India’s scheduled commercial banks continue to record improvement in their asset quality, with the gross and net non-performing assets ratios declining to multi-decadal lows of 2.3 per cent and 0.5 per cent, respectively. RBI’s latest Financial Stability report said, the soundness and resilience of India’s scheduled commercial banks are bolstered by robust capital buffers, multi-decadal low non-performing loans and strong earnings. While overall gross NPAs (non-performing assets) of banks fell to 2.3 per cent of total loans as of March 31 from 2.8 per cent a year ago, public-sector banks registered a sharp decline in NPAs from 3.7 per cent in March 2024 to 2.8 per cent in March this year. According to the RBI data, the gross NPA ratio of private-sector banks remained stable at 2.8 per cent.

Furthermore, macro stress test results showed that the scheduled commercial banks’ aggregate capital levels will continue to remain above the regulatory minimum, even under adverse stress scenarios. The report said, the capital position of the urban cooperative banks strengthened, while that of the non-banking financial companies remained well above the regulatory minimum. The consolidated solvency ratio of the insurance sector, both life and non-life segments, remained above the minimum prescribed threshold limit.