India's banks hit record low in bad loans
Indian banks just posted their lowest bad loan levels in decades—only 2.1% of loans were non-performing by September 2025, according to the RBI.
That's a big turnaround from the stressful post-pandemic years, with improvements seen across most borrower categories, though some segments continue to face stress.
What's happening across sectors?
Accounts overdue by 61-90 days (SMA-2) dropped to just 0.8%.
MSMEs held steady at 5.1%, while unsecured loan stress eased a lot—down to 13% from over 20% last year.
Large borrowers also showed progress, with SMA-2 declining by nearly 36%.
Where's the lending action?
Gold loans mostly went to top-rated borrowers (69%), and over 70% of consumer loans disbursed by private sector banks were to prime-and-above borrowers.
Sectors affected by US tariffs kept their overdue rates stable at around 4.8%.
Why are analysts upbeat?
Analysts see asset quality holding strong and credit costs staying low—JM Financial pegged them at just 0.6% for late 2025.
While microfinance is improving, there's still some caution around loans against property and commercial vehicles, but overall vibes are positive for now.