SCBs see a sharp drop in NPA ratio, falling to 2.67% in June 2024 from 11.18% in March 2018: FinMin

New Delhi: The gross non-performing assets (NPA) ratio for scheduled commercial banks (SCBs) witnessed a significant reduction to 2.67 percent in June 2024 from 11.18 percent in March 2018, the Finance Ministry stated on Saturday.
The ministry further added in a social media post on X that the asset quality has improved significantly while the provisional coverage ratio (PCR) has also increased from 49.31 percent in March 2015 to a healthy 92.52 percent in June, showing an increased resilience.
NPA is a loan that has not generated income or interest on the principal amount for the banks for a specified period of time. If the borrower has not made interest or principal payments for at least 90 days, the principal amount will be categorised as the NPA.
On the other hand, the provision coverage ratio (PCR) is the percentage or amount of the fund that a bank has kept aside to cover losses from the bad debts.
The post added that the gross NPA ratio of public sector banks (PSBs) declined to 3.32 percent in June 2024 from 4.97 percent in March 2015 and from a peak of 14.58 percent in March 2018.
The SCBs recorded the highest-ever aggregate net profit of Rs 3.50 lakh crore in the financial year 2023-24 against the net profit of Rs 2.63 lakh crore in FY 2022-23, as per the ministry.
The government emphasised its proactive support for the banking ecosystem, addressing both business needs and employee welfare to ensure stability, transparency, and growth.
Over the past decade, the government highlighted multiple citizen- and staff-centric reformative initiatives undertaken to strengthen the sector.
The Reserve Bank of India (RBI) initiated the Asset Quality Review (AQR) in 2015 to identify and address stress within the banking system.
This led to transparent recognition by banks and the withdrawal of special treatment for restructured loans. Stressed accounts were reclassified as Non-Performing Assets (NPAs), and expected losses on stressed loans, previously unaccounted for, were provided for, resulting in higher NPAs that peaked in 2018.
During the financial year 2023-24, public sector banks (PSBs) recorded their highest-ever aggregate net profit of Rs 1.41 lakh crore, compared to Rs 1.05 lakh crore in 2022-23. In the first half of 2024-25 alone, PSBs registered a net profit of Rs0.86 lakh crore.
In the past three years, PSBs have paid a total dividend of Rs 61,964 crore.
The number of bank branches has risen from 117,990 in March 2014 to 160,501 in September 2024. Of these, 100,686 branches are located in rural and semi-urban areas.