The GNPA ratio of the banking sector reaches the lowest in the last 13 years, at 2.5%; fraud cases fall to a decade low

The asset quality of India’s scheduled commercial banks (SCBs) has improved, with gross non-performing assets (GNPA) falling to a 13-year low of 2.7% at end-March 2024 and 2.5% at September 2024, from 3.9% from 2024. March 2023 as per RBI report on trend and progress of banking activities in India 2023-24.

Improvement in banks’ asset quality, as measured by GNPA ratios, began in 2018-19. SCB’s GNPAs were reduced by 15.9% YoY to INR 4.8 lakh crore as on March 31, 2024. “During 2023-24, about 44.4% of the GNPA reduction was attributed to better recoveries and improvements ”, says RBI.

The net NPA (NNPA) ratio, meanwhile, fell to a “decade low” of 0.62% at the end of March 2024, driven by stronger provisions. It further improved to 0.57% as of September 2024.

In 2023-24, the amount involved in fraud was the “lowest in a decade”, while the average amount was the lowest in 16 years.

In 2023-2024, the share of total internet and card fraud was 44.7% by value, the highest for all bank groups, and 85.3% by number of cases. Fraud cases reported by private banks represented 67.1% of the total. In the quantity involved, however, PSBs had the largest share.

As of March 2024, India’s commercial banking sector consisted of 12 Public Sector Banks (PSBs), 21 Private Sector Banks (PVBs), 45 Foreign Banks (FBs), 12 SFBs, 6 PBs, 43 RRBs and 2 LABs. Out of these 141 commercial banks, 137 were classified as scheduled banks while four were non-scheduled.

The RBI says robust credit growth has led to an expansion of the ECB’s consolidated balance sheet in 2023-24. In 2023-24, banks’ balance sheets expanded at a healthy pace, with robust growth in deposits and loans. Their profitability improved, and liquidity reserves and provisions remained comfortable. “Indian banks are at the forefront of digitization, looking to use technology to increase productivity and efficiency. However, with the adoption of new technology, the risks of cyber-attacks, digital fraud, data breaches and operational failures have also increased.”