India’s gross non-performing assets (NPAs) of scheduled commercial banks as a percentage of gross advances had declined from 12.7 per cent in 1990-91 to 2.4 per cent in 2010–11. In case of public sector banks, this ration had dropped from 14.0 to 2.3 per cent over the same period.
However, during the recent economic downturn, there has been a sharp deterioration in asset quality of the public sector banks (PSBs), as the ratio reversed to 3.2 per cent in 2011–12. While the NPA levels are still low by historical trends or cross-country comparison, newer fragilities were obvious by the high slippage ratio and a spurt in restructuring loans.