International Journal of Transformations in Business Management

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Abstract

Recovery of NPAS in Indian Commercial Banks

Dr Jasbir Singh

Associate Professor, Maharaja Surajmal Institute, C-4, Janak Puri New Delhi 110058. Affiliated From GGSIP University New Delhi

75-92 Vol: 3, Issue: 1 , 2013
Receiving Date: 2012-12-14
Acceptance Date: 2013-01-13
Publication Date: 2013-02-19
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Abstract

The problem of non-performing assets has shaken the entire Indian banking sector. The main reason
of high percentage of NPA’s is the target-oriented approach, which deteriorates the qualitative
aspect of lending. NPA’s put detrimental impact on the profitability, capital adequacy ratio and
credibility of banks. The paper highlights the most significant factors contributing towards the
problem of nonperforming assets from the point of view of top bankers from public sector banks in
India, some foreign banks and themeasures required for management of NPA’s like reformulation of
banks’ credit appraisal techniques, establishment of monitoring department.
The best indicator for the health of the banking industry in a country is its level of Non-performing
assets(NPAs). High NPAs are one of the major concerns for banks in India. It reflects the performance
of banks. Reduced NPAs generally gives the impression that banks have strengthened their credit
appraisalprocesses over the years and growth in NPAs involves the necessity of provisions, which
bring down the overall profitability of banks. The Indian banking sector is facing a serious problem
of NPAs. To improve the efficiency and profitability of banks, NPAs should be reduced and
controlled. This paper deals with recovery of NPAs from various Channels, major causes and effects
of NPAs on Indian banks.

Keywords: Banking System in India; Commercial Banks; NPAs; Recovery

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