New Delhi: The bad loan ratio, or NPA, of Indian banks, which has fallen to a 12-year low, is expected to double to five to five and a half percent by March 2026, if credit quality, interest rates and related conditions are taken into account. Could be in between. A report published by the Reserve Bank of India on Monday said geopolitical risks are worsening. Thus, there is no need to be too happy that the bad loan ratio has fallen to a 12-year low of 2.6 per cent. RBI has given such an indication.
The bad loan ratio, which touched a low of 2.6 per cent in September 2024, could rise to three per cent by March 2026 as 46 banks stand exactly on the line, the Reserve Bank said in a report on financial stability. This ratio.
This can also be called the basic scenario. Under two different high-risk scenarios, the bad loan ratio could go up to 5 to 5.3 percent. RBI said that as the overall capital ratio of banks has come down, the minimum capital requirement of any bank will not go below 9 per cent even in the worst case scenario.
The Financial Stability Report is published by the Reserve Bank every two years. It includes all the provisions of financial regulators. The asset quality of Indian banks has improved over the years due to improvement in bad loan recovery as well as reduction in the growth of bad assets. With this, banks can also increase their capital.
Over the past year, the Reserve Bank has warned the financial sector against all forms of extremism. The tightening of regulations on credit cards and personal loans has made it difficult for non-banking financial companies to obtain loans from banks. It has also banned non-compliant lenders from doing business.
