The Pressing Problem of Non-Performing Assets (NPA) and Employees’ Cost (EC) in Indian Banking Sector: A Time Series Analysis of Select Banks of India

A strong banking sector is important for a flourishing economy. The collapse of banking system may have cascading effect on other sectors. The failure of the banking sector may have an adverse impact on other sectors too. Non- Performing Assets (NPA) are one of the major concerns for banks in India. A high level of NPAs reflects high degree of risk of credit defaults. It affects the profitability and net worth of banks and erodes the value of the asset. The present piece of work is an attempt to discuss this problem and develops a time series model for data of Employees Cost (EC) and Gross Non-Performing Assets (GNPA) of select five public sector banks (except State Bank of India (SBI) in India. Employees’ Cost and NPA for the period Q1:2019 to Q3:2019 have been forecasted. The paper concludes with the identification of best model fit for select banks (Punjab National Bank, Bank of Baroda, Union Bank of India and Canara Bank) through times series analysis. Predicted Values of Employee Cost (EC) and Non-Performing Assets (NPA) will help banks in forming their strategies to overcome EC and NPA issues.