Comparison of Non-Performing Assets: A Study of Selected Public Sector Banks of India

Field: Economics, Econometrics and Finance (Social Sciences)

INTRODUCTION:Banking sector in any country performs a role of one of the mediators of the organised system of any county.It collects savings from the general public and grant advances to the needy sectors of society.Banks provide interest on deposits and safeguard the idle funds of the depositors.On the other side they grant the money in terms of loan to various types of loans.In India, there are many categories of banks regulated by the Reserve Bank of India.This chain must work in continuous basis for the proper utilisation of funds available for the bank.But in some cases, borrowers may be unable to pay the amount of loan or interest and it becomes non receivable.These are called non-performing assets for the bank.These are the obstacles which reduce the profitability of the company and increase the cost of funds available to them.Proper steps may also need to be taken in order to solve the problem of NPAs as it may adversely result into solvency questions of the banks.This paper attempts to examine the situation of NPA levels in three top public sector banks of India and how priority sector advances may affect the level of NPAs in selected banks. LITERATURE REVIEW:(Agarwala & Agarwala, 2019) has conducted a study on critical review of non-performing assets of Indian banking industry.The aims of the study were to check the mean growth rate of different banking groups and draw conclusions thereof.The data was collected of Gross NPAs of various banking groups and mean was used for analysis.The overall findings represented the troublesome situation for different banking groups.The guidelines given by the Central bank RBI, also became hindrance for provisioning norms.The Insolvency and Bankruptcy Code also played an important role in recovery of NPAs upto certain extent.(Das & Dey) has conducted analysis on non performing assets of various public and private sector banks.The objectives of the study were to analyse the bank wise movement of NPA and find out the relationship of NPA with GDP.Researchers found that priority sector advances as well as non-priority sector advances increase with increase in NPAs.In some of the banks, priority sector NPAs are under control whereas in some banks, the non-Abstract: The Banking sector is vital for growth in any country.The bank provides loans to the different sectors of the country.This loan, due to some reasons may be unpaid up to certain time, gets converted into non-performing asset.The banks need to classify the assets into standard, sub-standard, doubtful and loss assets as per the class of assets.This study attempts to assess the levels of Gross and Net NPA levels in selected banks.Results show the significant difference between Gross NPA Ratio, Net NPA Ratio and Priority Sector Advances of Selected Banks.The accounting ratios and One way analysis of Variance were used for the hypothesis testing for the study.Furthermore, by assessing the Priority Sector Advances with Net NPA levels, the correlation was found significant in Punjab National Bank and insignificant in State Bank of India and Bank of Baroda.