Causal analysis of profitability and non-performing asset of selected indian public and private sector banks

Abstract

The major issue currently being faced by the banks is Non Performing Asset (NPAs) which is not only the burden for banks but it is the problem for whole financial system. Rising NPA affect the operational efficiency which in turn affects profitability, liquidity and solvency position of banks. The mounting NPAs put stress on recycling of funds and minimize the ability of banks for lending more and thus results in lesser interest income. For improving the efficiency and profitability of banks, NPA needs to be minimized and controlled. NPA is not only increasing in Public sector banks but also in the Private sector banks as well. In this study an effort has been made to know the co-relation between NPAs and Profitability of banks for which major Public and Private sector banks have been considered who are facing the problem of mounting NPAs.