Indian banks' bad loans hit lowest level in decades
Indian banks just hit a big milestone: their bad loan ratio dropped to 2.1% by September 2025—the lowest ever recorded since the RBI started tracking it in the late '90s.
This means banks are doing a much better job of handling risky loans and keeping their finances healthy.
Public sector banks are leading the way
Public sector banks made major progress, slashing their bad loan ratio from over 9% in 2021 to just 2.6% by March 2025.
That's a huge turnaround, showing that government and RBI efforts to clean up bank books are finally paying off.
Banking sector looks stronger overall
Even with slightly slower growth this year, deposits and lending both saw double-digit jumps—so people are still saving and borrowing with confidence.
Non-banking finance companies also got better at managing risk.
Why does this matter?
After years of worry about bad loans dragging down India's economy, these numbers show real progress.
For anyone interested in how India's money moves—or thinking about jobs or investments—this is good news for stability heading into 2026.