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The strength and soundness of a banking system primarily depends upon the quality of the assets. Non-performing assets (NPA) is one of the major concerns for banking system in India. This study analyzes NPA management in Indian banks for the period 2004-2013. The data for the study pertained to gross and net NPAs of different bank groups over the research period, and was collected from the Reserve Bank of India (RBI) website. The results of the study show that there has been a reduction in the NPA ratios over the research period, which indicates improvement in the asset quality of Indian public sector banks, private sector banks, and foreign banks. There was significant improvement in the management of NPAs of the public sector banks. The stringent prudential and provisioning norms and other initiatives taken by the regulatory bodies have pressurized banks to improve their performance, and consequently resulted in reduction of NPA as well as improvement in the financial health of the Indian banking system. The various steps initiated by the RBI and the Government of India in strengthening/improving the functioning of the Debt Recovery Tribunals, Lok Adalats, and SARFAESI Act as a comprehensive settlement policy certainly has resulted in improved recovery of NPA accounts. All these efforts have improved the efficiency and profitability of Indian banks, and have strengthened the financial position of the public sector banks and private sector banks. The study further reveals that despite the huge NPA level of public sector banks, they have been successful in reducing their respective gross and net NPA ratios at par with the private sector banks.
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Non-performing Asset is one of the prevalent problem of Indian Banking sector. For the past three decades, the banking system has several outstanding achievements to its credit. Many banks are facing the problem of NPAs which hampers the business of the banks. Non-performing assets are a drain to the banks. Various research studies have been conducted to analyze the root causes of NPA. The following study tries to understand the concept of NPA, its causes and impact on profitability. The problem of NPA impacts profitability, Liquidity and results in credit loss. Unless and otherwise proper remedial measures are taken the quantum of non-performing assets cannot be reduced and the bank will incur losses to a great extent.
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The banking sector is the backbone of the Indian economy. In this paper, the NPAs of public and private sector banks in India has been compared over a period of ten years (2004 to 2013). It has been observed that the percentage of net NPAs to net advances in public sector banks is varied between 3.1 and 0.9. In case of private sector banks, it varied between 2.4 and 0.4. A regression analysis has also been carried out in order to determine the relationship between the net advances and net NPAs for both sectors. From this analysis, it is evident that private sector banks are performing well in reducing the level of NPAs than public sector banks. This is an alarming figure to the Indian economy; therefore, the public sector banks have to take necessary steps in recovery of loans like war footing method.
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In the recent scenario loan has become a willingness or ability to pay off which is a nightmare for banks. Basically NPA are default loans in the books of banks or are in arrears on scheduled payments of principal or interest has not been paid off within 90 days. We have analysis the secondary data of public and private sector bank for the year 2016 till the end of December 2017. It highlights those sway for NPA for execution for banks, prudential norms and new methodologies of government, suggestions to dispense with the terrible debts problem; bring, diminish and control NPA.
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