CREDIT DEFAULTS CAUSE NON-PERFORMING ASSETS IN PUBLIC SECTOR BANKS IN INDIA

A strong banking sector is important for healthy economy. The failure of the banking sector may have an adverse impact on other sectors. Over the years, much has been talked about NPAs and the emphasis so far has been only on identification and quantification of NPAs rather than on ways to reduce and upgrade them. Non-performing assets a re one of the major concerns for banks in India. A high level of NPAs suggests high probability of a large number of credit defaults that affect the profitability and net-worth of banks. The NPA growth involves the necessity of provisions, which reduces the overall profits and shareholders value.