Empirical study of non-performing assets management of indian public sector banks

The Indian banking system has undergone significant transformation following financial sector reforms. It is adopting international best practices with a vision to strengthen the banking sector. The public sector banks dominate the Indian banking system with almost 82 percent market share in the total deposits and advances of the industry. Several prudential and provisioning norms have been introduced, and these are pressurizing banks to improve efficiency and trim down NPAs to improve the financial health in the banking system. In the background of these developments, this study strives to examine the state of affair of the NPAs of the public sector banks in India. The study is analytical in nature, and it is based on the secondary retrieved from Report on Trend and Progress of Banking in India, Report on Currency and Finance etc. The scope of the study is limited to the analysis of NPAs of the public sector banks for the period 2002-03 to 2008-09. It examines trend of NPAs; quality of assets; health of several loan assets; sector wise NPAs etc. The data has been analyzed by statistical tools such as descriptive statistics, correlation, regression analysis, one-way ANOVA, and post-hoc Tukey HSD procedure. The study observed increase in gross as well as net NPAs in absolute terms and improved asset quality of banks. The public sector banks have managed its assets proficiently; however, the study observes that increased NPA's in the agriculture sector is a matter of great concern.