A Comparative Study of NPA’s of Indian Commercial Banks

Indian banking industry plays a crucial role in the economic development of the country. This role is performed by banks by extending credit to several industries/sectors for their operations, expansion and development. This process of credit creation leads to credit risk which in turn leads to Non-Performing Assets (NPA’s). The Indian banking sector has been facing serious problems of increasing Non- Performing Assets (NPAs) for more than two decades. NPA’s reflects the performance of banks, affect the liquidity, profitability, net-worth of banks and also erodes the value of the asset. The Public Sector Banks have shown good performance over the private sector banks as far as the financial operations are concerned. The Private Sector Banks have also shown comparatively good result. However, the only problem of the Public Sector Banks these days are the increasing level of the non performing assets and Managing NPA’s has emerged as one of the major challenges facing public sector banks in India The Non Performing Assets of the Public Sector Banks have been growing regularly. On the other hand the non performing assets of private sector banks have been decreasing regularly except few banks. Generally reduction in NPAs shows that banks have strengthened their credit appraisal processes over the years and vice -versa. Today Non- performing assets are one of the major concerns for scheduled commercial banks in India. The recommendations of Narasimham committee and Verma committee, some steps have been taken to solve the problem of old NPAs in the balance sheets of the banks. The objective of this research is to study, compare Gross NPA’s, Net NPA’s and position of NPAs of public and private sector banks and to identify reasons for increasing of NPAs, to examine the steps to be engaged for recovery of NPAs and to suggest measures for efficient management of NPA’s to improve the financial health in the overall banking system.