Credit costs for banks rise in Q1FY26, GNPA improves marginally YoY: Report

New Delhi, Aug 20 (IANS) The amount of loans disbursed by Scheduled Commercial Banks (SCBs) in India grew 9.5 per cent YoY in Q1FY26, slightly lagging deposit growth at 10.1 per cent, with growth expected to remain moderate ahead, a report said on Wednesday.

The credit cost of SCBs increased by 19 bps YoY, and also a marginal improvement in asset quality was seen for the quarter, with the Gross Non-Performing Asset (GNPA) ratio declining to 2.3 per cent from 2.7 per cent a year earlier, CareEdge Ratings said in its report.

GNPA levels improved by 9.5 per cent YoY to Rs 4.18 lakh crore as of Q1FY26, driven by steady recoveries, upgradations, and write-offs, particularly among Public Sector Banks (PSBs).

The Net Non-Performing Asset (NNPA) ratio held steady even as GNPAs edged up 0.5 per cent sequentially every quarter due to increased slippages in microfinance and unsecured lending segments at select banks.

"NNPA ratio of SCBs remained at 0.5 per cent in Q1FY26 for the second consecutive quarter against 0.6 per cent over a year ago. NNPAs reduced by 8.7 per cent YoY to Rs 0.92 lakh crore as of Q1FY26," the report said.

Credit cost (annualised) of SCBs increased by 19 bps sequentially on an annual basis to 0.61 per cent in Q1FY26. However, for PSBs, it decreased by six bps YoY to 0.35 per cent in Q1FY26, while for PVBs, it increased to 1.02 per cent during the same period.

Sequentially, NNPAs for PSBs decline marginally by six bps, while for PVBs they rose by 51 bps.

The uptick in credit cost among PVBs was primarily driven by higher provisions at a large private bank, mainly on account of technical accounting adjustments, alongside increased slippages reported by a few other PVBs during the quarter.

–IANS

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