Non performing assets and its composition: A comparative study of SBI groups with other nationalised banks of India

A strong banking sector is important for flourishing economy. The failure of the banking sector may have an adverse impact on other sectors. Non-performing assets are one of the major concerns for banks in India. NPAs reflect the performance of banks. A high level of NPAs suggests high probability of a large number of credit defaults that affect the profitability and net-worth of banks and also erodes the value of the asset. The NPA growth involves the necessity of provisions, which reduces the overall profits and shareholder value. The issue of Non Performing Assets has been discussed at length for financial system all over the world. The problem of NPAs is not only affecting the banks, but also the whole economy. In fact high level of NPAs in Indian banks is nothing but a reflection of the state of health of the industry and trade. NPA plays an important role in performance measurement of any bank as it reduces the overall profitability of the bank. In this research paper the performance of the two public banks, i.e. State Bank of India and Punjab National Bank in concern with NPA management is evaluated. Through this paper, it has been tried to analyze how efficiently these two public sector banks are managing their NPAs with the help of various financial and statistical tools.