An asset, including a leased asset, turn into non-performing. when it ceasesto create income for the bank and is then called as. Non-PerformingAsset (NPA) RBI has defined NPA as a credit facility in respect of which theinterest and or segment of principal has continued ‘past due’ for a specifiedperiod of time as required.by RBI.
NPA is animportant limit in the analysis of financial performance of a bank as itresults in. advanced provisioning requirementsand therefore decreasing margin. It affects liquidity and productivity, in addition to posing danger onquality of asset and existence of banks. It points out the credit threat of the banks. It emerged about 25 years ago in ourbanking area, sending disappointing signs on the sustainability of affected banks.
At present, Public Sector CommissionBanks (PSU) are fronting more problems than PrivateSector Banks (PRSB). A mounting level of NPAs in the banking sector can harshly affect the economy in many ways. If NPAs are not correctlymanaged, it can cause financial and economic povertywhich in turn signs an adverse investment climate. OBJECTIVE OF THE STUDY – To understandthe concept of non-performing assets amongstvarious sectors.- To studythe effect of NPAs on Indian Banking Sector. REVIEW OF LITERATURE· Prashanth K Reddy in his investigationpaper “A comparative Study of Non-PerformingAssets in India in the Global context – Similarities and dissimilarities, corrective measures” worried the importance ofa whole understanding of the macroeconomic Variablesand systemic issues pertaining to banks and the economy for explaining the problem NPAs along with thecriticality of a strong legal framework and legislativeframework.· Dr. Sonia Narula & MonikaSingla (2014) in their research paper”Empirical Study on Non-Performing Assets of Bank” Found that Due to mismanagement in bank there is a positiverelation between Total Advances, Net Profitsand NPA of Bank which is not good.
Bank is not capable to give loans to the newclients due to lack of funds which arises dueto NPA.· Neha Rani (2014) in herresearch paper “Analysis of Non-Performingassets of Public Sector banks” revealed that share of public sector banks inpriority sector NPA was more in 2008 but afterthat it is falling. However, amount of NPA ofboth Banks is growing but their percentage share in total NPA is falling after 2010 continuously. RESEARCH METHODOLOGYA research method isa systematic plan for showing research. Sociologistsdraw on a diversity of both qualitative and quantitative research methods, including experiments, survey research,participant observation, and secondary data.
Quantitative methods target to categorize features, count them,and generate statistical models to test hypothesesand explain observations. Qualitative methods target for a complete, detailed report of observations, including the context of actionsand circumstances. Qualitative researchQualitative research is a type of social scienceresearch that bring together and works with non-numerical data and thatseeks to understand meaning from these datathat help us know social life through the study of targeted people or places.People over and over again frame it inopposition to quantitative research, which uses mathematical data to identify large-scale trends and employs statistical operations to control causal and correlative relations between variables. Quantitative researchQuantitative methods give emphasis to objectivemeasurements and the statistical,mathematical, or numerical analysis of data collected throughsurveys, questionnaires, and polls, or by controlling pre-existing statistical data using computationalmethods. Quantitativeresearch focuses on collecting numerical data and simplifyingit across groups of people or to explain a specific phenomenon. Data Collection· The study is based on secondarydata belong to to the period 2011-16. The databelong to to banks was obtained from annual reportsof banks.
· The data collected is mostly secondary in nature. The sources of data for thisresearch take in from the literature published by theReserve Bank of India, various magazines, Journals, Books dealing withthe current banking situation and research documents.·Analytical Tools of Data Analysis· Ratio AnalysisRatio Analysis isa form of Financial Statement Analysis that isused to find a quick indication of a firm’s financialperformance in some key areas. The ratios are characterizedas Short-term Solvency Ratios, Debt Management Ratios, Asset ManagementRatios,Profitability Ratios, and Market Value Ratios.· Statistical tools for dataanalysisUse of tables, Piediagrams and column charts are done to matchthe ratios of five financial years & interpret the analysis of the same.