Economic Survey: NPA recovery rate in banks doubles in FY25

Banks

• NPA recovery rate in scheduled banks doubled from 13.2% in FY18 to 26.2% in FY25
• Slippage ratio improved from 7.1% in FY18 to 1.3% in FY26 as of September 2025
• Bank credit growth reached 14.5% YoY in December 2025, highest in FY26

Did our AI summary help?

The recovery rate in non-performing assets (NPAs) in schedule commercial banks has approximately doubled from 13.2 per cent in FY18 to 26.2 per cent in FY25, according to the Economic Survey tabled by finance minister Nirmala Sitharaman on January 29.

The slippage ratio of SCBs, which measures the amount of new accretion to NPAs during the financial year as a percentage of standard loans and advances as at the beginning of financial year, has also improved from 7.1 per cent in FY18 to 1.4 per cent in FY25 and further to 1.3 per cent in FY26, as of September 2025.

The recovery rate through the Insolvency and Bankruptcy Code, 2016 (IBC/Code) has improved from 28.3 per cent in FY24 to 36.6 per cent in FY25. Through the SARFESI, it has improved from 25.4 per cent in FY24 to 31.5 per cent in FY25, Economic Survey said.

Banks’ profit after tax increased by 16.9 per cent (YoY) in FY25 and by 3.8 per cent (YoY) by September 2025.

The return on equity for SCBs has experienced a marginal decline from 13.8 per cent in March 2024 to 13.6 per cent in March 2025; however, it has maintained a steady upward trend since March 2020.

On the other hand, the return on assets has remained stable at 1.4 per cent in March 2025, consistent with the level recorded in March 2024.

As of September 2025, these metrics stand at 12.5 per cent and 1.3 per cent, respectively.

In FY26, a moderation in bank credit growth was observed across major sectors compared to the same period last year, though recent months have shown an uptick.

As of 31 December 2025, the (YoY) growth in outstanding credit by SCBs increased to 14.5 per cent compared to 11.2 per cent in December 2024. December 2025 marked the highest YoY growth rates for both bank credit and non-food credit in FY26 (up to December 2025).