NON-PERFORMING ASSETS LEVELS AND VARIATIONS IN INDIAN BANK GROUPINGS (A CASE STUDY)

Abstract

The Banking industry is essential to an economy; as finance is consider being the lifeblood of an economy. It makes easier to carry out a variety of tasks, such as lending of money, making advances and ensuring resources are used effectively to foster the economic growth and development. Due to increase in NPAs, banking industry’s efficiency has been falling in the current environment. A significant proportion of NPAs could not be advantageous for the bank or the economy. Large NPAs indicate that a bank has too many loans that are no longer working or aren’t generating any interest income for the bank because these are the NPAs. Banks has two options either they can continue to record NPAs in their books in the hopes of recovering them or making preparations for them, or they can completely write off the loans as bad debt. NPA is only one of many criteria to evaluate a bank though. If additional borrowers default their loans, the level of NPAs will continue to rise. The study looks at NPA trends throughout the previous six years (2017 -2022) and compares the performance levels of different types of bank groupings, including both commercial and government sector banks, in terms of NPAs.

Keywords- Reserve bank of India, NPAs, Government sector banks, Commercial sector banks, and Special mention account, Doubtful assets.