News

Source — Source: ET ///Category — GS Paper 2 ///Published — 2026-01-03 ///Exam — Both Prelims and Mains ///Tags — Government Policies & Interventions, Banking Sector & NBFCs, Indian Economy ///Source — Source: ET ///Category — GS Paper 2 ///Published — 2026-01-03 ///Exam — Both Prelims and Mains ///Tags — Government Policies & Interventions, Banking Sector & NBFCs, Indian Economy ///

Source: ET · GS Paper 2

Report on Trend and Progress of Banking in India 2024-25

The RBI's Report on Trend and Progress of Banking in India 2024-25 shows a resilient banking sector with GNPA at a multi‑decadal low of 2.1% and CRAR at 17.4%, while highlighting rising high‑value frauds and emerging risks like climate change and technology. The data are crucial for UPSC aspirants to understand financial stability, regulatory priorities and the role of NBFCs and cooperative banks in the Indian economy.

2026-01-03

Published

Source: ET

Source

Quiz Questions

Article

Key Facts and Data Points

GNPA Ratio (SCBs): 2.2% (Mar 2025) → 2.1% (Sep 2025) – multi‑decadal low.
CRAR (system‑wide): 17.4%.
Balance‑sheet expansion (SCBs): 11.2% (double‑digit).
Net profit of SCBs: Rs 4 lakh crore.
Banking frauds: Rs 34,771 crore total loss; 66.8% card/internet frauds; 33.1% loan‑related value.
Fraud distribution: Private banks 59.3% volume; Public sector banks 70.7% value.
NBFCs: Credit growth 19.4%; CRAR 25.9%; contribute ~25% of SCB credit.
Urban Cooperative Banks: GNPA 6.2%.
Rural Long‑Term Cooperatives: GNPA >38%.
Macroeconomic backdrop: Inflation at multi‑year low; GDP growth >8%.

Background and Context

RBI’s Report on Trend and Progress of Banking in India 2024‑25 is an annual assessment of the health of the banking system, complementing the Financial Stability Report and Monetary Policy Report.
The report reflects post‑pandemic recovery, rapid digitalisation, and an evolving risk landscape.

Significance for India / Governance / Policy

Resilient banking supports credit flow to productive sectors, crucial for sustaining >8% growth.
High‑value frauds despite lower case numbers signal the need for stronger fraud detection and consumer protection mechanisms.
NBFCs’ robust performance underscores their role in financial inclusion and credit diversification.
Cooperative banks’ stress highlights regional credit gaps and the necessity for targeted reforms.
Climate risk integration signals a shift towards sustainable finance, aligning with India’s climate commitments and the broader ESG agenda.

Related Constitutional / Legal Provisions

Banking Regulation Act, 1949 – governs scheduled banks and cooperative banks (amendments 1966, 2020).
RBI Act, 1934 – empowers RBI to issue prudential regulations, including climate‑risk guidelines.
Financial Sector Legislative Reforms Commission (FSLRC) recommendations – encourage integration of ESG risks into the regulatory framework.

Regulatory Priorities Highlighted

Climate Risk – physical & transition risks; termed a "national imperative".
Consumer Protection – harmonised guidelines for advertising and recovery practices to curb misselling.
Technology – ethical AI usage, guarding against algorithmic bias, and managing risks from technological disruption.