RAS question
After 9 years of operation, what was the approximate NPA (Non-Performing Asset) ratio of scheduled commercial banks in India after the Insolvency and Bankruptcy Code (IBC) resolved over ₹26 lakh crore in debt?
Correct answer: (D) 2.3%.
After nine years of the Insolvency and Bankruptcy Code, the NPA ratio of scheduled commercial banks had fallen to about 2.3%.
Explanation
The figure asked here is 2.3%. The fall in scheduled commercial banks' NPA ratio is linked to the IBC's nine years of operation: the Code resolved over Rs 26 lakh crore in stressed debt, revived 3,763 companies and helped bring the ratio down from a peak of 10.9%. The verified PIB release supports the endpoint: citing the RBI Financial Stability Report, it says Gross Non-Performing Assets reached a multi-decadal low of 2.3% at the end of March 2025, indicating a stronger and more stable banking system. It also places IBC within bank recoveries, stating that the IBC channel contributed Rs 46,340 crore, or 48.1% of total SCB recoveries in FY 2024-25.
Why the other options are wrong
- (A) 7.8% is too high because the question asks for the post-IBC approximate ratio, and the endpoint is 2.3%, not a mid-single or high-single figure.
- (B) 5.2% overstates the post-resolution position; the verified PIB release records GNPAs at 2.3% at the end of March 2025.
- (C) 4.1% is closer than the higher distractors but still not the stated endpoint; the PIB-backed figure is 2.3%.
Concept
This tests banking-sector stress and insolvency reform under Indian Economy, especially how IBC is linked to asset resolution and NPA reduction. It recurs in RAS because reforms are often asked through headline indicators rather than legal detail alone.