NPAs in Indian Scheduled Commercial Banks: Origination and Impact on Economy
Sunil B. Kapadia1, Venu V. Madhav2
1Sunil B. Kapadia, Ph.D. Scholar, KL University, Vijayawada (A.P), India.
2Dr. Venu V. Madhav, Associate Professor, Department of MBA, KL University, Vijayawada (A.P), India.
Manuscript received on 20 August 2019 | Revised Manuscript received on 30 August 2019 | Manuscript Published on 16 September 2019 | PP: 538-541 | Volume-8 Issue-2S6 July 2019 | Retrieval Number: B11030782S619/2019©BEIESP | DOI: 10.35940/ijrte.B1103.0782S619
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: Mounting non-performing assets (NPAs) in the Indian banking sector has been drawing the attention of policymakers, economists, academicians, and other stakeholders. More particularly, during the last ten years, the rise in NPAs of banks has sent the alarming bell both to the Reserve Bank of India and the Government. Per a few studies, one of the root cause for the huge and gigantic rise in NPAs is the 2008 global financial crisis besides lending to Priority sector. The necessity of provisions and high funding costs has also caused an increase in NPAs while bringing down the profitability of banks. Hence, the consequent impact of NPA includes poor recycling of funds due to the weak deployment of credit which potentially could thwart the financial soundness of the credit system. Higher NPAs not only shakes the confidence of investors, depositors, lenders, etc., but also imperil liquidity, solvency position, profitability, capital adequacy ratio, and so on. A few measures that are required for management of NPAs like the establishment of monitoring department, reformulation of banks’ credit appraisal techniques, among others. The paper examines the trends of NPAs and the factors responsible for mounting NPAs in the banking sector from non-identical aspects. The use of secondary sources of data from authentic websites of RBI, Finance Ministry, and Banks has been made.
Keywords: Non-Performing Assets, Credit Appraisal, Priority Sector Lending, 2008 Global Financial Crisis.
Scope of the Article: Residential, Commercial, Industrial and Public Works