Reserve Bank of India Reports Banking Sector Resilience
India's banking sector shows resilience with declining non-performing assets and strong balance sheets, despite moderated profit growth due to lower interest margins.
Insights:
The Reserve Bank of India (RBI) released its Trend and Progress of Banking report on December 29, 2025, highlighting the resilience of India's banking sector amid a decline in non-performing assets (NPAs) and strong balance sheet growth. The report indicates that the gross NPA ratio fell to 2.1% at the end of September 2025, down from 2.2% in March 2025, marking a multi-decade low for the sector. This improvement in asset quality was particularly evident in retail loan segments such as housing, education, and credit cards. However, within the retail segment, loans for consumer durables continue to show the highest bad loan ratios. Similarly, in the industrial loan sector, the leather and leather products segment remains a point of concern due to elevated bad loan ratios.
