Impact of Non-Performing Assets (NPA) on Working of the State Bank of India

To ascertain impact of NPA on working of the State Bank of India together with other public sector banks’ a research project was undertaken during FY 2016–17 and thereafter it was concluded that substandard, doubtful, and loss assets were increased in the bank. Similarly, increase in gross NPA (volume & percent) and net NPA had reduced the gross advances and credit-deposit ratio. The bank had to make more provisions for NPA which reduced the capital adequacy ratio and increased its total expenses. This had bad impacts as decreased net interest income (%), net interest margin (%), yield average on advances (%), and average return on assets (%). Ultimately, due to such negative effects, the bank earned a net profit of only Rs. 10,484 crores which was just 5.35% increase since last year when many of PSBs had shown more percentage growth in net profit. Moreover, keeping in view the largest total business of the SBI worth Rs. 35,54,251crores, such a low net profit is not desirable.