New Delhi, Nov. 27 -- The lending boom a decade ago later turned into a major setback for public-sector banks (PSBs). Loans that slipped into default were not recognised in time, and a slowing economy worsened the stress.

By March 2018, India's banking system reported non-performing assets (NPAs) of Rs.10.4 trillion, of which PSBs accounted for Rs.9 trillion. The PSU Bank Index crashed as a result.

A series of reforms followed-RBI-led stress recognition, a Rs.2.1 trillion recapitalization plan, lending curbs and large write-offs. Over time, the clean-up started showing results.

By March 2025, NPAs at PSBs had fallen 69% to Rs.2.8 trillion and gross NPA ratios improved from 14.6% to 2.6%. Profitability returned too - PSBs posted a recor...