Gross NPAs of banks fall to multi-decade low of 2.1% as of end September 2025: RBI report

In absolute terms, gross NPAs of banks stood at Rs 4.32 lakh crore in 2024-25 compared to Rs 4.81 lakh crore in 2023-24. Public sector banks’ (PSBs) gross NPAs fell to 2.6 per cent from 3.5 per cent, private sector lenders (PVBs) edged lower to 1.8 per cent from 1.9 per cent, and foreign banks improved to 0.9 per cent from 1.2 per cent. In contrast, small finance banks’ asset quality worsened to 3.6 per cent from 2.4 per cent.

Close to 42.8 per cent of the reduction in GNPAs of banks in 2024-25 was aided by better recoveries from bad loans and upgrades. Lenders recovered Rs 67,693 crore of bad loans while upgraded Rs 50,087 crore worth of stressed accounts.

Gross NPA Ratio

The slippage ratio, which measures new accretions to NPAs as a share of standard advances at the beginning of the year, declined for the fifth consecutive year to 1.4 per cent at end-March 2025.

As of September 2025, the ratio further dipped to 1.3 per cent.

Slippage ratio of both PSBs and PVBs declined, although it remained higher for PVBs.

Led by gains in asset quality, the proportion of standard assets in total advances increased for SCBs to 97.7 per cent at end-March 2025, as against 97.2 per cent as at end March 2024.

This was on account of an improvement in standard assets for PSBs (97.2 per cent vs 96.3 per cent) and foreign banks (99.1 per cent vs 98.8 per cent).

The report further states that the share of large borrowal accounts (with total exposure of Rs 5 crore and above) in total advances of banks remained broadly unchanged at 43.9 per cent at end-March 2025.

The special mention accounts-0 (SMA-0), special mention accounts-2 (SMA-2) and NPAs as a proportion of gross advances of scheduled commercial banks declined for both overall and large borrowal accounts in 2024-25. The special mention accounts-1 (SMA-1) ratio for banks increased during 2024-25, driven by an increase in SMA-1 for PSBs.

SMA-0 accounts are those wherein the principal or interest payment is not overdue for more than 30 days but the account is showing signs of incipient stress.

SMA-1 accounts are those wherein the principal or interest payment is overdue between 31-60 days. SMA-2 accounts are those wherein the principal or interest payment is overdue between 61-90 days.

During 2024-25, restructured standard advances ratio declined for overall as well as for large borrowal accounts of banks, led by PSBs. Restructured standard advances ratio represents proportion of restructured standard advances in gross advances

Private sector banks had a lower share of restructured standard advances in gross advances compared to PSBs at end-March 2025.