Study of Management of Non-Performing Assets of Banks by Public Sector Banks in India.

Abstract

In India, Banking Sector has a long history and tradition. However, the severity of the bad debt issue of banks has not been taken seriously. Subsequently, following the recommendations of the Narasimham committee and the Verma committee, some steps have been taken in the banks' balance sheets to solve the issue of old NPAs. It continues to be articulated from every corner that there has been barely any formal evaluation of the best way to tackle the issue. There doesn't seem to be unanimity in the proper policies to be followed to solve this problem. There is also little flexibility in implementing NPA criteria, as these have been accepted. Often named Non Performing Assets are Non-Performing Loans. It is done by a bank or finance company that fails to make repayments or interest payments on time. A loan is an asset to a bank, as interest payments and the principal's repayment create a cash flow stream. A bank makes its money from interest payments. To solve this problem, there does not seem to be unanimity in the proper policies to follow. As these have been acknowledged, there is also little flexibility in applying the NPA requirements. The Non Performing Assets are also referred to as Non Performing Loans. A bank or investment firm does so without allowing repayments or interest payments on time. A loan is an advantage to a bank because interest payments and repayment by the borrower create a cash flow stream. A bank is making its money out of paying interest. The present Research Paper focuses on the growing issue of NPA of banks and the effects thereof on the Economy.