How India’s Banks Went From Bad Loans to Cleanest Balance Sheets in a Generation

For the first time, every listed Indian bank has net bad loans below 1%, showing a recovery from the 11.5% crisis. How? It’s an interesting story to tell.

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Something quiet but remarkable has happened in the Indian banking industry. In the April-June quarter of 2026, not a single listed Indian bank, government-owned or private had net bad loans of even 1% of its loan book. A decade ago, the picture was the opposite. Banks were sitting on a mountain of loans that borrowers had stopped repaying. Several state-owned lenders were bleeding losses so deep that the regulator had to put them in a form of intensive care. The change seen today did not happen by accident, nor overnight.