Banks’ Gross NPAs Drop To 3.2% In Sept-End, Helped By Retail Loans

Syllabus: GS-III

Subject: Indian Economy

Topic: Issues Relating to Planning, Mobilization of Resources

Context: Write-offs, recoveries contributed to reduction in NPAs: RBI data

Highlights of the Report:

  • Positive trends in GNPA reduction are attributed to write-offs, recoveries, and improved industrial sector asset quality.
  • Agricultural sector has the highest GNPA ratio, while retail loans have the lowest.
  • Industrial sector’s GNPA ratio improved to 4.2% by September 2023.
  • Slippage ratio (new NPAs as a share of standard advances) moderated in 2022-23 and H1 FY24.
  • SCBs’ consolidated balance sheet expanded by 12.2% in 2022-23, driven by credit to retail and services.
  • Gross bank credit accelerated at 15%, led by the personal loans and services sector.


  • Unsecured loans pose higher credit risk, comprising 25.5% of total credit as of March 2023.
  • NBFCs recorded a 16.1% gross advances growth in 2022-23, primarily fueled by unsecured loans.
  • Emphasis on robust governance and risk management to safeguard banking and payment systems from cyber threats.


  • High interconnectedness between banks and NBFCs necessitates attention to minimize contagion risk.
  • NBFCs urged to diversify funding sources, reducing reliance on bank funding.
  • Banks advised to regularly evaluate exposure to NBFCs and assess individual NBFCs’ exposure to multiple banks.


What are NPA’s?

  • A NPA is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
  • The RBI has defined NPAs as assets that stop generating income for banks.
  • Banks are required to make their NPAs numbers public and to the RBI as well from time to time.
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