Indian bank NPAs are likely to rise modestly in fiscal 2026–27 as stress emerges in small-business and unsecured retail lending, rating agency ICRA said on October 27, 2026.
Indian bank NPAs: Private lenders face more pressure
ICRA expects fresh non-performing asset generation at public sector banks to rise to 0.8% in FY27 from 0.7% in FY26. For private sector banks, it projects an increase to 1.6% from 1.4%. These figures measure newly troubled loans, rather than banks’ overall gross NPA levels.
Fresh slippages are estimated at around ₹1 lakh crore for public sector banks and ₹1.3 lakh crore for private banks. ICRA expects private lenders to face greater pressure because of their larger exposure to unsecured retail loans and credit to micro, small and medium enterprises.
Credit costs expected to remain contained
Higher interest rates, inflation and global uncertainty are putting pressure on borrowers, ICRA said. Elevated crude oil prices and supply-chain disruptions could also affect the repayment capacity of small businesses and retail borrowers.
Despite the expected increase in fresh NPAs, ICRA expects overall gross NPA levels to remain contained and credit costs to stay well below historical levels. It expects bank profitability to remain largely steady and comfortable in FY27.
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