RBI report
A good news has come out regarding India’s banking sector. The new report of the Reserve Bank of India (RBI) shows that the country’s banks are in a stronger position than before. There has been a continuous improvement in the balance sheets of banks and the biggest relief is that bad loans have reached their lowest level in several decades. This clearly means that now people and companies are repaying loans on time and the pressure on banks has reduced.
According to RBI’s Trend and Progress of Banking report, the gross NPA ratio of banks has come down to 2.1 percent by September 2025. Earlier in March 2025 this figure was 2.2 percent. This means that for every Rs 100 loan, now only Rs 2 are in bad condition. This figure clearly shows the strength of the banking system.
Situation improved in retail loans
The report said that asset quality has improved in retail loan segments like housing loans, education loans and credit cards. However, pressure still remains in some areas. For example, the proportion of bad loans in loans given on consumer durables like TV, refrigerator or electronic goods is still high. At the same time, in the industry sector, the maximum problem was seen in the debt of companies related to leather and leather products.
Impact of RBI’s strictness on personal loans
In the last two years, banks have taken some caution in giving expense-based loans like personal loans and credit cards. Small personal loans started increasing rapidly, due to which RBI had to tighten the rules at the end of 2023. The effect of this was that risky loans were curbed. Later, when the situation improved, RBI also partially relaxed some rules.
Profit increased, but the pace was a little slow
It has also been told in the report that during 2024-25, there was a good increase in both deposits and loans of banks, although it was slightly less than last year. Due to decreasing interest margin, the profit growth of banks has also slowed down. Nevertheless, it is a matter of relief that the banks are standing on a strong capital base and their liquidity position is much better than the regulatory requirements.
RBI also keeps an eye on climate risk
RBI has warned that climate change could become a major threat to financial stability in the future. Keeping this in view, the Central Bank is preparing a new information system, so that climate risks can be accurately identified. RBI believes that climate finance is not just a policy but a national responsibility and everyone’s cooperation is necessary in this.
Also read- Indian wine is popular in the foreign market, these drinks made from mango and apple did wonders!