NPA provisions fall for second straight quarter as bank asset quality improves
Aggregate loan loss provisioning by banks dropped significantly year-on-year. This decline was driven by improving asset quality and fewer fresh slippages. Provision coverage ratios also reduced the need for fresh funds. Public sector banks saw a 19.8 percent fall in provisioning. Private sector banks registered a sharper 33.6 percent reduction in provisioning.
Bank loan loss provisions fell sharply for the second consecutive quarter, driven by improving asset quality and reduced credit losses. Of 29 analyzed banks, 23 reported a decline in non-performing asset (NPA) provisions compared to the prior year, the highest since March 2022. The aggregate NPA provisions dropped by 27.3% to ₹21,314 crore for the June 2026 quarter.
Among the sample, private sector banks experienced a steeper 33.6% decline to ₹10,597.5 crore, while public sector banks saw a 19.8% reduction to ₹10,717 crore. State Bank of India, the nation's largest lender by assets, cut its NPA provisions by 31.9% to ₹3,359 crore. Sequentially, overall provisions rose 10.4% in the June quarter, mainly due to higher private sector bank provisions, which surged 46.4% from the previous quarter.
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