Comparative Study of Non-Performing Assets (NPAs) in Selected Public and Private Sector Banks in India

Abstract

The banking industry is an important pillar of the financial sector which plays a vital role in the economy of our country. It becomes essential to measure and maintain the quality of the asset for the development of the bank. The quality of the asset in banks mainly the Public Sector Banks is continuously deteriorating as a result of which there is high level of stress in the banking sector, regulators and Indian economy. The present study is aimed at understanding the level of Non-Performing Assets (NPA) and its impact on profitability of the banks. For this purpose, the study considered Gross and Net NPA of 5 Public and Private Sector Banks from 2017-2021. The study reveals that there is a continuous increase in Gross and Net NPA in both Public and Private sector banks. The study shows that there is a positive relationship between the Gross and Net NPA and a negative relationship between the NPA and ROA of Public and Private Banks. There is a significant negative impact of Gross NPA on ROA whereas a positive impact of Net NPA on ROA of both Public and Private sector banks. The study recommends that the bank should improve their credit, repayment structure and follow all the credit policy of the government and take quick actions against NPA.