Evaluation of Indian Banking Sector Non-Performing Assets: An Impact Assessment

Abstract

The Non-Performing Assets (NPAs) have remained one of the most important indicators of asset quality, profitability and financial stability in the Indian banking sector. Every year the NPAs are adding more and more. According to Reserve Bank of India (RBI) data, the Gross NPA (GNPA) ratio of total Banking sector is 8.2% in 2019-20 and it decreased to 2.2% in 2024-25.  In 2019-20 the Net NPA is 2.8% in 2019-20 and reduced to 0.5% in 2024-25 due to written-off NPAs. This article examines the evaluation of NPAs in the Indian banking sector with particular reference to different bank groups; Public Sector Banks, Private Sector Banks, Foreign Banks, Small Finance Banks and Scheduled Commercial Banks. The significant reduction in NPAs in recent years indicates not an improvement in banking-sector asset quality, credit expansion, sector-specific stress, and changes in economic conditions but only written-off the NPAs. The main objective of this research article is to examine the trend of NPAs in the Indian banking sector and to analyse NPAs across major bank groups, particularly public sector, private sector foreign banks, Small Finance Banks and Scheduled Commercial Banks. For the evaluation purpose the researcher depends up on secondary data collected from RBI reports and taken assessment period as 2019-20 to 2024-25. It concluded with findings and suggestions.