Management Of Non-Performing Assets Research Articles

EFFECT OF DEPOSITS AND NON-PERFORMING LOANS ON BANK PROFITABILITY – A CASE STUDY ON CONVENTIONAL COOPERATIVE BANK OF BARODA REGION

The banking sector plays a vital role in providing essential financial services, facilitating the allocation of funds to productive ventures, and aiding in the implementation of government fiscal and monetary policies. Historically, Non-Performing Assets (NPAs) have posed significant challenges for banks, but reducing NPAs has now become a top priority. The strength of a nation's economy relies heavily on the health of its cooperative banking sector. This study analyzes the non-performing assets (NPAs) of The Pragati Co-operative Bank Ltd. over a six-year period from 2017-18 to 2022-23. The research examines various aspects related to NPAs, including gross NPAs, net NPAs, provisions made towards NPAs, loans and advances, deposits, and relevant ratios such as net NPA ratio, provision coverage ratio, and credit-to-deposit ratio. The data analysis reveals that the bank maintained a zero net NPA throughout the period, indicating effective provisioning strategies. While gross NPAs fluctuated, the provision coverage ratio remained strong, suggesting the bank's ability to withstand asset quality pressures. The study also investigates the relationship between gross NPAs and net profits using correlation and regression analysis, finding a positive correlation but minimal significant impact of gross NPAs on profitability. Overall, the research highlights The Pragati Co-operative Bank Ltd.'s proactive approach to NPA management, financial stability, and adaptability to changing market conditions.

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

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.

Non-Performing Assets: A Current Overview of Selected Indian Public Banks

This research paper provides a detailed overview of Non-Performing Assets (NPAs) in selected Indian Public Banks as of the year 2024, aiming to assess current trends, sector-specific distributions, and the effectiveness of management strategies in mitigating NPAs. Given the critical role of NPAs in determining the financial health of banks and their potential impact on the broader economy, this study seeks to identify effective strategies for NPA management within the evolving economic and regulatory landscape of India. Utilizing a descriptive analytical approach, the research analyzes secondary data sourced from the Reserve Bank of India, covering the period of April 2023 to March 2024. The data were analyzed using the Statistical Package for the Social Sciences (SPSS) to perform a comprehensive examination of NPA trends across different sectors and banks, the impact of NPAs on bank profitability, and the recovery rates of secured versus unsecured NPAs. Key findings indicate significant variations in NPA levels and recovery rates among banks, with sector-specific vulnerabilities, notably in the SME sector, highlighting the need for targeted risk management strategies. The study underscores the importance of robust regulatory frameworks and strategic NPA management in enhancing bank profitability and ensuring economic stability. The implications of these findings are significant for policymakers, regulatory bodies, and banking institutions, advocating for strengthened NPA management practices and adaptive strategies to navigate the complexities of the banking sector.

A Study on Management of Non-Performing Assets in Context of Public Banks Sectors

The management of Non-Performing Assets (NPAs) remains a critical concern, especially within the public sector, where financial institutions play a pivotal role in supporting economic growth. This study aims to comprehensively analyse and evaluate the strategies employed by public sector entities to effectively manage NPAs, considering the unique challenges and regulatory frameworks governing these institutions. KEYWORDS; NON PERFPRMING ASSETS, PUBLIC SECTOR BANKS, FINANCIAL MANAGEMENT, ASSET QUALITY, RISK MITIGATION, . CREDIT RISK, BANKING SECTOR

Management of non-performing assets in India: role of risk management practices in the wake of Covid-19

Management of non-performing assets in India: role of risk management practices in the wake of Covid-19

A STUDY ON NON-PERFORMING ASSETS MANAGEMENT AT STATE BANK OF INDIA, ANANTHAPURA GATE, BANGALORE KARNATAKA

Non-performing assets (NPAs) are advances that are not repaid or serviced by the borrowers, posing a risk to the financial stability and profitability of banks. This research aims to inspect the management of NPAs at ‘State Bank of India’ (SBI), one of the largest public segment banks in India. The study has four objectives: to study the gross and net NPAs position at SBI, to analyse the sector-wise and segment- wise NPAs position at SBI, to ascertain the extent of provisions made for NPAs, and to determine the impact of NPAs and provisions on the profitability of SBI. The learning uses secondary data from the annual reports of SBI for the period from 2019 to 2023. The study employs descriptive statistics, correlation analysis, and hypothesis testing to analyse the data. The study discoveries that SBI has improved its asset quality and credit risk management over the five-year period, as evidenced by the declining trend of gross and net NPAs, the of NPAs in high-risk sectors, and the increase in provisions and profitability. The study also finds that there is a significant relationship between gross and net NPAs, and that there is a difference between provisions and net profit. The study suggeststhat SBI should focus on reducing the NPA ratio of the industries with high exposure and default rates, diversifying its loan portfolio, and strengthening its credit assessment, monitoring, and recovery systems. The study concludes that SBI has successfully managed its NPAs and enhanced its financial performance, which is beneficial for the country’s growth andeconomic growth. Key words: Non-performing assets, Gross NPA, Net NPA, Sector wise Performance, Provisions, Profitability

CONTROLLING THE NPA IN THE INDIAN BANKING INDUSTRY: THE ROLE OF GREEN BANKING

The success of the Swadeshi movement, which emphasizes comprehensive and sustainable development, is the primary means by which the Indian government hopes to achieve Atmanirbhar Bharat. It is crucial to remember to create an atmosphere that is favorable for the creation of locally produced, cost-effective goods and services with minimal negative environmental effects. Due to the availability of smart technology, we saw that numerous financial transactions happened quickly during the lockdown caused by COVID 19. Banking institutions are relying on technology to strengthen their risk monitoring and NPA management capabilities in light of the COVID-19 pandemic and the slowing economy.The current imperative is improved Innovative green banking technologies for paperless transactions, including loan applications, loan releases, agreements, payback strategies, and the recovery of non-performing assets (NPAs), etc.This research paper's goal is to examine the numerous financial products, laws, and regulations governing bank NPA recovery that support green banking. By rerouting capital flows to projects and innovative technologies that are ecologically responsible and have a low impact on the environment, banks play a significant role in reducing the carbon footprint and accelerating economic growth. The paper presents the strategies or techniques employed by the banking sector to promote green banking. Understanding the importance of online resources this paper tries to bring out the significance of the same in the promotion of green banking highlighting the positive implications for controlling non-performing assets with the challenges in promoting green banking.

A Frequency Assessment of Prevalent Prevention Strategies in order to Manage Banks’ NPAs in MSME Loans

The vast amount of non-performing assets (NPAs) is a recurrent problem and a huge barrier to developing a successful banking sector. The MSME sector of the Indian economy is experiencing a worsening problem with delinquent assets. There has hardly been any systematic evaluation of tackling the problem in the context of loans sanctioned to MSMEs. Recent years have seen an increase in bad loans to micro, small, and medium businesses. Curative and preventive measures are both available to control non-performing assets (Meher et al., 2020). The study makes an effort to concentrate on the identification of numerous preventive methods for NPA management in the MSME sector in future. The primary data is related to the actual usage of preventive measures. The data was empirically evaluated using frequency analysis based on a survey of 316 bankers from 10 banks (5 from public and 5 from private sector). Therefore, the current study aims to shed light on the methods utilised to prevent NPAs in MMSEs while taking into account the viewpoint of the bankers who have had direct involvement in lending choices. The findings highlight the key methods for preventing NPAs which the banks must consider while making the necessary structural modifications to their mitigation measures.

Study on Comparative Analysis of Rising Non Performing Assets of Bank of Maharashtra and ICICI Bank

The banking industry plays a crucial role in the financial and economic growth of a country. A well-functioning banking sector acts as a catalyst in achieving rapid economic development by providing a stable financial system, mobilizing savings, channeling funds to productive sectors, facilitating transactions, and supporting monetary policy. However, one challenge that banks face is the issue of Non-Performing Assets (NPA), which refers to loans that are not repaid by borrowers as per the agreed terms. In conclusion, high levels of NPAs can have several limitations on the banking sector and the economy, including reduced incomes, unrecoverable principal amounts, negative indicators, operational inefficiency, political interference, and constraints on financing for certain sectors. Effective management of NPAs is crucial for maintaining a healthy banking sector and supporting sustainable economic growth. The present comparative study is aim to know NPAs of Bank of Maharashtra(BOM) and ICICI bank the study applied quantitative research method. In this paper, the NPAs of public and private sector banks in India has been compared over a period of last five financial years. It has been observed that the percentage of net NPAs to net advances in public sector banks is varied between 3.1-0.9. In case of private sector banks, it varied between 2.4-0.4. The collected data is analyzed using descriptive analysis, chi square test, etc. This study also identifies the cause of the increasing non-performing assets in the banks and a few suggestions.

Intellectual capital and non-performing assets: the role of knowledge assets in improving credit quality of Indian banking sector

Purpose Intellectual capital (IC) is beneficial to the improved performance of businesses, irrespective of their industry. The present study proposes to check if the use of IC can also help in improving the asset quality of banks. Thus, this study aims to examine the impact of IC and its components on non-performing assets (NPAs). Design/methodology/approach The study has been conducted with a sample of 30 Indian commercial banks and analysed over a time frame of 15 years (2004–2005 to 2018–2019). The modified value-added intellectual coefficient model has been used to measure the independent variables, IC, and its components. The dependent variable, NPA, has been represented by the net NPA ratio. Two-step system generalized methods of moments (SGMMs) have been applied for the regression analysis. Along with the short-term estimates provided by the SGMM approach, the long-term impact of explanatory variables on the dependent variables has also been seen. Findings The results of the study show that IC and its components are indeed helpful for the management of NPA, as they impact the problem loans negatively. Furthermore, the long-term benefits of IC in enhancing bank credit quality are more substantial. Practical implications The results from the present study can be used by bank management. The bank managers can draw inferences that the efficient application of IC can help them reduce their loan losses. Developing skills and knowledge of employees, maintaining close relations with stakeholders, significantly the customers, and putting more sophisticated processes and infrastructure to use can help banks to control their loan losses. Originality/value A major proportion of studies examining the role of intangible assets in various aspects of the banking sector focuses on the association between IC and the financial performance of banking entities. However, for banking institutions, apart from financial performance, improving credit quality is also imperative for staying afloat. Thus, to the best of the authors’ knowledge, the present study is one of the first to examine the relationship between knowledge-based assets (i.e. IC) and bank credit quality.

Financial Management: Management of Non-Performing Assets (NPAs)

"Banking sector plays an important role in the Indian economy. The banking sector performance can be measured by assessing the bad loans which cannot be recovered. The level of NPAs indicates the soundness of the banking sector. The purpose of this research is to examine the role of the different banks in managing and controlling the NPAs through the various recovery mechanisms. This paper identifies the reasons on occurring of NPAs in Indian banking industry, and to find out existing monitoring systems and credit appraisals to control the NPAs. The information will be useful for investors as the issue of poor loans causes for the NPAs and to know its impact on the profitability of the banks and thereby the future prospects of the banking sector. The main objectives of this paper; To examine the gross NPAs and incidence of NPAs. To measure the trends of NPAs in the Indian banking sector. Further the paper also attempts to study adherence to the guidelines and directions issued by the RBI from time to time"

Management of non-performing assets in India: role of risk management practices in the wake of COVID-19

Management of non-performing assets in India: role of risk management practices in the wake of COVID-19

An Economic Analysis of Non-Performing Assets of Banks in India

Banking and Financial Institutions are the strength of any countries economy and which plays an important role to the progress to the country. With an increase in the prerequisite of banking systems in the trade and industry development progression, the major challenge that the Bank and the Financial Institutions are facing an increase in Non-Performing Assets. The Central Bank of India (RBI) instructed all the banks to stringent the loan process to avoid the increase in NPA, which is still peaking high every year. According to the credit rating agency CRISIL, the gross NPA (GNPA) has touched almost Rs. 8,06,412 crore as on 31.3.2019 (provisional data). As per RBI provisional data on comprehensive procedures, as on 31.3.2019, the cumulative amount of unrefined NPAs of PSBs and Scheduled Commercial Banks (SCBs) were Rs. 8,06,412 crore and Rs. 9,49,279 crore correspondingly. Numerous wise accounting norms with a focus to NPA have been introduced by the RBI to diminish the Non-Performing Assets. Consequently, to progress the financial health of a banking system Non-Performing Assets management has become an important assignment of the bank. Over the last five years, Government has engaged wide-ranging phases under its 4R’s approach of recognizing NPAs evidently, undertaking and improving value from strained books, recapitalizing PSBs, and transformations in banks and financial system to guarantee a liable besides spot less structure.

NPAs in Indian Scheduled Commercial Banks: Origination and Impact on Economy

Mounting non-performing assets (NPAs) in the Indian banking sector has been drawing the attention of policymakers, economists, academicians, and other stakeholders. More particularly, during the last ten years, the rise in NPAs of banks has sent the alarming bell both to the Reserve Bank of India and the Government. Per a few studies, one of the root cause for the huge and gigantic rise in NPAs is the 2008 global financial crisis besides lending to Priority sector. The necessity of provisions and high funding costs has also caused an increase in NPAs while bringing down the profitability of banks. Hence, the consequent impact of NPA includes poor recycling of funds due to the weak deployment of credit which potentially could thwart the financial soundness of the credit system. Higher NPAs not only shakes the confidence of investors, depositors, lenders, etc., but also imperil liquidity, solvency position, profitability, capital adequacy ratio, and so on. A few measures that are required for management of NPAs like the establishment of monitoring department, reformulation of banks’ credit appraisal techniques, among others. The paper examines the trends of NPAs and the factors responsible for mounting NPAs in the banking sector from non-identical aspects. The use of secondary sources of data from authentic websites of RBI, Finance Ministry, and Banks has been made.

A STUDY OF NON PERFORMING ASSETS MANAGEMENT WITH REFERENCE TO SELECT INDIAN PUBLIC SECTOR BANKS AND PRIVATE SECTOR BANKS

A STUDY OF NON PERFORMING ASSETS MANAGEMENT WITH REFERENCE TO SELECT INDIAN PUBLIC SECTOR BANKS AND PRIVATE SECTOR BANKS

Why Non-Performing Assets Are More in Public Sector Banks in India?

The paper identifies why there are more non-performing assets (NPAs) in the public sector banks (PSBs) than those in the private sector banks (PVSBs). It evaluates and reviews the policies and practices of scheduled commercial banks (SCBs) in terms of NPA management. It studies the causes of NPAs, such as ownership structure, credit terms, conditions and covenants, nature of loans, kind of borrowers, bank management practices and business cycles. The study suggests that PSBs have adopted liberal and loose credit policies, and have concentrated loans on borrowers and sectors, i.e., huge credit exposures to a few large corporate borrowers and to a few sectors. It also finds that PSBs are subject to weak and mild regulatory and supervisory impacts on their operations and functions as these are owned by the Government of India. The managements of PSBs are indifferent to the success and performance of PSBs as there are no incentives or penalties for their performance and nonperformance. It is suggested that the PSBs should develop both the skills and practices towards credit and credit risk management. The government has to introduce flexible compensation package and incentives to the managements of PSBs linked to the performance so that it will improve profitability and reduce NPAs. The Reserve Bank of India’s regulation and supervision should be ownership neutral.

Non-performing assets (NPAs) and its determinants: a study of Indian public sector banks

There has been increased concern about the continued deterioration in the asset quality of Indian public sector banks in recent times. Reserve Bank of India’s Financial Stability Report 2017 acknowledged that the risks to the Indian banking sector have been increasing in the post-recession period, particularly, the risk of accumulating non-performing assets (NPAs). In this perspective, the current paper investigates the extent and growth of NPAs and interbank disparity in NPA management among public sector banks. We found that the profitability of public sector banks is declining in the post-crisis period and the amount of NPAs has been on the rise. Further, the recovery mechanisms have proved to be ineffective in containing the problem of bad debts. In a dynamic panel analysis, we also examined the determinants of NPAs in public sector banks and found that factors such as past NPAs, the operating efficiency of the bank, capital adequacy, GDP growth rate, and interest rate are the major determinants of the growth of NPAs in Indian public sector banks.

Non-Performing assets in MSME Sector-A study

MSME sector in India is known for job creation. Hence, Government of India attaches more importance to promotion and development of micro, small and medium enterprises (MSMEs). For this purpose, bank credit is a critical input. Unfortunately, these enterprises suffer from need based finance. Consequently, the number of non performing assets (NPAs) in the MSME sector and also sick units is on the rise. Over the years, several initiatives have been taken up by both Government and Reserve Bank of India to frame new policy guidelines &schemes, strengthening institutional arrangements, revising lending norms. rationalising lending procedures and asking banks to adopt best practices. Yet, the problem remains unresolved. Consequently, MSMEs default the payment of interest and loan instalments and become NPAs. Towards this end, it calls for analysis of NPA portfolio of MSME sector and review loan recovery measures based on which suggestions are offered for better management of NPAs in the sector

Assessing the Inter Bank Disparity in Non-Performing Assets (NPAs) Management in Indian Public Sector Banks

In a bank-dominated financial system like India, the strength of the overall financial system or financial stability highly depends on the soundness of banks. Indian Banking system proved to be strong and resilient during the global financial crisis of 2008. But of late, there has been increased concerns about the continued deterioration in the stability of the banking sector. Financial stability report of RBI confesses to the fact that the risks to Indian banking sector have been increasing in the post-recession period particularly the risk of accumulating NPAs. This study attempts to analyse the trend in profitability, NPAs, and the effectiveness of recovery mechanisms and interbank disparity in NPA management with respect to public sector banks. We found that the profitability of public sector banks is declining in the post-crisis period and the amount of NPA has been on the rise. Further, the recovery mechanisms have proved to be ineffective in containing the problem of bad debts.

A Study of Non Performing Assets Management with Reference to Select Indian Public Sector Banks and Private Sector Banks

The asset quality of banks is one of the most important indicators of their financial health. It also reflects the effectiveness of banks’ credit risk management and the recovery environment. It is important that the signs of distress in all stressed accounts are detected early and those which are viable are also extended restructuring facilities expeditiously to preserve their economic value. (RBI/2012-13/208). The Indian banking sector has been facing severe problems of raising Non- Performing Assets (NPAs). The NPAs growth directly affects the profitability of banks. The problem of NPAs is not only affecting the banks but is affecting the economy as a whole. In fact high level of NPAs in Indian banks is nothing but a reflection of industry and trade. NPA do not generate any income, whereas, the bank is required to make provisions for such as assets. (Olekar and Talawar, 2012). NPAs do not just reflect badly in a bank‟s account books, they adversely impact the working of economy. There are many research conducted on the topic of Non- Performing Assets (NPA) Management, concerning particular bank, comparative study of public and private banks etc. In this paper the researcher is considering the aggregate data of select public sector and private sector banks and attempts to compare analyze and interpret the NPA management from the year 2010 -2015. On the conceptual side, it gives an overview of NPA, various types of NPA and its cause. The tools used in the study are Least square method and ANOVA. The findings reveals the percentage of Gross NPA to Gross advances is increasing for public banks, the Estimated Gross NPA for 2014-15 is also more in public banks as compared to private banks and from the ANOVA test, it is concluded Ratio of Gross NPA to Gross Advances for public sector and private Sector Banks does not have significant difference between 2010 to 2015.