The Daily Brief Indian Banking in 2025: the year in review
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Jan 12, 2026 Explore the evolving landscape of Indian banking as it heads into 2025. Discover how insolvency recoveries and low non-performing assets are reshaping financial stability. Dive into the risks associated with the rise of fintech loans, especially among younger borrowers. Learn about the deposit squeeze impacting banks and the shifting behavior of households in response to inflation expectations. Packaged with crucial insights, this examination reveals the intricate interplay of saving and spending in a changing economic climate.
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Low NPA Headline Hides Cleanup Methods
- Gross NPAs fell to 2.2% but much of the decline came from write-offs and asset sales rather than recoveries.
- Banks wrote off ₹1.58 lakh crore while recoveries were only ₹0.68 lakh crore in FY24-25, masking underlying stress.
Large Haircuts Despite IBC Resolutions
- IBC resolutions recovered only about 32% of admitted claims, implying deep haircuts for creditors.
- Banks also sold stressed loans to ARCs at lower prices to clear books faster, accepting losses to improve metrics.
Fintech Lending Shows Credit Saturation
- Fintech-originated unsecured loans grew rapidly and skew younger, but show higher impairment losses.
- Borrowers with loans from five+ lenders have significantly higher defaults, signaling credit saturation risks.