Does NPA Prove to be an Alarming Issue for the Performance of the Indian Banking Sector?

Non-Performing Asset is an alarming issue for the growth of Indian Economy. It has been dealt with utmost difficulty by the banking and non-banking financial institutes, in different sectors of the country. It is a major problem of the financial sector that has been evolving round over the years. The NPA scenario for the public sector banks worsened a great extent by March end in the year 2014, as the banks were issuing loans to corporations, with an expectation of a miraculous pick-up in the economy, but ultimately it was proved to be a total loss. The amount of gross non-performing assets grew from Rs 53,917 crores, inSeptember 2008, to Rs 3,41,641 crores in September 2015, as a result there was an increase in percentage of these bad loans from 2.11 in 2008 to 5.08 in 2015.

The present study tries to discuss the reasons for the rising percentage of NPA in the priority sector, non-priority sector, and public sector, with reference to the Nationalised Banks, State Bank and associates and Other Public Sector Banks. The probable reasons found from the past and the present studies are due to several reasons. Some are from the borrowers’ side and some from the bankers’ side. Hypotheses have been formed based on the objectives, and based on those the analysis has been done. The study is exploratory and descriptive in nature. A comparative study between the three sectors and analysing the problems individually, with a suitable solution and providing suggestion at the end of the study is the main motto. The study is based on secondary data, of eleven (11) years, (2005-2015), which have been collected from the published reports of the RBI Website. Statistical tools like ANOVA have been used. The analysis and interpretation of the study has been done with the help of SPSS 20 software.