IMPACT OF NPA (NON-PERFORMING ASSETS) ON THE PROFITABILITY PERFORMANCE OF THE SELECTED PUBLIC AND PRIVATE SECTOR BANK

Abstract

The banking sectors performance is crucial for any economy as it reflects the countrys financial health. Banks play a crucial role in mobilising funds from various sectors of the economy, including both priority and non-priority sectors, to finance diverse economic activities.For many years, the banking industry has faced significant challenges due to unrecovered loans.The presence of Non-Performing Assets (NPAs) has significantly hindered the development and growth of the economy.This study delves into the impact of NPAs on the profitability performance of selected public and private sector banks in India from 2018-19 to 2022-23. Analysing key ratios like Gross NPA, Net NPA, and Return on Assets (ROA), sheds light on the relationship between NPAs and bank performance. The findings highlight higher NPA levels in public sector banks, adversely affecting their profitability. Moreover, a significant correlation between NPAs and profitability underscores the imperative of effective NPA management for enhancing bank profitability. These insights are crucial for bank management, policymakers, and regulators to devise strategies for mitigating NPAs and fortifying the banking sector.