Net NPAs Reach Historic Low Levels, Fall Below 1.0 per cent in Q4

• Gross Non-Performing Assets (GNPAs) of Scheduled Commercial Banks (SCBs) reduced by 23.5% y-o-y to Rs.5.5 lakh crore as of March 31, 2023, due to lower slippages, “steady recoveries & upgrades” and write-offs. The GNPA ratio of SCBs reduced to 3.96% as of March 31, 2023, from 6.04% over a year ago. Robust growth in advances of 16.5% y-o-y is also supporting this reduction.
• Net Non-Performing Assets (NNPAs) of SCBs reduced by 34.0% y-o-y to Rs.1.3 lakh crore as of March 31, 2023. The NNPA ratio of SCBs reduced to 0.95% from 1.72% in Q4FY22 which is significantly better than pre-AQR levels of 2.1% (FY14).
• SCBs’ credit cost (annualised) declined by 16 basis points (bps) y-o-y to 0.6% in Q4FY23. Besides, it has been generally trending down from 1.4% in Q4FY21. The banks have been holding substantial buffers for provisions over the last 6-8 quarters along with continuous improvement in the asset quality required a lower level of incremental provisioning, resulting in lower credit cost.
• PCR of SCBs expanded by 376 bps y-o-y in Q4FY23 mainly driven by PSBs.

Asset_Quality_in_Q4FY23