Indian Banks' Asset Quality Improves, Combined Profit Up 15%: RBI Report

The banking sector has shown resilience of steel during FY25, with Commercial banks maintaining robust performance in the last fiscal, according to a report by Reserve Bank of India released on Monday.

Combined profit for net profit of all scheduled commercial banks (SCBs) rose 14.8% year-on-year to Rs 4.01 lakh crore during 2024-25. During 2023-24, their profit had increased by 32.8% to about Rs 3.5 lakh crore.

The gross non-performing assets (GNPA) ratio for commercial banks declined to a multi-decadal low of 2.2% at March-end, as per the report.

Strong balance sheet, sustained profitability and improved asset quality were some of the supporting factors to the sector's performance in financial year 2025, the report on Trend and Progress of Banking in India highlighted.

"Strong banking sector fundamentals provide a buffer against risks, which, together with prudent regulation, create conditions for sustained credit flow," the report said.

Moreover, Bank credit and deposit growth continued in double-digits, albeit with a moderation. Capital and liquidity buffers remained well above the regulatory requirements across bank groups.

The RBI report said the profitability of the SCBs remained robust with the return on assets (RoA) at 1.4% and return on equity (RoE) at 13.5% in 2024-25.

During H1: 2025-26, RoA and RoE of the SCBs stood at 1.3% and 12.5%, respectively.

The capital-to-risk-weighted assets ratio of SCBs was 17.4% at March-end 2025 and 17.2% at the end of September 2025, the report said.

"Asset quality strengthened further, with the gross non-performing assets (GNPA) ratio declining to a multi-decadal low of 2.2% at end-March 2025 and 2.1% at end-September 2025," it pointed out.

Also, the consolidated balance sheet of urban co-operative banks recorded higher growth in 2024-25 than the previous year.

Their asset quality improved for the fourth consecutive year, alongside the strengthening of their capital buffers and profitability.

According to the report, the non-banking financial companies continued to record double-digit credit growth along with robust capital buffers. Their asset quality also improved during the year.

The report presents the performance of the banking sector, including commercial banks, co-operative banks and non-banking financial institutions, during 2024-25 and 2025-26 so far.

(With inputs from PTI)