Banks’ gross NPA drops below 6% in March ’22

Gross non-performing assets (NPAs) of the banking sector dropped below 6 per cent as of March 2022 — the lowest since 2016 — and net NPAs fell to 1.7 per cent during the same period, indicating that the sector has remained largely unscathed from the ill-effects of the Covid-19 pandemic so far, M Rajeshwar Rao, deputy governor of the Reserve Bank of India (RBI), said.

At the same time, it would be important to assess if the improvement in the asset quality is broad based or only because of regulatory forbearance, he said. “The preliminary assessment of the health of the banking sector is encouraging,” Rao said.

“The asset quality of banks has improved, and the gross NPAs and net NPAs of the banks have improved from the pre-pandemic levels. The fresh slippages have broadly been brought under control. Banks have also enhanced their provisions including provisions for restructured accounts,” he added.