A Comparative Study of Non- Performing Assets of Public and Private Sector Banks

On-performing assets are one of the major concerns for banks in India. NPA is an important parameters in the analysis of financial performance of a bank as it results in decreasing margin and higher provisioning requirements for doubtful debts. NPAs reflect the performance of banks. A high level of NPAs suggests high probability of a large number of credit defaults that affect the profitability and net-worth of banks and erodes the value of the assets. NPAs affect the liquidity and profitability, in addition to posing threat on quality of assets and survival of banks. The Indian banking sector has been facing serious problems of raising Non-performing assets (NPAs). The NPAs growth has a direct impact on profitability of banks. It involves the necessity of provisions, which reduces the overall profits and shareholders’ value. The problems of NPAs is not only affecting the banks but also the whole economy. In fact high level of NPAs in Indian banks is nothing but a reflection of the state of health of the industry and trade. To improve the efficiency and profitability, the NPAs have to be scheduled. Various steps have been taken by governments to reduce the NPAs. It is highly impossible to have zero percentage NPAs. But at least Indian banks can try competing with foreign banks to maintain international standard. An attempt is made in this paper that what is NPA? The factor contributing to NPAs, reason for high NPAs and their impact on Indian banking operations, the trend and magnitude of NPAs in selected indian banks