An addition to posing danger on quality of asset

An asset, including a leased asset, turn into non-performing. when it ceases
to create income for the bank and is then called as. Non-Performing
Asset (NPA) RBI has defined NPA as a credit facility in respect of which the
interest and or segment of principal has continued ‘past due’ for a specified
period of time as required.by RBI. NPA is an
important limit in the analysis of financial performance of a bank as it
results in. advanced provisioning requirements
and therefore decreasing margin. It affects liquidity and productivity, in addition to posing danger on
quality of asset and existence of banks. It points out the credit threat of the banks. It emerged about 25 years ago in our
banking area, sending disappointing signs on the sustainability of affected banks. At present, Public Sector Commission
Banks (PSU) are fronting more problems than Private
Sector Banks (PRSB). A mounting level of NPAs in the banking sector can harshly affect the economy in many ways. If NPAs are not correctly
managed, it can cause financial and economic poverty
which in turn signs an adverse investment climate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OBJECTIVE OF THE STUDY

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– To understand
the concept of non-performing assets amongst
various sectors.

– To study
the effect of NPAs on Indian Banking Sector.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVIEW OF LITERATURE

·        
Prashanth K Reddy in his investigation
paper “A comparative Study of Non-Performing
Assets in India in the Global context – Similarities and dissimilarities, corrective measures” worried the importance of
a whole understanding of the macroeconomic Variables
and systemic issues pertaining to banks and the economy for explaining the problem NPAs along with the
criticality of a strong legal framework and legislative
framework.

·        
Dr. Sonia Narula & Monika
Singla (2014) in their research paper
“Empirical Study on Non-Performing Assets of Bank” Found that Due to mismanagement in bank there is a positive
relation between Total Advances, Net Profits
and NPA of Bank which is not good. Bank is not capable to give loans to the new
clients due to lack of funds which arises due
to NPA.

·        
Neha Rani (2014) in her
research paper “Analysis of Non-Performing
assets of Public Sector banks” revealed that share of public sector banks in
priority sector NPA was more in 2008 but after
that it is falling. However, amount of NPA of
both Banks is growing but their percentage share in total NPA is falling after 2010 continuously.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESEARCH METHODOLOGY

A research method is
a systematic plan for showing research. Sociologists
draw on a diversity of both qualitative and quantitative research methods, including experiments, survey research,
participant observation, and secondary data. Quantitative methods target to categorize features, count them,
and generate statistical models to test hypotheses
and explain observations. Qualitative methods target for a complete, detailed report of observations, including the context of actions
and circumstances.

 

Qualitative research

Qualitative research is a type of social science
research that bring together and works with non-numerical data and that
seeks to understand meaning from these data
that help us know social life through the study of targeted people or places.
People over and over again frame it in
opposition to quantitative research, which uses mathematical data to identify large-scale trends and employs statistical operations to control causal and correlative relations between variables.

 

Quantitative research

Quantitative methods give emphasis to objective
measurements and the statistical,
mathematical, or numerical analysis of data collected through
surveys, questionnaires, and polls, or by controlling pre-existing statistical data using computational
methods. Quantitative
research focuses on collecting numerical data and simplifying
it across groups of people or to explain a specific phenomenon.

 

 

 

 

 

 

 

 

 

 

Data Collection

·        
The study is based on secondary
data belong to to the period 2011-16. The data
belong to to banks was obtained from annual reports
of banks.

·        
The data collected is mostly secondary in nature. The sources of data for this
research take in from the literature published by the
Reserve Bank of India, various magazines, Journals, Books dealing with
the current banking situation and research documents.

·

Analytical Tools of Data Analysis

·       
Ratio Analysis

Ratio Analysis is
a form of Financial Statement Analysis that is
used to find a quick indication of a firm’s financial
performance in some key areas. The ratios are characterized
as Short-term Solvency Ratios, Debt Management Ratios, Asset Management

Ratios,
Profitability Ratios, and Market Value Ratios

.

·       
Statistical tools for data
analysis

Use of tables, Pie
diagrams and column charts are done to match
the ratios of five financial years & interpret the analysis of the same.