Loan NPA increased sharply in Private Banks in Q1 FY26

Several large and mid-sized private sector banks in India have reported a noticeable rise in bad loans (also known as slippages) and provisions during the first quarter of the financial year 2025-26 (Q1 FY26). The increase in bad loans is mainly due to stress in agriculture loans and small, unsecured loans.

Axis Bank: Sharp Rise in Bad Loans and Provisions

Axis Bank reported a significant increase in bad loans. In Q1 FY26, new bad loans rose by 71% compared to the previous quarter, reaching ₹8,200 crore. At the same time, the bank recovered and upgraded only ₹2,147 crore of loans, which was lower than ₹2,790 crore in Q4 FY24. Write-offs also dropped to ₹2,778 crore.

To deal with this situation, Axis Bank increased its loan loss provisions to ₹3,900 crore, compared to ₹1,369 crore in the previous quarter. Provisions are funds that banks set aside to cover potential loan defaults.

Axis Bank explained that some of the increase in bad loans was due to technical reasons—especially how it classifies loans like cash credit, overdraft accounts, and those settled under one-time agreements. CEO Amitabh Chaudhry added that the agriculture loan segment was also unusually stressed this quarter, contributing to higher bad loans.

Click here to download Financial Results of All Banks for June 2025 Quarter

HDFC Bank: Rise in Bad Loans and Buffer Provisions

HDFC Bank also saw a rise in its bad loans. The bank reported fresh slippages of ₹9,000 crore, up from ₹7,500 crore in the last quarter. According to the bank’s CFO, Srinivasan Vaidyanathan, most of these bad loans came from the agriculture sector, although details about other segments were not shared.

Interestingly, HDFC Bank earned ₹9,130 crore from selling a stake in its subsidiary, HDB Financial Services. Using this profit, the bank decided to create a floating provision of ₹9,000 crore and an additional buffer of ₹1,700 crore. These are not tied to any particular loan portfolio but serve as a safety cushion in case of future risks or economic downturns.

Click here to download Financial Results of All Banks for June 2025 Quarter

ICICI Bank: Rising Stress in Retail and Rural Loans

ICICI Bank also saw an increase in fresh bad loans, which went up to ₹6,245 crore in Q1 FY26, from ₹5,142 crore in the previous quarter. A large part—₹5,193 crore—came from the retail and rural loan segments, especially from Kisan Credit Card (KCC) borrowers.

Why Are Bad Loans Increasing?

The bad loans are increasing because the number of loans have increased so naturally some of the loans might become NPA. Moreover as per various reports and current industry scenario, there is stress in unsecured loans, microfinance, and MSME (Micro, Small and Medium Enterprises) segments.

Click here to download Financial Results of All Banks for June 2025 Quarter