases, resulting in higher recovery for the banks and financial institutions, he said.

Public Sector Banks have set up specialised stressed assets management verticals and branches for effective monitoring and focused follow-up of NPA accounts, which facilitates quicker and improved resolution/ recoveries. Deployment of Business correspondents and adoption of Feet-on-street model have also boosted the recovery trajectory of NPAs in banks, he said.

Prudential Framework for resolution of stressed assets was issued by RBI to provide a framework for early recognition, reporting and time bound resolution of stressed assets, with a build-in incentive to lenders for early adoption of a resolution plan.

As per RBI guidelines, banks have a board approved policy in place for valuation of properties done by professionally qualified independent valuers. RBI mandates banks to have a procedure for empanelment of professional valuers based on prescribed minimum qualifications and maintain a register of approved list of valuers.

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)