Banks’ GNPA ratio fell to 3.2% in September, shows RBI Trend and Progress report

Loans become NPA if there is no repayment of principal or interest for a period of 90 days.

Indian banks’ gross non-performing assets (GNPA) ratio fell to 3.2 per cent at the end of September, registering a further improvement seen in earlier years, according to the Reserve Bank of India (RBI)’s Trend and Progress of banking in India, 2023.

“The improvement in asset quality of banks that began in 2018-19 continued during 2022-23 and H1:2023-24, with gross non-performing assets (GNPA) ratio at 3.2 per cent at end-September 2023,” said the report.

Loans become NPA if there is no repayment of principal or interest for a period of 90 days.

Further, the capital to risk weighted assets ratio (CRAR), a measure of capital adequacy, of banks stood at 16.8 per cent at end-September 2023, with all bank groups meeting the regulatory minimum requirement and the common equity tier 1 (CET1) ratio requirement, the report showed.

Also, the consolidated balance sheet of scheduled commercial banks in 2022-23 expanded by 12.2 per cent, driven by credit to retail and services sectors; deposit growth also picked up, although it trailed credit growth, the report said.

The improvement in asset quality of banks, measured by their GNPA ratios, that began in 2018-19 continued during 2022-23.

The GNPA ratio of SCBs fell to a decadal low of 3.9 per cent at end-March 2023 and further to 3.2 per cent at end-September 2023.

During 2022-23, around 45 per cent of reduction in GNPAs of SCBs was contributed by recoveries and upgradations, report added.

The slippage ratio — which measures new accretions to NPAs as a share of
standard advances at the beginning of the year — moderated during 2022-23 and further in H1:2023-24.

A mix of write-offs, upgradations and recoveries contributed to reduction in NPAs.