The Reserve Bank of India anticipates a decline in banks’ gross non-performing assets (GNPA) ratio to 2.5% by FY25, following a record low of 2.8% in FY24. State-run banks led the reduction, with their GNPA ratio improving to 3.7%. Factors contributing to this trend include decreased new NPA additions and increased provisioning. Stress tests suggest resilience against adverse macroeconomic scenarios, projecting potential GNPA ratios of 3.4% under severe stress. The banking sector’s robust capitalization is highlighted, supporting its ability to withstand economic shocks without additional capital infusion.
RBI Forecasts Improved Bank Asset Quality Amid Falling Bad Loans
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