The gross non-performing property (NPAs) of public sector banks (PSBs) have seen a major decline—from 9.11% of whole loans in March 2021 to 2.58% in March 2025, based on Union Minister of State for Finance Pankaj Chaudhary. He shared this information in a written reply to the Rajya Sabha on Tuesday, crediting sustained authorities and RBI efforts for the turnaround.
The minister highlighted that the entire worth locked in gross NPAs has decreased from Rs 6.16 lakh crore in March 2021 to Rs 2.83 lakh crore in March 2025.
Chaudhary attributed the regular enchancment to a multi-pronged technique adopted by the federal government and the Reserve Financial institution of India (RBI) to strengthen restoration mechanisms and guarantee early decision of unhealthy loans.
“The Insolvency and Chapter Code (IBC) has basically altered the borrower-creditor relationship,” he stated, including that the IBC ensures defaulting firm promoters lose management, and wilful defaulters are saved out of the decision course of.
As well as, private guarantors of company debtors have additionally been introduced below the IBC, tightening the authorized web round defaulters.
To additional bolster restoration efforts:
Amendments have been made to the Securitisation and Reconstruction of Monetary Belongings and Enforcement of Safety Curiosity (SARFAESI) Act, 2002 and the Restoration of Money owed and Chapter Act.
The pecuniary jurisdiction of Debt Restoration Tribunals (DRTs) was raised from Rs 10 lakh to Rs 20 lakh to permit DRTs to concentrate on high-value instances.
Public sector banks have additionally taken inside steps:
Formation of specialized harassed property administration verticals and branches to observe and resolve NPAs.
Adoption of enterprise correspondents and “feet-on-street” mannequin to enhance recoveries on the grassroots.
The RBI’s prudential framework additionally encourages banks to undertake decision plans early, with built-in incentives for fast motion, the minister famous.
To make sure transparency throughout mortgage disbursement and restoration:
Banks observe RBI-approved insurance policies for property valuation by unbiased professionals.
Properties value Rs 50 crore or extra are topic to not less than two unbiased valuations.
Previous to promoting property below the SARFAESI Act, banks take possession and re-evaluate them by way of empanelled valuers.
RBI additionally recommends e-auction for asset gross sales to make sure higher value discovery and wider participation.
Chaudhary concluded that these sustained efforts have considerably improved the well being of public sector banks, placing them on a stronger and extra secure monetary footing.
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