Indian commercial banks’ bad loans declined by 21.1% in 2023: analyst

Net non-performing assets dropped to a record low in Q3 FY2024.

Gross non-performing assets held by India’s scheduled commercial banks (SCBs) reduced by 21.1% to approximately $59.7b (Rs 4.95 lakh crore) in end-2023, according to data by Care Edge Ratings. 

SCBs’ net non-performing assets (NNPA) dropped by 28.1% to Rs 1.09 lakh crore over the same period.

Notably, SCBs saw their NNPA levels sink to an all-time low in Q3 FY2024, at just 0.7%.

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Care Edge Ratings attributed the reduction in bad loans to lower slippages, steady recoveries & upgrades, and some write-offs. 

Credit costs declined by 35 basis points (bps) to 0.38% in Q3 FY 2024.

SCBs refer to banks in India who are listed in the second schedule to the Reserve Bank of India Act, 1934. These banks are required to maintain capital and reserves of an aggregate value not less than Rs.5 lakh, amongst other criteria.