The Reserve Bank of India's Financial Stability Report indicates a significant decline in gross and net non-performing assets (NPAs) for commercial banks, reaching multi-year lows. This improvement is attributed to regulatory actions, recapitalization, improved insolvency mechanisms, and more conservative lending. While overall asset quality has strengthened, the report highlights a concerning shift in NPA composition, with agriculture now representing the largest share of bad loans, exceeding its proportion of bank credit and signaling deeper sector stress.