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Updated January 2nd, 2024 at 14:19 IST

Gross NPAs of banks declined to decadal low of 3.2% in Sep 2023: RBI

During 2022-23, around 45 per cent of reduction in GNPAs of SCBs was contributed by recoveries and upgrades, RBI said.

Gross NPA improved to 2.11% sequentially while Net NPA appreciated 0.68% sequentially
Gross NPA improved to 2.11% sequentially while Net NPA appreciated 0.68% sequentially | Image:Pexels
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The Indian banking system is having a good time, at least the latest gross non-performing asset (GNPA) ratio of all scheduled commercial banks, according to the RBI report. The gross national performing assets ratios of all scheduled commercial banks fell to a decadal low of 3.9 per cent at end of March 2023 and further improved to 3.2 per cent at end-September 2023, RBI data showed.

During 2022-23, around 45 per cent of reduction in GNPAs of SCBs was contributed by recoveries and upgrades, RBI said.

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As per the report, the slippage ratio, which measures new accretions to NPAs as a share of standard advances at the beginning of the year, moderated during 2022-23 and further in the first half of 2023-2024.

Another important aspect, the GNPA ratio remained the highest for the agricultural sector and the lowest for retail loans as at the end of September 2023. The asset quality of the industrial sector improved further, with its GNPA ratio at 4.2 per cent at end September 2023. The variation of asset quality between bank groups has narrowed over the years.

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The report also mentioned that the improvement in asset quality during 2022-23 was broad-based across industries, with notable gains in mining and quarrying, construction, engineering and basic metals. The gems and jewellery industry has the highest GNPA ratio due to legacy issues.

“A mix of write-offs, upgrades and recoveries contributed to reduction in NPAs,” the RBI said. The increase in the proportion of standard assets to total advances was sustained for all bank groups during 2022-23. The amount of NPAs decreased for all bank groups, except SFBs

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The share of large borrowal accounts (accounts with total exposure of Rs 5 crore and above in total advances declined to 46.4 per cent at end-March 2023 from 47.8 per cent a year ago. Their contribution to total NPAs also fell during the year to 53.9 per cent from 64.0 per cent. The SMA-1 and SMA-2 ratios, which indicate potential stress.

In addition to drastic improvement in asset quality of banks, the provision coverage ratio (PCR) (without write-off adjusted) rose to 75.3 per cent by end-September 2023.

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Published December 28th, 2023 at 16:24 IST

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