Lok Sabha Question No. 2676 (UNSTARRED), answered on 2026-03-09
Subject: Banking and Credit Stability
Ministry: FINANCE
Asked by: Dr. Prabha Mallikarjun

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO- 2676

ANSWERED ON MONDAY, 9 MARCH, 2026/ PHALGUNA 18, 1947 (SAKA)

## Banking and Credit Stability

## 2676. DR. PRABHA MALLIKARJUN:

Will the Minister of FINANCE be pleased to state:-

(a) the present status of banking and financial sector stability, including trends in NonPerforming Assets (NPAs) and capital adequacy;

(b) whether recent credit tightening and market concerns have adversely affected Micro, Small and Medium Enterprises (MSMEs) and retail borrowers; and

(c)  if  so,  the  steps  taken  to  ensure  adequate  and  affordable  credit  flow  without compromising systemic stability?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a):  Major  banking  reforms  undertaken  by  the  Government  and  the  Reserve  Bank  of India  (RBI)  over  the  last  few  years,  including, inter-alia ,  the  4Rs'  strategy  (Recognising NPAs transparently, Resolution and Recovery, Recapitalising Public Sector Banks (PSBs), and  Reforms  in  the  financial  system),  have  strengthened  credit  discipline,  improved recognition and resolution of stress, enabled responsible lending, and enhanced governance in banks.

These  reforms,  along with financial inclusion initiatives, adoption  of technology, amalgamation of banks, and measures to improve management and maintain confidence in the banking system, have helped banks turn the corner and significantly improve their financial health and resilience.

Further,  under  the  Enhanced  Access  and  Service  Excellence  (EASE)  reforms  agenda, PSBs have undertaken a series of customer-centric initiatives aimed at improving service delivery,  digital  enablement,  transparency,  and  ease  of  access  to  banking  services. Implementation of Basel III capital and prudential norms, as prescribed by RBI has also strengthened  capital  buffers,  improved  risk  management,  and  enhanced  the  overall resilience of banks. RBI's macro stress test results, as per the Financial Stability Report o f RBI in 2025, have also reaffirmed the resilience of Scheduled Commercial Banks (SCBs) to adverse macroeconomic shocks. As per RBI's provisional data, as on 30.9.2025:

- (a) The asset quality has improved significantly with -
- (i) Gross NPA ratio of SCBs declined to a fresh multi-decadal low of 2.05% ( ₹ 4.18 lakh crore) in Sep-25 from 4.28% ( ₹ 3.23 lakh crore) in Mar-15, and from a peak of 11.18% ( ₹ 10.36 lakh crore) in Mar-18.
- (ii) Net NPAs of SCBs declined to a record low of ₹ 0.94 lakh crore (0.47%) in Sep25 from ₹ 2.31 lakh crore (3.13%) in Mar-15, and from a peak of ₹ 5.20 lakh crore (5.94%) in Mar-18.
- (b) Resilience  has  increased  with  Provision  Coverage  Ratio  (PCR)  of  SCBs  increasing from 49.31% in Mar-15 to a healthy 93.23% in Sep-25.
- (c) Capital  adequacy  has  improved  significantly  with  Capital  to  Risk-weighted  Assets Ratio  (CRAR)  of  SCBs  improving  by  430  bps  to  reach  17.24%  in  Sep-25  from 12.94% in Mar-15.
- (d) PSBs declared dividend of ₹ 34,990 crore to shareholders (GoI share ₹ 22,699 crore) in  FY2024-25  against  total  dividend  of ₹ 27,830  crore  to  shareholders  (GoI  share ₹ 18,013 crore) in FY2023-24.
- (e) Enabled by implementation of comprehensive reforms, the financial health of PSBs has improved significantly, enhancing their ability to raise capital (in the form of both equity and bonds) from the market. PSBs have mobilised capital of ₹ 5.24 lakh crore from the market from FY 2014-15 to FY 2025-26 (up to 31.12.2025).
- (f) During FY 2024-25, SCBs have recorded highest ever aggregate net profit of ₹ 4.01 lakh crore. PSBs have also recorded highest ever aggregate net profit of ₹ 1.78 lakh crore  during  FY  2024-25.  Further,  the  net  profit  of  PSBs  during  the  first  nine months of FY 2025-26 is ₹ 1.46 lakh crore.

The  improved  financial  health  has  enabled  banks  to  better  serve  common  customers through  enhanced  credit  availability,  improved  transmission  of  policy  interest  rates, strengthened  depositor  confidence,  and  wider  access  to  digital  and  financial  services. Customer-centric  reforms  under  the  EASE  agenda  and  technology  adoption  have  also improved  service delivery, transparency, and  ease of access to banking  services, particularly benefiting retail customers, MSMEs, and rural populations.

(b)  and  (c):  With  regard  to  the  recent  credit  tightening  and  market  concerns,  MSME credit in SCBs has continued to grow with year-on-year (YoY) growth standing at 20.6% as  on  30.9.2025,  and  asset  quality  has  improved  with  Gross  NPA  at  3.5%  as  on 30.9.2025,  indicating  no  broad-based  adverse  impact.  While  in  respect  of  the  retail borrowers in SCBs, overall retail credit quality remains stable or improving, indicating no widespread  deterioration  with  Gross  NPA  standing  at  1.1%  as  on  30.9.2025.  Personal loans (Retail loans) grew at 14.0% as on 31.10.2025, higher than 11.7% as on 31.3.2025.

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