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Public Sector Banks’ Gross NPAs Fall to 2.58%, Loan Write-Offs Surpass ₹12 Lakh Crore

A six-year low in consumer inflation prompted a 100-basis-point rate cut to encourage fresh credit flows.

Gross NPAs of state-run banks down to 2.58% in March 2025
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Overview

  • Gross NPA ratio of public sector banks fell from 9.11% in March 2021 to 2.58% in March 2025, according to official data.
  • State-run banks have written off more than ₹12.08 lakh crore of non-performing loans since FY2015–16, with recovery efforts continuing under IBC, SARFAESI and DRT mechanisms.
  • Structural reforms such as the Insolvency and Bankruptcy Code and amendments to SARFAESI and the Recovery of Debt Act have strengthened asset recovery and resolution processes.
  • CPI inflation eased to 2.1% in June 2025, the lowest in six years, enabling the RBI to cut its policy rate by 100 basis points so far in 2025.
  • Government interventions including buffer stock releases, subsidised “Bharat” retail sales and an increased income tax exemption limit aim to stabilise prices and support disposable incomes.