Indian banks' gross NPA ratio at multi-year low of 2.8%, net NPA down to 0.6% in FY24: RBI Financial Stability Report

The Reserve Bank of India (RBI) highlighted significant improvements in Indian scheduled commercial banks (SCBs) by March 2024 in its 29th Financial Stability Report. The report noted a notable decline in SCBs' gross non-performing assets (NPA) ratio to a multi-year low of 2.8%, with the net NPA ratio falling to 0.6%. This improvement was driven by increased profitability and effective management of non-performing assets. SCBs also achieved near-decadal highs in return on assets (RoA) at 1.3% and return on equity (RoE) at 13.8%. As of March 2024, SCBs maintained robust capital adequacy ratios, with a capital-to-risk-weighted assets ratio (CRAR) of 16.8% and a common equity tier 1 (CET1) ratio of 13.9%.

The RBI's stress tests indicated SCBs' resilience under various scenarios, projecting system-level CRARs of 16.1%, 14.4%, and 13.0% by March 2025. Non-banking financial companies (NBFCs) also reported strong metrics, with a CRAR of 26.6%, a gross NPA ratio of 4.0% as of March 2024, and a robust return on assets (ROA) of 3.3%. Despite global economic risks like geopolitical tensions and high public debt levels, the RBI affirmed confidence in the Indian economy and financial system, emphasizing their robustness and ability to support sustained economic growth through continued credit expansion and financial stability.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.