Trend analysis of non-performing assets of indian banks

Non-Performing Assets are a serious challenge faced by the banking sector and they pose a serious threat to the development of the economy of a country. Non-Performing Assets are the loans/advances that have been defaulted or are overdue. NPA is considered to be a crucial factor while assessing the financial performance of a bank. A low NPA rate depicts high competence of performance of a bank. The objective of the study is to analyze the trend of NPA in Indian Banks, factors responsible for the creation of NPA, and its impacts. In the present study, three Public Sector Banks (SBI, PNB & Canara Bank) and three Private Sector Banks (HDFC Bank, ICICI Bank & Axis Bank) have been selected to analyze the trend of NPAs in Indian Banks. There are several internal as well as external factors that result in the creation of NPA in Banks, and those factors have been identified in this study. The impact of NPA on the profitability of banks has been analyzed with the help of tables and graphs. In the event when borrowers fail/deny to pay back loans and advances, banks can recover such loans or advances through recovery mechanisms. Some of the recovery mechanisms available for Indian banks to recover defaulted loans or advances have been discussed in the present study. This study shows that in India, Net NPA % of Public Sector Banks is higher than net NPA % of Private Sector Banks.