India’s banking sector got a shot of good news this quarter as several major banks, including Bank of Baroda and Canara Bank, reported a significant decline in their Non-Performing Assets (NPAs). The third quarter of the financial year 2024-25 brought with it signs of improved asset quality and tighter control over risky loans, offering reassurance to investors and depositors alike.
Bank of Baroda showed strong improvement in its financial health. Its consolidated net profit rose to ₹5,214 crore in Q3—up 5.6% from the ₹4,789 crore posted during the same period last year. The bank’s gross NPA ratio dropped sharply to 2.43%, compared to 3.08% a year ago. Even more impressively, the net NPA—often seen as a clearer indicator of problem loans—fell to 0.59% from 0.70%.
Canara Bank also turned in a solid performance. It saw its net NPA dip to 0.89% in the third quarter, compared to 0.99% in the previous one. The bank’s gross NPA improved to 3.34%, a significant step down from 4.39% in Q3 of the previous fiscal year. Canara’s global deposits and advances also showed steady growth, reflecting its expanding footprint and customer confidence.
But the good news didn’t stop with these two.
According to data compiled by Trendlyne, several other banks from the Nifty500 index reported reductions in NPAs:
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City Union Bank cut its net NPA to 1.42%, down from 1.62%.
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Bandhan Bank posted a slight improvement, lowering its net NPA to 1.28% from 1.29%.
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Bank of India brought its net NPA down to 0.85%, from 0.94%.
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UCO Bank trimmed its net NPA to 0.63%, from 0.73%.
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Central Bank of India improved as well, reducing its net NPA to 0.61% from 0.70%.
These drops in NPAs indicate that banks are getting better at identifying risky loans and managing them early. It also points to an overall improvement in credit quality and economic stability. For retail customers, it means their money is likely in safer hands, while investors might see this as a green flag for putting their trust—and their funds—into the sector.
This trend is expected to continue if current economic and lending conditions hold. With better risk management and a tighter handle on defaults, Indian banks are on a promising path toward stronger balance sheets and sustainable growth.
