Analysis of Non-Performing assets in banking industry

Purpose-the purpose of this paper is to analyse the trend of Non-performing assets in the banking sector in India. Design/methodology/approach-It reviews several pieces of research, employing wide range of methods, including Factor Analysis on various possible determinants of Non-performing assets. Structured questionnaires and secondary data analysis has been done. Findings-The analysis provides that there has been an upward trend in Gross and Net NPA during the specified time period of 10 years. Situation can be stated as alarming for the banking sector where in 2016 gross NPA ratio for private and public is at its peak with 8.545 and 2.83 respectively. Six major factors were extracted from the study which has the effective impact on NPAs. Research limitation/implications—Major factors are extracted through the responses received through the questionnaires only from fifty bankers which may be biased. Originality/Value-The efficiency of the banks is affected by the Non-Performing Assets (NPAs). Government has introduced provisioning norms to curtail the menace of NPAs in this sector. This paper offers new insights into that gap by which performance or efficiency of banks is measured. The urgency to overhaul the system was conveyed. Barge (2012)NPAs, its magnitude and major causes for an account becoming non-performing and also strategies for reducing NPAs are the areas covered under the paper. Especially the year of 2016 has been a great problem for the banking industry in India wherein the public sector banks hold 8.545 gross NPA ratio suggesting for every 100 advances made approximately 9 turn out as bad loans. Six factors are extracted from 20 variables which affect the Non-Performing Assets in Banking Industry.