The Non-performing Assets Of Commercial Banks In India: A Bank Group-wise Analysis

Non-performing assets (NPAs) is a serious problem that has been afflicting the Indian banking sector. A bank-group-wise analysis of the size of NPAs in the commercial banking sector in India during the period 2000–2013 shows that the problem of NPAs is generic in nature and is not peculiar to any one group of the Indian commercial banking sector. Large volume of NPAs implies a waste of resources at the disposal of the banking system, apart from its direct adverse impact on the level of profit of the bank concerned. NPAs adversely affect the pace of credit recycling in the economy, adversely affect banking morale and retard the healthy growth of the banking system. The level of NPAs has, therefore, to be reduced through proper appraisal and assessment of loan applications, not only in terms of KYC norms, but also in terms of the economic prospects of the purpose of the loan applied for, its suitability and economic sustainability.