The gross non-performing assets (GNPA) of the Indian banking system are set to improve further to up to 2.1 per cent by the end of FY25, a report said on Friday. GNPAs are likely to come at 2.5-2.7 per cent in FY24 and will improve further to 2.1-2.4 per cent by the end of FY25, domestic rating agency Care Ratings said in the report. It can be noted that the Reserve Bank of India (RBI) began the comprehensive exercise in the middle of the last decade by instructing banks to classify certain stressed assets as NPAs so that the balance sheets represent a true picture. The rating agency also flagged a list of downside risks, which may result in its estimate not coming true, including a material weakening in asset quality due to the elevated interest rates, the impact of regulatory changes, a tighter liquidity environment and global issues. It said GNPAs surged to 11.2 per cent in FY18 from 3.8 per cent in FY14 due to the AQR process of 2015-16, which pushed banks to recognise NPAs and