Analytical Study of Stochastic Trends of Non-Performing Assets of Public and Private Commercial Banks in India

Abstract

NPA refers to a borrower's asset or account that the bank has classified as second-rate suspicious or lost assets under the RBI's asset classification criteria. The rise in non-performing assets demonstrates the need for provisions, reducing the overall profitability of commercial banks. In addition, a high level of non-performing assets (NPAs) indicates a significant likelihood of many credit evasions, which can affect the profitability and liquidity of banks. As a result, a solid, rule-based, and long-term financial system is critical for the overall progress company. Therefore, its collapse could have negative consequences across numerous segments and domains. The study investigates the current state and the stochastic pattern of non-performing assets (NPAs) and how well public and private sector commercial banks handled their NPAs. Secondary data were collected from various publications of RBI. In terms of independent t-test results, public sector banks have exhibited a consistent upward trend in gross and net NPAs; however, private banks have not kept pace. Furthermore, all commercial banks took a significant step for resolving NPA most efficiently. Due to the competent regulatory guidelines and supervisory aspect, individual banks continually tried to reduce their questionable and lost assets.