At the SBI Banking and Economics Conclave in Mumbai, Mr. Mishra warned that a repeat of past aggressive lending could force the banking system to divert valuable resources toward cleaning up stressed assets, a process that previously required considerable time and capital.
He reminded the audience that India’s banking sector has emerged from one of its worst asset‑quality crises, with the gross non‑performing assets (GNPA) ratio falling below 1% in the first quarter of fiscal 2027, a stark contrast to the double‑digit levels seen a decade ago during the peak of the bad‑loan wave.
The principal secretary noted that today’s banks enjoy strong liquidity and improved balance sheets, but cautioned that renewed credit growth driven by market enthusiasm rather than fundamentals could reignite the cycle of excessive lending, stressed assets and costly clean‑ups.
Mishra also used the platform to stress the need for greater macro‑economic resilience, urging a reduction in import dependence, a boost to domestic manufacturing, and the attraction of stable, long‑term foreign direct investment to offset volatile global capital flows.
His remarks come as the government continues to monitor credit expansion, with regulators expected to reinforce risk‑management practices to ensure that the recent recovery in asset quality is not eroded by overly optimistic lending.