AMBER – ABBS Management Business and Entrepreneurship Review

Inchara P. M. Gowda ¹, K. R. Manjunatha ¹

Affiliations
1 Institute of Management Studies, Kuvempu University, Jnana Sahyadri, Shankaraghatta 577 451 (Karnataka), IN

Abstract

Banking and financial institutions in the country play multiple and pivotal roles, and contribute substantiallyfor the overall development of the economy. In spite of this pivotal role that these banking institutions are playing, their financial performance is not satisfactory. One of the indicators of this not-so satisfactor y performance is the mounting non-performing loans (NPLs). This is adversely affecting their performance from the points of view of other indicators such as capital adequacy, return on assets, etc. This NPL has, therefore, become a big challenge for the bankers and also to the government. To resolve this problem of mounting NPLs of banks, the Reserve Bank of India (RBI) and the Government of India (GOI) have taken many a number of steps. However, these measures have not yielded the desired result and the problem remain unresolved. Hence, the apex bank of the country revised its earlier scheme viz., Prompt Corrective Action (PCA) Framework of 2002 thoroughly and issued the Revised PCA Framework in April 2017 identifying the key per formance areas, parameters to measure the performance of banks in each of these key areas, Risk Thresholds for each performance indicator and also the corrective actions required to be taken by the banks if their performance breach the Risk Thresholds. In this background, this paper makes an attempt examine the problem together with other related issues followed by an analysis of different aspects of Revised PCA Framework, 2017.

Keywords

Asset Quality, CAR, CET - 1 Ratio, CRAR, Net NPA Ratio, Prompt Corrective Action, Return on Assets Ratio, Risk Thresholds, Tier-I and II Capital.

Full Text

   

Inchara P. M. Gowda ¹, H. N. Ramesh ¹

Affiliations
1 Institute of Management Studies, Kuvempu University, Jnana Sahyadri, Shankaraghatta 577 451(Shivamogga Dist, Karnataka State), IN

Abstract

Many studies, committees, commissions, etc., have shown the importance and role of micro, small and medium enterprises (MSMEs) in the overall development of the country including in its economic development. In the post-independent India, this sector has emerged as a highly vibrant and dynamic sector of Indian economy. It is through its contribution in many ways such as,(i) generation of large employment opportunities at comparatively and substantially lower level of capital employment, (ii) industrialization of not only industrially backward regions but also rural are aspreading the industrial activities across the nation and acting as a major partner in the country's ambitious mission of inclusive growth thereby contributing to the balanced regional development,(iii) working towards more equitable distribution of national income and wealth, etc. Besides, 3.6 crore units in this sector are producing more than 6,000 products for both domestic and overseas markets, contributing about 8% to country's gross domestic product (GDP), accounting for about 45% of manufacturing output and 40% to country's exports. Further, these enterprises, as ancillary units, complement the operating activities of large-scale organizations.All these statistics signify the vital role being played by the MSMEs.

Full Text