A study of Non Performing Assets (NPA’s) of public sector banks in India– An intersectoral comparison

Monika Dahiya; Supreet Johal Bhatia

Volume : V, Issue : III, March - 2016

A study of Non Performing Assets (NPA’s) of public sector banks in India– An intersectoral comparison

Monika Dahiya, Supreet Johal Bhatia

Abstract :

Indian banking industry plays a crucial role in the socio economic development of the country. This role is performed by banks by extending credit to several deficit sectors for their expansion and development. This process of credit creation leads to credit risk which in turn leads Non–Performing Assets (NPA�s).While the prime function of banks is to lend funds to various sectors such as agriculture, industry, personal loans, etc., but in recent times the banks have become very vigilant in extending loans. With the introduction of income recognition, asset classification and provisioning norms in the banking sector, managing NPAs has emerged as one of the major challenges facing public sector banks in India. In today�s competitive scenario banks are judged not only on the basis of number of anches and volume of deposits but also on quality of assets. Non–performing assets form a major part of Banks portfolio and hence are an inexorable burden on the banking industry. The objective of this research is to study trends and position of NPAs of public sector banks across different sectors i.e. priority and non priority sectors, to identify and study the reasons for occurrence of NPAs, to examine the steps taken for recovery of NPAs and to suggest measures for efficient management of NPA�s.