Gross NPAs of public sector banks fell to 2.5% at the end of March quarter
By Ankur Chandra | Updated at: Jul 22, 2025 05:51 PM IST
New Delhi, July 22, 2025 – Public sector banks (PSBs) in India have achieved a significant reduction in gross non-performing assets (NPAs), with the gross NPA ratio falling to 2.58% as of March 2025, down from 9.11% in March 2021, according to data released by the Ministry of Finance.
Decline in Gross NPAs Over Five Years
The gross NPAs in absolute terms declined by over ₹3.32 lakh crore over a five-year span. The trend in gross NPAs and the ratio to total advances is as follows:
| As on | Gross NPAs (₹ crore) | Gross NPA Ratio (%) |
|---|---|---|
| 31-Mar-2021 | 6,16,616 | 9.11 |
| 31-Mar-2022 | 5,40,958 | 7.28 |
| 31-Mar-2023 | 4,28,197 | 4.97 |
| 31-Mar-2024 | 3,39,541 | 3.47 |
| 31-Mar-2025 | 2,83,650 | 2.58 |
Source: RBI (provisional data for FY 2024–25)
This progressive improvement reflects the impact of comprehensive reforms and tighter asset classification and resolution norms implemented by the Reserve Bank of India (RBI) and the Government.
Structural and Regulatory Measures Driving Recovery
The sharp drop in NPAs is attributed to multiple initiatives including:
- Insolvency and Bankruptcy Code (IBC): A key turning point in credit discipline, the IBC shifted control away from defaulting promoters, included personal guarantors under its ambit, and barred wilful defaulters from resolution participation.
- Strengthening Debt Recovery Mechanisms: Amendments to the SARFAESI Act and the Recovery of Debt and Bankruptcy Act, and a hike in Debt Recovery Tribunal (DRT) pecuniary limits from ₹10 lakh to ₹20 lakh, have improved recovery efficiency in higher-value cases.
- Bank-Level Asset Management: PSBs established specialized verticals for stressed asset monitoring and intensified recovery efforts through Business Correspondents and “feet-on-street” models.
- RBI’s Prudential Framework: RBI’s guidelines emphasized early recognition and time-bound resolution of stressed assets, with incentives for prompt action and implementation of resolution plans.
Strengthened Valuation and Sale Norms
To safeguard against inflated valuations and ensure fair asset disposal, the RBI mandated:
- At least two independent valuation reports for properties worth ₹50 crore or more,
- Valuation of immovable assets every three years by empaneled professionals,
- Use of e-auctions for stressed asset sales to improve price discovery,
- Accountability of valuers through reporting to the Indian Banks Association in cases of inflated assessments.
Ministerial Statement
“This performance underscores the impact of decisive structural reforms undertaken over the past few years,” said Shri Pankaj Chaudhary, Minister of State for Finance, in a written reply to the Rajya Sabha. “The combined efforts of the Government and RBI have placed PSBs on a more robust and accountable lending path.”
About the Public Sector Banks (PSBs)
India’s public sector banks comprise majority state-owned institutions listed on domestic stock exchanges, including the State Bank of India, Punjab National Bank, Bank of Baroda, and others. These banks are critical to financial inclusion and credit distribution, particularly in priority sectors. The reduction in NPAs boosts capital adequacy and enhances lending capacity across the sector.
REF:https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2146819
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