The banking sector has showed improvement with the gross non - performing assets (GNPA) ratio of Scheduled Commercial Banks (SCBs) declining from 11. 2 per cent in March 2018 to 9. 1 per cent in March 2019 and a return to profitability in H1 of 2019 - 20, according to an RBI report released on Tuesday.
As the bad loan recognition process nears completion, gross non - performing loans of banks improved to 9. 1 per cent as of end - September 2019, compared to 11. 2 per cent in FY18, says the report, "Trend and Progress of Banking in India 2018 - 19".
Net non - performing assets (NPAs) of all commercial banks reduced to 3. 7 per cent in FY19 as against 6 per cent in FY18.
"The gross NPA ratio of all banks declined in FY19 after rising for seven consecutive years, as recognition of bad loans neared completion, " the RBI report said.
During 2018 - 19, the asset quality of scheduled commercial banks turned around after a gap of seven years.
With a concomitant reduction in provisioning requirements, the banking sector returned to profitability in the first half of 2019 - 20, while recapitalisation helped public sector banks in shoring up their capital ratios.
The Insolvency and Bankruptcy Code gained traction, enhancing resolutions.
Furthermore, credit growth revival that began in 2017 - 18 maintained momentum into 2018 - 19, led by private sector banks.