Analysis of npas of public sector banks – A rating model

This paper is based on my research project entitled “ANALYSIS OF NPAS OF COMMERCIAL BANKS: A STRATEGIC MANAGEMENT PERSPECTIVE”. I greatly acknowledge the Alagappa University for the financial assistance provided for the project from the Alagappa University Research Fund.

Banks accept the deposits from the customers and lend money to them. Every bank lends with a fond hope of growing with such business venture. But the road is not always smooth. There are several hurdles. The banker invariably being the major stake holder has to take extra care to ensure that his interests are protected. He has to be shrewd person to judge the borrowers, the industry trends, the current problems and the probability of putting the units back on track with certain relief measures. Unless the debts become overdues and the banker struggle to collect the interest and principal amount from the borrowers. Then they have to face the problem of borrowers. The NPAs reduce the earning capacity of the business, affect the capital adequacy and banks profitability, decrease the value of the shares etc… Hence, steps should be taken to reduce the NPAs. Inn this paper, an attempt has been made to frame a model called NPAs rating model in order to assess the position of the banks in connection with the NPAs.