A strong banking system is the indicator of an efficient economy. With the opening up of the economy in the early 1990s, the Indian banking sector has become very much competitive with the entry of private and foreign players in the Indian banking space. The asset quality of banks reflects the efficacy of their credit risk management and recovery environment. However, Non-Performing Assets (NPAs) are a major concern for Indian banks. In this backdrop, the main objectives of this work are: (a) To study the magnitude and trend of NPAs of Indian banks; (b) To highlight the causes and likely impact of NPAs; (c) To suggest measures for proper management of NPAs. The study is descriptive in nature. The work is based on secondary data which have been collected from articles, reports, and web resources. The asset quality of the banking system has deteriorated significantly over the years. Banks should seriously follow the various measures put in place by the Reserve Bank of India (RBI) for resolution and recovery of bad loans. Simultaneously, the banks have to strengthen their due diligence, credit appraisal and post sanction loan monitoring systems to mitigate the problems of increasing NPAs.
Asset Quality, Banking System, Management of NPA, NPA, RBI
