Bank provisioning at 3-year low on better recoveries, asset quality

ET Intelligence Group: Mortgage loss provisioning by banks at the mixture stage dropped to a 12-quarter low within the three months to March 2026, aided by decrease provisioning from personal sector banks amid bettering asset quality and unhealthy mortgage recoveries. For a pattern of 29 banks, mortgage loss provisioning dropped by 17.4% sequentially and 23.5% year-on-year to ₹19,314.3 crore. The earlier low was ₹18,169.5 crore within the March 2023 quarter. The quarterly unhealthy mortgage provisioning by the pattern banks was beneath ₹20,000 crore on three events up to now 13 quarters.

Majority of the banks from the pattern, 23 out of 29 to be exact, reported decrease provisioning year-on-year. As well as, 15 out of 17 personal sector banks and eight out of 12 public sector banks (PSBs) confirmed contraction in mortgage loss provisioning.

The asset quality of the banking sector has been bettering steadily over the previous few quarters. CARE Rankings talked about in a current report that the gross non-performing asset ratio dropped to a multi-year low of 1.8% within the March 2026 quarter. “The development was pushed by sustained recoveries, upgrades, calibrated write-offs, and decrease incremental stress formation,” the rankings company mentioned within the report.

For personal sector banks, the provisioning almost halved to ₹7,236.6 crore from the earlier quarter and fell by 28% year-on-year. Among the many high banks, ICICI Bank reported the sharpest fall in complete provisioning, which almost halved sequentially and year-on-year to ₹96 crore. Different personal sector banks that reported greater than a 90% year-on-year decline in provisioning included South Indian Bank and Sure Bank.

For PSBs, mortgage loss provisioning elevated by 27% sequentially whereas falling by 20.4% year-on-year to ₹12,078 crore. Their share within the pattern’s provisioning elevated to an eight-quarter excessive of 62.5% within the March quarter, pushed by a pointy bounce within the case of some PSBs. Bank of Baroda’s mortgage loss provisioning almost doubled to ₹2,566 crore year-on-year, whereas for Punjab Nationwide Bank, it rose by 54% to ₹906 crore.