Emerging Trends of NPAs in Priority and Non-Priority Sector in India: A Study of Public and Private Sector Banks

Abstract

This paper analyses the growth and structure of NPAs in priority and non-priority sector lending of public vis-a-vis private sector banks from the year 2004 to 2017. The exponential growth rate, co-efficient of correlation and co-efficient of variation has been calculated. The null and alternative hypothesis with respect to NPAs has been tested with t-test at 5% level of significance. It was found that, both the priority and nonpriority sector NPAs have contributed significantly to total NPAs of the banks. However, non-priority sector NPAs contribution to total NPAs was found to be more than priority sector NPAs, both in case of public as well as private sector banks from the year 2013 onwards. The reduction in entire NPAs is difficult for the banks in the short as well as long run, keeping in view the risks attached with the priority sector lending on the one hand and the social responsibility of the banking sector on the other hand. It is recommended that, government, policy makers, private and public sector banks should make efforts for reducing sector-wise NPA