IMPACT OF NON PERFORMING ASSETS (NPAS) IN THE PERFORMANCE OF PUBLIC SECTOR BANKS
Abstract
India's banking sector holds significant importance in the nation's economy, serving as a fundamental driving force. Numerous risks pose challenges to Indian banks, encompassing substantial amounts of non-performing assets, operational inefficiencies, and limited expertise in credit approval processes. Modern banks are increasingly diversifying their business streams beyond traditional banking, aiming to mitigate risk and optimize resource allocation. Within this context, non-performing assets (NPAs) refer to assets that do not generate income for the bank. Loans issued to customers constitute valuable assets for banks, but when customers fail to pay either the interest or the principal, these loans transform into bad loans or non-performing assets. The objective of this study is to examine the influence of NPAs on profitability and performance. The findings indicate a notable adverse impact of NPAs on both total loans and operating expenses.
Keyword : Non-Performing Asset, Risk portfolio, Profitability, Performance
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