Impact of Nonperforming Assets On Selected Public Sector Banks in India

Abstract

Banks are the backbone of the Indian economy. Mainly the public sector banks have more popular for deposits and providing loans to the people of the country. But now a day’s public sector banks facing the biggest problem from Non-performing assets and it decreases the profitability of the banks. Deposits done by the customers termed as liabilities and it should be repaid to the customers and loans taken by the customers termed as Assets and it should be repaid by the customers to the banks within the time period. A nonperforming asset (NPA) refers to a classification for loans or advances that are in default or in arrears. A loan is in arrears when principal or interest payments are late or missed. A loan is in default when the lender considers the loan agreement to be broken and the debtor is unable to meet his obligations1.non performing assets becoming the burden to the banks and adversely affecting the liquidity and profitability of the banks. By this nonperforming assets of the banks will questions the solvency position. Increase in nonperforming assets of the banks may affect agricultural, industrial growth also. In this paper we are going analyze the non-performing assets of the selected public sector banks and its impact on banks profitability. Here we evaluate the gross nonperforming assets and net performing assets to know the present situations of public sector banks.