Management of non-performing assets a study of Indian public sector banks

A mounting level of NPA's in the banking sector can severely affect the economy in many ways. If NPA's are not properly managed, it can cause financial and economic degradation which in turn signals an adverse investment climate. This study highlight on management of non-performing assets in the perspective/viewpoint of the Indian public sector banks under stringent asset classification norms, use of latest technological platform based on Core Banking Solution (CBS), recovery procedures and other bank specific indicators in the perspective of stringent regulatory framework of the Reserve Bank of India. Non-performing Asset is an important constraint in the study of financial performance of a bank as it results in declining margin and higher provisioning requirement for doubtful debts. Various banks from different categories together provide advances to different sectors like SSI, agricultural, priority sector, public sector & others. These advances need pre-sanctioning evaluation and post-disbursement control to contain rising non-performing assets in the Indian Banking Sector. The decline of non-performing asset is essential to improve profitability of banks and fulfil with the capital adequacy norms as per the Basel Accord. For the recovery of NPAs a broad framework has evolved for the management of NPAs under which several options are provided for debt recovery and restructuring. This study traces the movement of the nonperforming assets present in Indian public sector banks by analyzing the financial performance of the banks with respect to key performance indicators and management of the non-performing assets under the purview of new policy actions and regulatory adherence of the Reserve Bank of India.