Now Reading: Indian banks in best shape in a decade, says Motilal Oswal
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Indian banks in best shape in a decade, says Motilal Oswal
Indian banks have reached their strongest position in a decade, with gross non-performing assets (NPAs) near historic lows and capital buffers robust, according to Motilal Oswal Financial Services Ltd. The firm said…
Indian banks have reached their strongest position in a decade, with gross non-performing assets (NPAs) near historic lows and capital buffers robust, according to Motilal Oswal Financial Services Ltd. The firm said on social media platform X that NPAs are at multi-decadal lows, gross NPAs stood at about 1.8% and net NPAs at 0.4% as of March 2026, based on banking-system data.
The assessment aligns with the Reserve Bank of India's latest Financial Stability Report, which found banks resilient and capable of withstanding severe stress. Credit growth accelerated to 14.5% year-on-year in 2025-26, while deposit growth was 11.5%. Motilal Oswal said stronger bank balance sheets, improved profitability and adequate capital now position banks to expand lending and benefit from India's improving credit cycle.
Indian Opinion Analysis
The Motilal Oswal note arrives after a decade-long cleanup during which banks wrote off over Rs 11 lakh crore in bad loans, many referred to the National Company Law Tribunal under the Insolvency and Bankruptcy Code. The headline gross NPA figure of 1.8% for March 2026 implied by the note compares with a peak of 11.5% in March 2018, meaning the banking system has shed roughly Rs 9.50 lakh crore of stress. The credit growth of 14.5% in 2025-26 cited in the note is driven largely by retail and services, corporate lending remains tepid. Whether banks can sustain this improvement while deposit growth trails credit growth by 300 basis points is the next point of pressure. The Reserve Bank of India's next monetary policy review on 8 April 2025 will offer the next official signal on the sector's trajectory.
Source: economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
