Banks’ NPA control through forensic audit

Trust and confidence are the building blocks of a bank. But these trust and confidence are badly affected by the rising NPAs of banks. The NPA of public sector banks has increased from Rs. 2, 05, 054 crore in September 2015 to Rs.4, 00, 000 crore in April 2016. In other words an increase of 100%approximately in just 8months. NPAs are basically the financially burdens to a bank. All this raises the concerns of the financial officers and the RBI. Due to the rising concern of NPAs the Reserve Bank of India issued a circular on May 2015 in order to determine some of these bad assets as red flag assets and to order the forensic audit to curb the situation. This paper makes an attempt to discuss the meaning and present status of NPA; understanding the early warning signals for an account becoming NPA; the meaning and evolution of Forensic Audit and to know Accounts for which forensic audit is applicable.