Gross NPAs of scheduled commercial banks declined to 1.73% as of March 2026 from 2.75% in March 2024. NPAs of Public Sector Banks also fell sharply to Rs 2.45 lakh crore from Rs 6.16 lakh crore in March 2021, the government told Rajya Sabha.
Gross Non-Performing Assets (NPAs) of scheduled commercial banks declined to 1.73 per cent as of March 2026 from 2.75 per cent at the end of March 2024, reflecting a sustained improvement, the Rajya Sabha was told on Tuesday.
NPA Decline Across Banking Sectors
According to data provided by the Ministry of Finance, NPAs of Public Sector Banks (PSBs) declined sharply from Rs 6.16 lakh crore as of March 31, 2021, to Rs 2.45 lakh crore as of March 31, 2026. Private Sector Banks also recorded a decline in NPAs over the period, from Rs 2.02 lakh crore in March 2021 to Rs 1.26 lakh crore in March 2026. NPAs of foreign banks fell from Rs 10,199 crore to Rs 3,990 crore during the same period. Small Finance Banks, however, reported NPAs of Rs 10,448 crore as of March 2026, compared with Rs 5,971 crore in March 2021. NPAs of Urban Cooperative Banks declined from Rs 37,993 crore to Rs 21,769 crore during the period.
Understanding NPA Closure and Loan Write-Offs
The government said NPAs are closed when full recovery is received or through compromise settlements between borrowers and banks, in accordance with Reserve Bank of India (RBI) guidelines and the internal policies of banks. It also clarified that loan write-offs are an accounting procedure used by banks to clean their balance sheets of bad debts and do not amount to a waiver of the borrower's liability. Borrowers remain liable for repayment, while banks continue to pursue recovery actions.
Government and RBI Measures for NPA Reduction
The government and RBI have taken several measures to reduce and recover NPAs, including implementation of the Insolvency and Bankruptcy Code (IBC), amendments to the SARFAESI Act and the Recovery of Debt and Bankruptcy Act, and the introduction of comprehensive Early Warning Systems in public sector banks.
PSBs have also established dedicated Stressed Asset Management Verticals for focused resolution and recovery, while the RBI's Prudential Framework for Resolution of Stressed Assets provides incentives for lenders to adopt resolution plans at an early stage.
Measures for Cooperative Societies
For Multi-State Cooperative Societies, amendments introduced in 2023 include the appointment of a Cooperative Ombudsman to address member grievances, Information Officers to improve transparency and concurrent audits for societies with turnover or deposits exceeding Rs 500 crore.
The government said these measures are aimed at strengthening recovery mechanisms, improving financial stability and protecting the confidence of investors and depositors in the banking and cooperative sectors. (ANI)
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