It emphasized that monitoring of par (portfolio risk) remains 1-90 trends crucial, in particular in states such as West Bengal (WB) and Maharashtra (MH), which together are about 17 percent of the market share good. Early delinquency trends have remained relatively flat in these regions. | Photocredit: Istock.com
The credit costs in Indian banks are expected to continue in the second half of the current financial year 2025 trend, although slipping will probably remain in the short term, according to a report from the global financial service provider UBS.
The report emphasized that although the credit costs are expected to be illuminated in H2FY26 compared to FY25, the quality pressure in the short term, in particular for banks, will continue to exist as a result of high progress. It stated: “We continue to expect a decrease in credit costs in H2FY26 (US FY25), but expect that they will remain increased in the short term (Q2) due to high forward streams, especially for banks”.
It emphasized that monitoring of par (portfolio risk) remains 1-90 trends crucial, in particular in states such as West Bengal (WB) and Maharashtra (MH), which together are about 17 percent of the market share good. Early delinquency trends have remained relatively flat in these regions.
In comparison, NBFCs have demonstrated better delinquency trends during the period of June-August 2025. According to the report, early delinquency comes down; However, forward streams to non-performing assets (NPAs) will continue at a rapid pace, especially at banks. The report noted that par 1-90 for banks with 30 basic points (BP) fell to 3.8 percent, while for NBFCs it fell by 80 BP to 3.2 percent.
Portfolio AT Risk (par) is a financial metric used to assess the credit risk of the loan portfolio of a lender. For banks and NBFCs, Par 1-30 fell with 30 BP and 20BP respectively, while par 31-90 was plane for banks and 60 BP for NBFCs.
The report also warned that, although the economic growth of India is expected to remain healthy, any persistent delay can influence the banking and financing sector. This can lead to slower credit growth, a higher risk of NPAs and pressure on reimbursement from reimbursement and net interest rate margins (NIM). Rising deposit costs can also burden the margins, whereby the report expects stable-to-praised margins for banks in the short term.
Published on September 30, 2025
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