Agri GNPA Likely To Touch Rs 2 Lakh Cr By March 2028
The GNPA ratio of agriculture loans at scheduled commercial banks (SCBs) stood at 5.11% in June 2026, the highest among major sectors. Agriculture made up 12.9% of SCB advances but accounted for 37.5% of all SCB GNPAs in June 2026
Chennai: The agriculture gross non-performing assets of scheduled commercial banks are likely to rise to Rs 2 lakh crore by March 2028 due to weak monsoons.
In June 2026, agriculture GNPA stood at Rs 1.41 lakh crore. Care Edge Ratings expects this to rise to Rs 1.47 lakh crore- Rs 1.53 lakh crore by March 2027 and Rs 1.9 lakh crore - Rs 2 lakh crore by March 2028, with most monsoon-related stress likely to show in bank books in FY28.
The GNPA ratio of agriculture loans at scheduled commercial banks (SCBs) stood at 5.11% in June 2026, the highest among major sectors. Agriculture made up 12.9% of SCB advances but accounted for 37.5% of all SCB GNPAs in June 2026. The GNPA ratio is expected to rise to 5.3% - 5.6% by March 2028 as some kharif crop loans in areas hit by the weak monsoon turn bad and are classified as non-performing assets (NPAs).
Public sector banks (PSBs) are likely to bear most of this increase. Including farm loans restructured in drought-hit areas, which stay classified as standard assets, stressed agriculture advances could reach 6.0% to 6.3% of agriculture advances. In an adverse scenario, with a poor rabi crop, larger state loan waivers and a sharper slowdown in bank lending as interest rates rise, the agriculture GNPA ratio could reach 6.1% to 6.4% by March 2028.
The agriculture GNPA ratio of SCBs rose from 4.60% in March 2015 to a peak of 10.33% in March 2020 after two weak monsoons. The much larger rise between FY18 and FY20 came during a wave of farm loan waivers. Ten states announced waivers of about Rs 2.4 lakh crore between 2014-15 and 2018-19. Some borrowers who could repay held back payments in hopes of relief.
“The agriculture GNPA ratio has improved over the last six years, but mainly because farm lending grew fast while the stock of bad loans has stayed between Rs 1.3 lakh crore and Rs 1.5 lakh crore since March 2021. The weak 2026 monsoon hit most of the states where banks lend the most to farmers, so we expect the stress to show in bank books from early 2027 and build through FY28, as some crop loans stay overdue and turn into NPAs,” said Vineet Jain, Senior Director, CareEdge Ratings.
Public sector banks are likely to carry most of this impact. Restructuring under the new natural calamity framework can soften the hit. In contrast, new state loan waivers remain the larger risk, as they have historically caused the sharpest increases in farm NPAs.