India’s clean balance sheets mask a growing working capital challenge
India’s banks have cleaner balance sheets and fewer bad loans, but delayed payments could leave otherwise healthy businesses short of cash and increase credit risks.
India’s banking sector is enjoying a rare moment of comfort. Asset quality is strong, corporate balance sheets are cleaner, and the credit narrative is increasingly one of resilience rather than stress. The RBI’s June 2026 Financial Stability Report underscores this improvement, with the gross non-performing asset (GNPA) ratio of scheduled commercial banks falling to a multi-decadal low of 1.8% as of March 2026.
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