Journal of Commerce and Accounting Research

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Non-Performing Assets Management of Commercial Banks in India – A Literature Review


Affiliations
1 Nalanda Institute of Technology, Chandaka, Bhubaneswar, Odisha, India
2 Assistant Professor, School of Economics, Gangadhar Meher University, Sambalpur, Odisha, India
     

   Subscribe/Renew Journal


The present study analyses existing studies on various issues of Indian commercial banks related to non-performing assets (NPA). The problem of NPA is not only precarious in India, but also across the globe. In other words, NPA is like a large red balloon, a red signal for the banking system in India. The reason for the investigation is to analyse the accessible literature, to place in a nutshell the various points of view of NPAs. The article divides the existing literature into different sections, for a detailed analysis of the identification, growth and composition, determinants, financial ratios, recovery channels, financial sustainability, and other aspects of NPA management of commercial banks. The papers which have been chosen for the literature reviews are based on a systematic literature review. The research papers and articles have been selected by searching keywords in the abstracts and concluding remarks of the whole database. The systematic review process conveys and assists in the selection of appropriate articles for the study. The scope of this research will be helpful to bankers in finding new directions to analyse the management of NPAs, and academicians and researchers in conducting exploratory research. The study presents the research gaps that occur in the management of NPAs, to explain research that can bring an insight into the literature. A wide-ranging review of NPA will not only help identify the issues, but also establish effective management of NPAs.

Keywords

Banks, NPA, Recovery Channels, Sustainability.
Subscription Login to verify subscription
User
Notifications
Font Size


  • Abel, E. E. (2011). Banking consolidation, credit crisis and asset quality in a fragile banking system: Some evidence from Nigerian data. Journal of Financial Regulation and Compliance, 19(1), 33-44.

  • Adebola, S. S., Yusof, W. S. W., & Dahalan, J. (2011). The impact of macroeconomic variables on Islamic banks financing in Malaysia. Research Journal of Finance and Accounting, 2(4), 22-32.

  • Adhikary, B. K. (2008). Nonperforming loans in the banking sector of Bangladesh: Realities and challenges (pp. 75- 95). Bangladesh Institute of Bank Management (BIBM).

  • Agarwal, P., Arora, D., Kashiramka, S., & Jain, P. K. (2021). The impact of non-performing assets on bank performance under Basel regime – Empirical evidence from India. Journal of Commerce & Accounting Research, 10(3), 36-45.

  • Alam, S., Haq, M. M., & Kader, A. (2015). Non-Performing loan and banking sustainability: Bangladesh perspective. International Journal of Advanced Research, 8, 1197-1210.

  • Alamelu, K., & Chandan, S. R. (2018). Trends in nonperforming assets of public sector banks. International Journal of Advanced Research in Management and Social Sciences, 7(8), 66-80.

  • Ali, L., & Dhiman, S. (2019). The impact of credit risk management on profitability of public sector commercial banks in India. Journal of Commerce & Accounting Research, 8(2), 86-92.

  • Amit, K., Mallik, D. S., & Debdas, R. (2005). Working capital and profitability: A study on their relationship with reference to selected companies in Indian pharmaceutical industry. GITAM Journal of Management, 3(2), 51-62.

  • Arora, N., & Ostwal, N. (2014). Unearthing the epidemic of non-performing assets: A study of public and private sector banks. Management insights. The Journal of Incisive Analysers, 10(1), 47-52.

  • Abdul Aziz, N. F., Ibrahim, I., & Kamaruddin, M. (2009). The impact of non-performing loans (NPL) towards profitability performance (ROA, ROE & NPM). Research Project Paper, Universiti Teknologi Mara, Selangor Darul Ehsan.

  • Bardia, S. C. (2004). Liquidity management: A case study of Steel Authority of India Ltd. (pp. 463-467). The Management Accountant, ICWAI, Kolkata.

  • Bawaa, J. K., Goyal, V., Mitra, S. K., & Basu, S. (2019). An analysis of NPAs of Indian banks: Using a comprehensive framework of 31 financial ratios. IIMB Management Review, 31(1), 51-62.

  • Bhatia, A., Mahajan, P., & Chander, S. (2012). Determinants of profitability of private sector banks in India. Journal of Commerce & Accounting Research, 1(2), 14-22.

  • Bhunia, A. (2010). A trend analysis of liquidity management efficiency in selected private sector Indian steel industry. International Journal of Research in Commerce and Management, 1(5), 9-21.

  • Bhuyan, R. R., & Rath, A. K. (2013). Management perspective of non-performing assets: A challenge for Indian banking sector in the post economic reform era. The Orissa Journal of Commerce, 34, 93-107.

  • Bidani, S. N. (2002). Managing nonperforming assets in banks (2002 ed.). New Delhi: Vision Books Private Ltd.

  • Boudriga, A., Taktak, N. B., & Jellouli, S. (2009). Bank specific, business and institutional environment determinants of nonperforming loans: Evidence from MENA countries. Journal of Financial Economic Policy, 1(4), 286-318.

  • Buyuksalvarci, A., & Aabdioglu, H. (2011). Determinants of capital adequacy ratio: A panel data analysis. African Journal of Business Management, 5(27), 11199-11209.

  • Chandran, S., & Ramanathan, K. A. (2019). NPA and its impact on asset quality – Banker’s perception. International Journal of Recent Technology and Engineering (IJRTE), 8(2S6), 704-713.

  • Chawla, S., & Rani, S. (2021). Investigating the determinants of non-performing assets: The case of the Indian banking sector. Journal of Commerce & Accounting Research, 10(4), 64-75.

  • Das, S., & Dutta, A. (2014). A study on NPA of public sector banks in India. IOSR Journal of Business and Management, 16(11), 75-83. doi:10.9790/ 487X-161117583

  • Demirguc-Kunt, A., & Huizinga, H. (2010). Bank activity and funding strategies: The impact on risk and returns. Journal of Financial Economics, 98(3), 626-650.

  • Dhananjaya, K., & Krishna, R. (2018). Non-performing assets (NPAs) and its determinants: A study of Indian public sector banks. Journal of Social and Economic Development, 20(2), 193-212. doi:10.1007/s40847-018-0068-0

  • Farhan, M., Sattar, A., Chaudhry, A. H., & Khalil, F. (2012). Economic determinants of non-performing loans: Perception of Pakistani bankers. European Journal of Business and Management, 4(19), 87-99.

  • Fifack, H. (2005, November). Non-performing loans in subSaharan Africa: Casual analysis and macro-economic implications. Working Paper 3769, World Bank Policy Research.

  • Jimenez, G., & Saurina, J. (2005, January). Credit cycles, credit risk, and prudential regulation. Banco de Espana.

  • Ghosh, D., & Ghosh, S. (2011). Management of non-performing assets in public sector banks: Evidence from India. Paper Presented at International Conference on Management (ICM).

  • Ghosh, S. K., Ghosh, P. K., & Chowdhury, S. (2018). Essentials of central bank’s regulatory policy to strengthen green banking practice and reporting in a country. Asian Journal of Finance & Accounting, 10(2), 133-150. doi:https://doi.org/10.5296/ajfa.v10i2.13599

  • Gomes, T., & Khan, N. (2011). Strengthening bank management of liquidity risk: The Basel III liquidity standards. Financial System Review Report, Bank of Canada, 35-42.

  • Ibrahim, M. S., & Thangavelu, R. (2014). A study on the composition of non-performing assets (NPAs) of scheduled commercial banks in India. Journal of Finance and Bank Management, 2(1), 31-48.

  • Ibrahim, M. S. (2019). Trend of non-performing assets (NPAs) of Indian commercial banks – An analysis. International Journal of Advances in Management and Economics, 8(5), 1-7.

  • Iezza, P. (2010). Financial sustainability of microfinance institutions (MFIs): An empirical analysis (Master’s Thesis, Copenhagen Business School). Retrieved from http://studenttheses.cbs.dk/handle/10 417/1560

  • Irina, B., & Angela, R. (2016). Effects of macroeconomic factors on bank loans quality: Evidence from Central and Eastern European countries (Chapter 36). Springer Science and Business Media LLC.

  • Jayakkodi, D., & Rengarajan, D. P. (2016). Impact of nonperforming assets on return on assets of public and private sector banks in India. International Journal of Applied Research, 2(9), 696-702

  • Jayasree, M., & Radhika, R. (2011). Non-performing assets: A study of scheduled commercial banks in India. International Journal of Research in Commerce, Economics and Management, 1(1), 60-64.

  • Kakker, R. (2005). NPA management – Role of asset reconstruction companies (pp. 1522-1527). The Chartered Accountant.

  • Karkowska, R. (2020). Business model as a concept of sustainability in the banking sector. Sustainability, 12(1), 1-12.

  • Kaur, K., & Singh, B. (2011). Non-performing assets of public and private sector banks (A comparative study). South Asian journal of Marketing & Management Research, 1(3), 54-72.

  • Kjosevski, J., Petkovski, M., & Naumovska, E. (2019). Bank-specific and macroeconomic determinants of non-performing loans in the Republic of Macedonia: Comparative analysis of enterprise and household NPLs. Economic Research – Ekonomska Istrazivanja, 32, 1185- 1203. doi:10.1080/1331677X.2019.1627894

  • Kumar, S., & Gulati, R. (2014). Deregulation and efficiency of Indian banks. Springer.

  • Laltey, V. C., Antwi, S., & Boadi, E. K. (2013). The relationship between liquidity and profitability of listed banks in Ghana. International Journal of Business and Social Science, 4(3), 48-56.

  • Louzis, D. P., Vouldis, A. T., & Metaxas, V. L. (2011). Macroeconomic and bank-specific determinants of nonperforming loans in Greece: A comparative study of mortgage, business and consumer loan portfolios. Journal of Banking & Finance, 36(4), 1012-1027. doi:https://doi. org/10.1016/j.jbankfin.2011.10.012

  • Marcucci, J., & Quagliariello, M. (2008). Credit risk and business cycle over different regimes.

  • Marques, J. A. C., & Braga, R. (1995). Dynamic analysis of working capital: The Fleuriet model. RAE – Review of Business Administration, 35(3), 49-63.

  • Masukujjaman, M., & Aktar, S. (2014). Green banking in Bangladesh: A commitment towards the global initiatives. Journal of Business and Technology (Dhaka), 8(1-2), 17- 40. doi:10.3329/jbt.v8i1-2.18284

  • McCullers, L. D., & Schroeder, R. G. (1982). Accounting theory: Text and reading. USA: John Wiley and Sons, Inc.

  • Meher, K., & Getaneh, H. (2019). Impact of determinants of the financial distress on financial sustainability of Ethiopian commercial banks. Banks and Bank Systems, 14(3), 187-201. doi:10.21511/bbs.14(3).2019.16

  • Mishra, T. P. (2003). Managing non-performing assets – A professional approach. IBA Bulletin – The Indian Banker, 25(1), 14-19.

  • Nkusu, M. (2011). Non-performing loans and macro financial vulnerabilities in advanced economies. IMF Working Papers. doi:10.5089/9781455297740.001

  • Noronha, M. R. (2006). Non-performing asset management – Key to robust banking system. Journal of Banking & Finance, 19(8), 5-7.

  • Olweny, T., & Shipho, T. M. (2011). Effects of banking sectoral factors on the profitability of commercial banks in Kenya. Economics and Finance Review, 1(5), 1-30.

  • Osiegu, P. I., & Nwakanma, C. (2008). Financial management (3rd ed.). Port Harcourt: Harey Publications Company, Oxford Dictionary of Accounting.

  • Patel, U. (2017, August 19). Resolution of stressed assets: Towards the end game, speech. National Conference on Insolvency and Bankruptcy: Changing Paradigm, Mumbai.

  • Pinter, E., Deutsch, N., & Ottmar, Z. (2006). New direction line of sustainable development and marketing in green banking. SSRN Electronic Journal, 1-10. doi:10.2139/ ssrn.2505529

  • Rajaraman, I., Bhaumik, S., & Bhatia, N. (1999). NPA variations across Indian commercial banks – Some findings. Economic and Political Weekly, 34(3-4), 161-167.

  • Rajeev, M., & Mahesh, H. P. (2010). Banking sector reforms and NPA: A study of Indian commercial banks. Working Paper (pp. 1-15). The Institute for Social and Economic Change, Bangalore.

  • Rayudu, T. S., & Rajesh, P. (2018). A study on non-performing assets in selected public and private sector banks in India. International Journal of Scientific Research and Reviews, 7(2), 360-368.

  • Vieira, R. S. (2010). The relationship between liquidity and profitability: An exploratory study of airline companies between 2005 and 2008.

  • Sahitya, U., Lalwani, V., & Bedi, P. (2014). Sustainability in Indian banking industry – A case study approach. International Journal of Commerce, Business & Management, 3(1), 220-229.

  • Sahoo, B. (1999). Rating of Banks on NPAs Management. Indian Banks Association Bulletin, 21(10).

  • Saluja, R, & Lal, R. (2010). Comparative analysis on nonperforming assets (NPAs) of public sector, private sector and foreign sector Banks in India. International Journal of Research in Commerce and Management, 1(7), 80-89.

  • Shafiqual, A., Mahabubul, H., & Abdul, K. (2015). Nonperforming loan and banking sustainability: Bangladesh perspective. International Journal of Advanced Research, 3(8), 1197-1210.

  • Shajari, P., & Shajari, H. (2012). Financial soundness indicators with emphasis on non-performing loans in Iran’s banking system. Money and Economy, 6(3).

  • Shiralashetu, A. S., & Akash, S. B. (2006). Management of non-performing assets in commercial banks – Some issues. Banking and Finance, 19(2), 14-16.

  • Singh, V. R. (2016). A study of non-performing assets of commercial banks and its recovery in India. Annual Research Journal of Symbiosis Centre for Management Studies, 4(1), 110-125.

  • Dincer, H., & Yuksel, S. (2020). Strategic priorities in competitive environments. Springer Science and Business Media LLC.

  • Sultana, N., & Akter, A. (2018). Financial sustainability of private commercial banks in Bangladesh. The Cost and Management, 46(4), 44-53.

  • Sur, D., Biswas, J., & Ganguly, P. (2001). Liquidity management in India private sector enterprises: A case study of India primary aluminium producing industry. Indian Journal of Accounting, 36(10), 14.

  • Rajesh, T., & Dileep, A. S. (2014). Role of banks in sustainable economic development through green banking. International Journal of Current Research and Academic Review, 2(12), 136-141.

  • Vishnani, S., & Shah, B. K. (2007). Impact of working capital management policies on corporate performance: An empirical study. Global Business Review, 8(2), 267-281.

  • Wadman, I., & Peterson, J. (2004). Non-performing loans – The markets of Italy and Sweden (Research thesis, Department of Business Studies, Uppsala University). Walt. (2009). What is more important? Profitability or liquidity of a company?

  • Zeng, S. (2012). Bank non-performing loans (NPLS): A dynamic model and analysis in China. Modern Economy, 3, 100-110. doi:10.4236/me.2012.31014


Abstract Views: 371

PDF Views: 0




  • Non-Performing Assets Management of Commercial Banks in India – A Literature Review

Abstract Views: 371  |  PDF Views: 0

Authors

Manoj Kumar Sahoo
Nalanda Institute of Technology, Chandaka, Bhubaneswar, Odisha, India
Muralidhar Majhi
Assistant Professor, School of Economics, Gangadhar Meher University, Sambalpur, Odisha, India

Abstract


The present study analyses existing studies on various issues of Indian commercial banks related to non-performing assets (NPA). The problem of NPA is not only precarious in India, but also across the globe. In other words, NPA is like a large red balloon, a red signal for the banking system in India. The reason for the investigation is to analyse the accessible literature, to place in a nutshell the various points of view of NPAs. The article divides the existing literature into different sections, for a detailed analysis of the identification, growth and composition, determinants, financial ratios, recovery channels, financial sustainability, and other aspects of NPA management of commercial banks. The papers which have been chosen for the literature reviews are based on a systematic literature review. The research papers and articles have been selected by searching keywords in the abstracts and concluding remarks of the whole database. The systematic review process conveys and assists in the selection of appropriate articles for the study. The scope of this research will be helpful to bankers in finding new directions to analyse the management of NPAs, and academicians and researchers in conducting exploratory research. The study presents the research gaps that occur in the management of NPAs, to explain research that can bring an insight into the literature. A wide-ranging review of NPA will not only help identify the issues, but also establish effective management of NPAs.

Keywords


Banks, NPA, Recovery Channels, Sustainability.

References