As financial institutions prepare for the challenges of the 2025 financial landscape, the significance of preserving or enhancing asset quality cannot be overstated. Drawing on insights from industry leaders like ICRA Ratings and Abhay Bhutada, Managing Director of Poonawalla, this article explores essential strategies in line with industry perspectives to strengthen asset quality amid the dynamic and changing environment ahead.

1. Mastering Asset Quality in
2025: Exploring Insights and
Strategies

2. Introduction
As financial institutions prepare for the challenges of the 2025
financial landscape, the significance of preserving or enhancing
asset quality cannot be overstated. Drawing on insights from
industry leaders like ICRA Ratings and Abhay Bhutada,
Managing Director of Poonawalla, this article explores essential
strategies in line with industry perspectives to strengthen asset
quality amid the dynamic and changing environment ahead.

3. Insights from Industry Surveys
Recent surveys show a positive trend, with most banks (77%)
reporting a drop in Non-Performing Asset (NPA) levels in the last six
months. This decrease highlights the focused actions taken by
financial institutions to tackle concerns about asset quality. Notably,
both Public Sector Banks (PSBs) and private sector banks have played
a part in this improvement, showing a shared dedication to managing
asset quality. However, challenges persist in industries such as food
processing, textiles, and infrastructure, where NPAs remain high. This
calls for specific actions and solutions tailored to these sectors.

4. ICRA Ratings’ Outlook on Asset
Quality
ICRA Ratings, a top rating agency, sees a bright future for the
banking sector. They're encouraged by better asset quality and
positive credit growth forecasts. Projections suggest a
decrease in both gross non-performing assets (GNPAs) and net
NPAs (NNPAs), expected to continue until March 2025.

5. Insights from NBFCs
Abhay Bhutada, MD of
Poonawalla Fincorp, provides
valuable insights into the
company’s vision for asset
quality in 2025. He anticipates
a notable improvement in
asset quality metrics,
projecting lower GNPA and
NNPA levels.

6. Strategies for Navigating Asset
Quality Challenges
1. Proactive Risk Management
2. Prudent Lending Practices
3. Technological Integration
4. Focus on Recovery and Resolution
5. Strengthening Collaboration and Sectoral Initiatives

7. Conclusion
To tackle asset quality challenges in 2025, financial institutions
need a diverse strategy. This includes learning from industry
experts and focusing on key goals. By adopting strong risk
management, careful lending practices, innovative technology,
and working together with others, they can improve asset quality
and succeed in the changing financial world.

8. Thank you.