Published Online:July 2024
Product Name:The IUP Journal of Applied Finance
Product Type:Article
Product Code:IJAF0724
Author Name:Sheena Mathews, Nandini Vengurlekar, Rishi Choudhary, Rutuja Jadhav, Rihal Gupta and Aryaa Mali
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:16
Managing nonperforming assets (NPAs) and maintaining them within tolerance level plays an important role in the success of a bank. This study analyzes the extent of efficiency in selected public and private sector banks in India with respect to net nonperforming assets (NNPAs). A careful analysis is carried out to understand the causes of NNPAs, reasons for their rise or fall, effect on profitability over time, their level with respect to advances given, etc. The study investigates the effect of NPAs on the performance of public and private sector banks, examining the year-wise efficiency gap to identify their financial health. It focuses on three public and three private sector banks for a period of 10 years. The study finds a rise in NNPAs and low net profits in three selected public sector banks, and identifies a significant difference between the public and private sector banks with regard to NPAs.
A nation’s development depends heavily on its banking sector. Banks, which act as the robust backbone of the economy, can create credit, generate flow of funds within the economy to various priority and non-priority sectors, and thereby contribute to the economic development of the nation, provided the borrowers repay the loan sum and interests on time.