International Journal of Financial Management

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Assessing the Inter Bank Disparity in Non-Performing Assets (NPAs) Management in Indian Public Sector Banks


Affiliations
1 Centre for Economic Studies and Policy, Institute for Social and Economic Change (ISEC), Bangalore, Karnataka, India
2 Center for Economic Studies and Policy (CESP), Institute for Social and Economic Change (ISEC), Bangalore, Karnataka, India
     

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In a bank-dominated financial system like India, the strength of the overall financial system or financial stability highly depends on the soundness of banks. Indian Banking system proved to be strong and resilient during the global financial crisis of 2008. But of late, there has been increased concerns about the continued deterioration in the stability of the banking sector. Financial stability report of RBI confesses to the fact that the risks to Indian banking sector have been increasing in the post-recession period particularly the risk of accumulating NPAs. This study attempts to analyse the trend in profitability, NPAs, and the effectiveness of recovery mechanisms and interbank disparity in NPA management with respect to public sector banks. We found that the profitability of public sector banks is declining in the post-crisis period and the amount of NPA has been on the rise. Further, the recovery mechanisms have proved to be ineffective in containing the problem of bad debts.

Keywords

Non-Performing Assets, NPA Management, Profit Coverage Ratio, and Profitability.
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  • Assessing the Inter Bank Disparity in Non-Performing Assets (NPAs) Management in Indian Public Sector Banks

Abstract Views: 234  |  PDF Views: 1

Authors

K. Dhananjaya
Centre for Economic Studies and Policy, Institute for Social and Economic Change (ISEC), Bangalore, Karnataka, India
Krishna Raj
Center for Economic Studies and Policy (CESP), Institute for Social and Economic Change (ISEC), Bangalore, Karnataka, India

Abstract


In a bank-dominated financial system like India, the strength of the overall financial system or financial stability highly depends on the soundness of banks. Indian Banking system proved to be strong and resilient during the global financial crisis of 2008. But of late, there has been increased concerns about the continued deterioration in the stability of the banking sector. Financial stability report of RBI confesses to the fact that the risks to Indian banking sector have been increasing in the post-recession period particularly the risk of accumulating NPAs. This study attempts to analyse the trend in profitability, NPAs, and the effectiveness of recovery mechanisms and interbank disparity in NPA management with respect to public sector banks. We found that the profitability of public sector banks is declining in the post-crisis period and the amount of NPA has been on the rise. Further, the recovery mechanisms have proved to be ineffective in containing the problem of bad debts.

Keywords


Non-Performing Assets, NPA Management, Profit Coverage Ratio, and Profitability.

References