A Study of NPAs in Selected Indian Commercial Banks

Abstract

NPAs are considered to be important parameter to judge the performance and financial health of the banks. The level of NPAs is one of the dirves of financial strength and growth in banking sector. The presence of NPAs has an adverse impact on the productivity and efficiency of the Indian banks which have resulted in the erosion of profits. To face the global challenges and to maintain the liquidity and profitability, it is required to maintain the NPAs at low point through efficient recovery before the converted into bad debts. The issue of increasing NPs is giving fitters to the banking sector particularly in a developing economy like India. The problem of NPA is not limited to Indian banks only. In fact, this is the problem of almost all countries of the world, no matter country is developing, developed or poor. Indian government has already taken number of initiatives in this direction. Among these Securitization Act 2002 is most significant to solve the problem of NPAs. The study observes a number of factors responsible for the generation of NPAs which are important and peculiar to India. like, negligent project appraisal system, political interference and incorrect projections of further demand in the industrial sector, coupled with recession in the last few years, have resulted in the default of many bank accounts, resulting in 'non performing assets'. The empirical study employ both simple and advanced statistical tools: non- parametric statistical tests based on Chi-square test and five point Liked scale has also been used to quantify the intensity of the respondents' attitudes towards the selected attributes.