Country's Banking Sector Strengthened, RBI Report Reveals

Country's Banking Sector Strengthened:  Good news has emerged regarding India's banking sector. A new report from the Reserve Bank of India (RBI) indicates that the country's banks are in a stronger position than ever before. Banks' balance sheets have shown continuous improvement, and the biggest relief is that bad loans have reached their lowest level in several decades. This clearly means that people and companies are now repaying their loans on time, and the pressure on banks has reduced.

Also Read: Secret SIP Formula: How to Raise 1 Crore? An Easy Way to Become Rich in the New Year According to the RBI's Trend and Progress of Banking report, the gross NPA ratio of banks has decreased to 2.1 percent by September 2025. Earlier, this figure was 2.2 percent in March 2025. This means that only about 2 rupees out of every 100 rupees of loans are now in a bad state. This figure clearly shows the strength of the banking system.  

Impact of RBI's strictness on personal loans

In the last two years, banks have exercised some caution in giving out consumption-based loans such as personal loans and credit cards. Small personal loans had started growing rapidly, which forced the RBI to tighten the rules at the end of 2023. As a result, risky loans were curbed. Later, as the situation improved, the RBI also partially relaxed some rules.

Profits increased, but the pace was slightly slower

The report also states that during 2024-25, both deposits and loans of banks increased significantly, although this was slightly less than the previous year. Due to the decrease in interest margins, the profit growth of banks has also slowed down. However, the good news is that the banks are standing on a strong capital base, and their liquidity position is far better than the regulatory requirements.

Also Read: Punjab National Bank flags over Rs 2,400 crore loan fraud, SREI accused of fraud

RBI is also keeping an eye on climate risks.

The RBI has warned that climate change could become a major threat to financial stability in the future. In view of this, the central bank is developing a new information system to accurately identify climate risks. The RBI believes that climate finance is not just a policy matter, but a national responsibility,.