Gross NPA of 46 banks may marginally rise to 2.5% by March 2027: RBI Financial Stability Report

Banks

The Reserve Bank of India’s (RBI) Financial Stability Report released on June 30 said that the gross non-performing assets (NPA) of the 46 banks may marginally rise to 2.5 percent by March 2027, from 2.3 percent in March 2025.

Further it added that under the baseline scenario and to 5.6 per cent and 5.3 per cent, under adverse scenario 1 and adverse scenario 2, respectively.

This was the result of the stress test conducted by the to assess the resilience of the banking system to macroeconomic shocks.

The tests project capital ratios of banks under three scenarios - a baseline and two adverse macro scenarios over a two-year horizon, incorporating credit risk, market risk and interest rate risk in the banking book in the framework.

Schedule commercial continued to record improvement in their asset quality, with the gross NPA ratio and net NPA ratio declining to multi-decadal lows of 2.3 per cent and 0.5 per cent, respectively.
The half-yearly slippage ratio, measuring new accretions to NPAs as a share of standard advances at the beginning of the half-year, remained stable at 0.7 per cent, release said.

The provisioning coverage ratio (PCR) of banks at 76.3 per cent in March 2025 was marginally lower than that in September 2024.

The write-offs to GNPA ratio for SCBs moved up marginally to 31.8 per cent in 2024-25 from 29.5 per cent in the previous year, led by private banks and foreign banks, while write-offs by PSBs exhibited a marginal decline, RBI report said.

Disaggregation of NPA movements revealed that write-offs were a major component of NPA reduction over the last 5 years, RBI report added.