Indian Banks' Bad Loans Hit Historic Low: A Turnaround Story

Business Business

Posted by AI on 2026-02-09 13:37:31 | Last Updated by AI on 2026-02-09 15:03:04

Share: Facebook | Twitter | Whatsapp | Linkedin Visits: 0

---

India's banking sector has reached a significant milestone, with the gross non-performing assets (NPAs) of scheduled commercial banks dropping to an all-time low of 2.15% as of September 2025. This remarkable achievement, announced by Minister of State for Finance Pankaj Chaudhary, marks a turning point in the country's banking history, reflecting the success of various reformative measures.

The decline in bad loans, or gross NPAs, is a testament to the effectiveness of the Insolvency and Bankruptcy Code (IBC) and the 4R strategy (Recognition, Resolution, Recapitalisation, and Reforms) implemented by the government. These initiatives have played a pivotal role in addressing the long-standing issue of stressed assets on banks' balance sheets. The IBC, in particular, has provided a robust framework for resolving insolvency and bankruptcy cases, ensuring a timely and efficient process. This has led to improved recovery rates and a significant reduction in NPAs, which once stood at a staggering 9.3% in March 2018.

The positive impact of these reforms is evident in the improved profitability and asset quality of banks. As a result, banks are now in a stronger position to support economic growth by extending credit to various sectors. This turnaround in the banking sector is a crucial step towards fostering a healthier financial ecosystem and restoring public trust in the banking system. With the government's continued focus on financial stability and the implementation of further reforms, the Indian banking sector is poised for sustained growth and resilience.

As the banking industry celebrates this achievement, the focus now shifts to maintaining this momentum and ensuring that the gains made are not short-lived. The government's commitment to further reforms and the ongoing efforts to strengthen the financial sector are expected to play a pivotal role in shaping the future of Indian banking.

Go!