Synopsis:
- Gross Non-Performing Assets (GNPAs) of Scheduled Commercial Banks (SCBs) decreased by 12.5% y-o-y to Rs 4.50 lakh crore as of September 30, 2024. Meanwhile, the GNPA ratio declined to 2.6% as of September 30, 2024, from 3.3% over a year ago.
- Sequentially, GNPAs of SCBs reduced by 2.5% q-o-q to Rs 4.50 lakh crore, compared to Rs 4.62 lakh crore in the previous quarter. This reduction was primarily attributed to lower incremental slippages, steady write-offs, and recoveries in the current quarter.
- Net Non-Performing Assets (NNPAs) of SCBs reduced by 16.6% y-o-y to Rs 0.97 lakh crore as of September 30, 2024. The NNPA ratio of SCBs reduced to an all-time low of 0.6% from 0.8% in Q2FY24.
- Sequentially, SCBs’ NNPA saw a decline of 4 basis points (bps), due to the overall decline in the GNPA, a higher provision coverage ratio, and overall improvement in asset quality.
- SCBs credit cost (annualised) ratio increased by 4 bps y-o-y to 0.44% in Q2FY25. This increase can be attributed to rising delinquencies, particularly in the retail and microfinance sectors, as well as several regulatory provisions. The rise in credit costs is primarily driven by increasing provisions at select banks, which have raised their provisions from the microfinance business and unsecured lending business.
- Standard Restructured Assets for select nine PSBs reduced by 40.6% y-o-y to Rs 0.51 lakh crore as of September 30, 2024. Meanwhile, restructured assets of 11 select PVBs declined by 42.6% to Rs 0.12 lakh crore due to repayments made by the borrowers, an uptick in the economic activities and slipping some accounts into the NPAs. Restructured assets (Nine PSBs + Five PVBs) as a percentage of net advances stood at 0.8% as of September 30, 2024, dropping by approximately 45 bps over a year ago period.
- The Provision Coverage Ratio (PCR) of SCBs expanded by 140 bps y-o-y to 78.3% Q2FY25 mainly due to improvement in overall asset quality, increased provisions driven by the reduction in NPAs, and lower slippages compared to recoveries.
