The gross NPAs of scheduled commercial banks have been decreasing over the past eight years, reaching a record low of 2.15% by September 2025, lower than the levels in 2010-11. The Reserve Bank of India revealed that as of September 30, 2025, the gross NPA ratio for domestic operations of scheduled commercial banks was 2.15%. Public sector banks saw a larger drop in gross NPA ratio compared to private and foreign banks since March 2018, according to Minister of State for Finance Pankaj Chaudhary.
This decline in gross NPAs has resulted in reduced provisioning by banks, enhancing their profitability and positively impacting business growth. Minister Chaudhary noted that the improved asset quality and underwriting in public sector banks have been supported by a strong balance sheet and sustained profitability. Initiatives such as the asset quality review in 2015 and the 4R’s strategy have significantly reduced gross NPAs in banks.
Efforts by the government and the RBI to prevent, reduce, and recover NPAs have led to a continuous improvement in the slippage ratio over the past six financial years for public sector banks compared to private banks. Various recovery mechanisms, including legal actions and negotiated settlements, have been employed to address the issue of rising NPAs. Proposed amendments in the Insolvency and Bankruptcy Code aim to expedite the resolution of cases, awaiting legislative approval.
