IMPACT OF NON-PERFORMING ASSETS (NPA`S) ON BANK`S PROFITABILITY - INDIAN SCENARIO

Abstract

Non-performing Assets (NPA’s) plays a crucial role in the assessment of financial performance of a bank. In simple terms, NPA is the pivotal term for banks by which one can the fitness can be assessed very easily. NPA’s means the portion of money not received by the banks towards they disbursed or sanctioned loans. Therefore, banks must be more cautious while sanctioning the loans because it not only affects the bank but also the overall financial system. Non-Performing Assets influence the fund establishment as well as the complete budgetary framework. In this way, a detailed research has been done on public sector banks in India to assess the impact of NPA’s on the productivity of banks. Banks today are not made a decision about just based on number of branches and volume of stores yet additionally based on standard of benefits. NPAs adversely impact on the gainfulness, liquidity and dissolvability of the banks. This paper concentrates on the conditions of NPAs in chosen banks. Specifically, Seven Public Sector Banks has been chosen for the research i.e. State Bank of India (SBI), Bank of India (BOI), United Bank of India (UBI), Bank of Baroda (BOB), Indian Overseas Bank (IOB), Punjab National Bank (PNB) and Central Bank India (CBI). Simultaneously, this research also focused on the strategies to be followed by the banks to handle the NPAs and proposes a multi-pronged system for fast recuperation of NPAs in banking area. The connection between Gross NPA and Net Profit of seven banks has been examined in this paper. The outcome shows that aside from SBI and PNB the wide range of various banks display a negative relationship between their gross Non-Performing Assets and net benefits. However, SBI and PNB is expanded the net benefit each year not influenced by Gross Non-Performing Assets. These two banks are focusing towards their NPA to recuperate their forthcoming credits. This research is completely depending on optional information recuperated from Report of Progress of banking in India, Websites, Journals and Articles.