New Delhi, July 23 The significant reduction in gross non-performing assets (NPAs) of India's public sector banks (PSBs) is a result of combined efforts of the Reserve Bank of India (RBI) and the union government, a leading economist said on Wednesday.
Economist Pankaj Jaiswal told IANS that the improvement in NPAs had been made possible due to the joint initiative of the RBI and the Centre.
According to him, the two were complementary to one another and collaborated closely to achieve the same objective.
Jaiswal noted that gross non-performing assets (NPAs) had decreased to 2.58 per cent in 2025, citing a statement by Minister of State for Finance Pankaj Chaudhary. He called this a significant accomplishment for the central government.
He discussed the role of the Insolvency and Bankruptcy Code (IBC) and said that 10 years ago, there was a widespread culture of evergreening, many industrial sector accounts were under stress, and NPAs were much higher.
He pointed out that the NDA government, which implemented the IBC to address stressed assets, stopped this practice. He went on to say that the resolution framework assisted in clearing management of persistent defaulters and promoters.
Jaiswal noted that the government's strategy for dealing with non-performing assets (NPAs) was clear and targeted. He added that the RBI's introduction of the Asset Quality Review (AQR) was crucial in keeping loans from being classified as non-performing assets (NPAs).
He told IANS that the central bank also made sure that stressed assets were monitored at the branch level, which greatly aided in the reduction of non-performing assets.
He further added that the process of loan disbursement had undergone a major transformation.
Banks now review a borrower's credit history and assess repayment capacity before approving loans, which, according to him, had strengthened both disbursal and monitoring systems, the economist said.
The total amount locked up in the gross NPAs of public sector banks has declined from Rs 6,16,616 crore in March 2021 to Rs 2,83,650 crore in March 2025.
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