Management of Non- Performing Assets in Commercial Banks in Punjab - An Empirical Analysis

The issue of Non-Performing Assets (NPAs) in the financial sector has been an area of concern for the entire economy. The mounting NPAs has an alarming threat to the banking industry of the country which is sending distressing signals on the sustainability and development of the affected banks. They constitute the real economic cost to the nation as they reflect the application of scarce capital and credit funds to unproductive uses. The money locked in NPAs is not used for productive purposes and the amount is either used for making provisions or it is written off by the banks which directly affect their profitability. The present paper finds out the primary reasons for the growth of NPAs in scheduled commercial banks through an empirical study based on the banks in Punjab. The study also suggests some strategies for controlling the level of NPAs in these banks.