Empirical assessment of management of non-performing asset (NPA) in the public and private sector banks

Abstract

The financial system plays a climacteric role in the development of an economy. It enables the financial intermediary process which facilitates the flow of fund between savers and borrowers. A financial system involves its bank, securities, market infrastructure and the central bank as well as its regulatory and supervisory authority. So for a well-developed economy, a strong, sound and healthy banking system is required. The vital role played by a banking system is lending to business or a borrower who want to invest or expand. Lending to business sustains a Credit Risk, which ensures or arises from the failure of the borrower to fulfill its contractual obligations either during the course of transactions or on future obligations. The failure of a banking sector has an adverse impact on another sector also. From the last few years, the banking sector is facing a problem of Non-Performing Asset (NPA). If the proper management of NPA is not undertaken, it would have serious implication on the business of the banks. The NPA will erode the current profits, seizes interest income and also affect the functioning of the recycling of funds. The study is based on Primary data and the structured questionnaire was framed.