Economic Survey 2025 Highlights Strong Banking Sector Performance with Lower NPAs and Higher Profits

India’s monetary and financial sectors have demonstrated strong performance in the first nine months of the Financial Year 2024-25 (FY25), as highlighted in the Economic Survey 2024-25. The survey was tabled in Parliament on January 31, 2025, by FM Nirmala Sitharaman.

Banking Sector Performance

According to the Economic Survey, bank credit has maintained a steady growth trajectory in the current financial year. Scheduled Commercial Banks (SCBs) have witnessed a continuous improvement in profitability, marked by a decline in gross non-performing assets (GNPAs) and an increase in the capital-to-risk weighted asset ratio (CRAR).

GNPAs of SCBs have fallen to a 12-year low of 2.6% as of September 2024. Additionally, the profitability of SCBs has improved significantly, with profit after tax (PAT) rising by 22.2% year-on-year (YoY) in the first half of FY25.

Deposit Growth and Sectoral Credit Trends

The Survey highlights that bank deposits have maintained double-digit growth. As of November 2024, the YoY growth in aggregate deposits of SCBs stood at 11.1%. Sector-wise, agriculture credit growth was recorded at 5.1% as of November 29, 2024.

Meanwhile, industrial credit growth picked up, reaching 4.4% by the end of November 2024, surpassing the 3.2% growth recorded a year earlier.

The data further reveals that bank credit to micro, small, and medium enterprises (MSMEs) has been expanding at a faster rate compared to credit disbursal to large enterprises. As of November 2024, credit to MSMEs registered a YoY growth of 13%, whereas credit to large enterprises grew at a comparatively lower rate of 6.1%.

Performance of Rural Financial Institutions

Rural Financial Institutions have also shown improved performance, with lower NPAs and better credit off-take. The consolidated net profit of Regional Rural Banks (RRBs) rose significantly from ₹4,974 crore in FY23 to ₹7,571 crore in FY24. Furthermore, the consolidated CRAR increased from 13.4% in March 2023 to an all-time high of 14.2% by March 31, 2024.

Additionally, the credit-to-deposit ratio of RRBs improved from 67.5% in March 2023 to 71.2% in March 2024, indicating stronger financial health and credit availability in rural areas.

The Economic Survey 2024-25 underscores the resilience and robust performance of India’s financial sector, with steady credit growth, rising profitability, and declining NPAs driving positive economic momentum.

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