Its estimate is based on the study of the 26 state-owned banks as well as 13 from the private sector, including all the big banks.
"Overall Gross NPA Ratio has risen from 3.26 per cent as on March 31, 2013 to 3.85 per cent as on March 31, 2014," Care said in a report.
The 3.85 per cent number would have been higher by 0.30 per cent, but for the sale of over Rs 10,000 crore of assets by the banks to the asset reconstruction companies in the latter part of the recently concluded fiscal, it said.
A December 2014 report by the Reserve Bank had pegged the overall system's gross NPA at 4.2 per cent in September 2013, and estimated that it will grow to 4.6 per cent in September 2014 and recover to 4.4 per cent by March 2015.
The slack economic growth (the country has witnessed two consecutive years of sub-5 per cent growth), high interest rates due to the pressure on the inflation front and trouble on projects both due to clearances and judicial interventions have been blamed for the high NPAs.
With a new pro-reforms government taking charge, analysts have been saying that there will be a surge in the growth.
"However, the improvement (on NPAs) would be gradual and would reflect in the second half of FY15. The Gross NPA ratio is estimated to be marginally higher at around 4 per cent by end of FY15," the domestic agency said.
Private banks continue to outperform the state-run ones on the asset quality front. "The gross NPAs of public sector banks increased by 38.2 per cent, while that of the private sector banks was comparatively lower at 13.6 per cent. The gross NPA of the state-run banks stood at 4.33 per cent as on March 2014 as against the 1.82 per cent for the private sector ones," it said.
On the restructuring front, Care said the recast books swelled by a third to Rs 3.9 trillion (Rs 3.9 lakh crore) as on March 2014, from the Rs 2.6 trillion as on March 2013.
A majority of the asset restructuring was done in the infrastructure, power, iron and steel, textiles and aviation sectors, it said.
During the fiscal, the 39 banks showed a 12.5 per cent moderation in their total income as against the 15.7 per cent surge in the previous fiscal, it said, adding that the net profits also declined by 11.3 per cent as compared to a growth of 10 per cent observed in the previous fiscal.
The overall net interest margins continued its downward trend and narrowed to 2.64 per cent for FY14 as against the 2.73 per cent in the year-ago. The downfall was led mainly by the state-run lenders who were not able to maintain their spreads, it said.
For the private sector banks, there was an expansion in margins during FY14 to 3.35 per cent from the year ago period's 3.26 per cent, the agency said.
It added: "Profitability of the public sector banks was largely impacted on account of slowing economy leading to weakening of income profile, pressure on margins and higher provisioning on account of weakening asset quality.
"On the other hand, the private sector banks continued to show stable growth in income and were able to maintain profitability and asset quality."