RBI: "GNPA for Indian Banks Has Decreased to 2.6%"

Recently RBI published Financial Stability Report and according to this report GNPA (Gross Non Performing Asset) for Indian banks has decreased to 2.6% in September 2024.

This is the lowest in last 12 years!

This decline in GNPA indicates that Indian banking sector is doing well.

What is NPA?

Full form of NPA is Non Performing Asset.

When someone takes a loan from a bank and does not pay back any interest or principal then it is called NPA (Non Performing Asset) or bad loan.

What is GNPA?

GNPA (Gross Non-Performing Assets) is the total value of loans that have been stopped being paid for more than 90 days.

Why GNPA is decreasing?

There are main 3 reasons:

1. New loans are not turning into bad loans because banks are doing proper research before giving loans
2. Banks are doing write-offs of bad loans. Which means banks are selling properties of borrowers and covering the loan amount.
3. There is a steady demand for taking loans from banks

That's why GNPA has decreased right now.