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Sunday, November 30, 2025 | 02:43 PM ISTहिंदी में पढें
MSME lending a new driver of credit growth? Asset quality a key test
Credit growth to small and medium enterprises is outpacing all other sectors, but the test of asset quality lies ahead
 "MSME, BANKING")
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When a bank produces an RoA of 1 per cent or more, it can be reasonably sure of access to capital from the market. | Illustration: Binay Sinha
India’s banking sector is in rude health. By a variety of measures — capital adequacy, provision coverage ratio, liquidity coverage ratio, return on assets, and gross non-performing assets (GNPAs) as a proportion of loans — the sector demonstrates strengths that would have been unthinkable five years ago.
Capital adequacy in the system as a whole is 17.3 per cent, with public sector banks’ (PSBs’) capital adequacy at 16.2 per cent. Being over five percentage points above the regulatory minimum is prudent and a source of stability. Return on assets (RoA) for all banks is 1.4 per cent. PSBs have an
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