RBI's Financial Stability Report projects Indian banks' bad loans to rise slightly to 1.9% by March 2028 under a baseline scenario, from 1.8% in March 2026. Capital ratios are expected to moderate, but remain above regulatory norms even under adverse scenarios, with no bank projected to breach the minimum CRAR requirement.
Indian banks' gross bad loans are projected to slightly increase to 1.9% by March 2028 from 1.8% in March 2026, according to the RBI's Financial Stability Report. Despite this, the banking system is expected to remain resilient with strong capital, healthy profits, and improving credit growth, capable of absorbing shocks.
India's Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 aims to provide guaranteed credit to MSMEs, helping banks avoid a rise in bad loans amid financial stress caused by the West Asia crisis. The scheme will offer 100% credit guarantee coverage on additional credit facilities.
State Bank of India reported a 6% rise in Q4 FY26 net profit to Rs 19,684 crore, driven by improved asset quality and lower bad loans. Despite this, total income saw a slight decline, and net interest margins compressed, leading to a drop in operating profit and a subsequent fall in SBI's stock price.
Chinese banks are increasingly using satellite remote sensing to evaluate client assets and reduce credit risks. Postal Savings Bank of China and Chang Guang Satellite Technology recently launched a joint satellite to monitor collateral such as property and vehicles. The technology helps banks assess loan viability and repossession potential, particularly in rural and small business markets where traditional credit records may be incomplete. China's non-performing loan rate stood at 1.5% at end of last year, up from a record low of 0.9% in 2011.
