New Delhi, July 22, 2025:
In a major boost to India’s banking sector, gross non-performing assets (NPAs) of public sector banks have significantly declined from 9.11% in March 2021 to just 2.58% by March 2025, as per data shared by the Reserve Bank of India (RBI).
This positive trend highlights the impact of sustained efforts by the Government of India and the RBI, who have undertaken a series of structural and institutional reforms over the past five years to reduce and recover bad loans in the banking system.
📊 Year-wise Gross NPA Details:
| As on | Gross NPAs (₹ crore) | Gross NPA Ratio (%) |
|---|---|---|
| 31.03.2021 | 6,16,616 | 9.11 |
| 31.03.2022 | 5,40,958 | 7.28 |
| 31.03.2023 | 4,28,197 | 4.97 |
| 31.03.2024 | 3,39,541 | 3.47 |
| 31.03.2025 | 2,83,650 | 2.58 |
Source: RBI (provisional data for FY 2024–25)
🔧 Reforms Driving NPA Reduction
Minister of State for Finance, Shri Pankaj Chaudhary, outlined the key initiatives responsible for this turnaround in a written reply to the Rajya Sabha:
✅ Major Steps Taken:
- Insolvency and Bankruptcy Code (IBC): Changed the borrower-lender relationship, removed promoters from defaulting companies, and barred willful defaulters. Personal guarantors also brought under IBC.
- Legal Reforms: SARFAESI and Recovery of Debts Acts amended for stronger enforcement and faster recovery.
- DRT Threshold Raised: Jurisdiction of Debt Recovery Tribunals increased from ₹10 lakh to ₹20 lakh to focus on high-value recoveries.
- Specialized NPA Units: PSBs created dedicated branches and verticals for stressed asset monitoring and resolution, aided by business correspondents and field officers.
- RBI’s Prudential Framework: Provided for early identification, time-bound reporting, and incentives for early resolution of stressed assets.
🏢 Property Valuation & Transparency Measures
To ensure fair recovery and avoid overvaluation, RBI mandates:
- Properties valued above ₹50 crore require two independent valuation reports by empanelled professionals.
- Valuation of immovable assets must be conducted every three years.
- For recovery under SARFAESI, banks must reassess asset value before sale.
- E-auctions are promoted to attract more buyers and ensure better price discovery.
- Valuers found inflating asset prices are reported to the Indian Banks Association (IBA).
This significant drop in NPAs reflects the success of reforms, technology-driven monitoring, legal action, and financial discipline implemented across the banking system. It marks a major achievement in strengthening India’s public sector banks.
