Small finance banks' asset quality to improve, GNPA to fall by March 2027: Crisil Ratings

Small finance banks anticipate improved asset quality by March 2027. Gross non-performing assets are projected to decline significantly from current levels. This improvement stems from microfinance portfolio recovery and non-microfinance growth. Tighter underwriting practices have strengthened borrower selection in microfinance portfolios. The non-microfinance segment now forms a larger share of total advances.