Bank level challenges on management of loan quality in public sector banks

Abstract

This Paper investigates the challenges faced by public sector banks in India on Management of loan quality. The focal point of a financial institution is purely based on credit growth, CASA Ration and viable environment to enhance the overall bank performance. But the formation of non-performing assets affects the loan quality severely. The Formation of Non-Performing Assets is seen as a crucial part of banks and the magnitude would expose to various levels of risks across the nation’s activities. The past literature discussed on determinants of non-performing assets, in terms of factors influencing by macroeconomic factors, borrower’s centric factors, and bank-specific factors. On which a few kinds of literature focused on what are the bank-level challenges to maintain asset quality To answer the research objectives, the structured questionnaire framed for the dimensions were taken all legal measures and bank level challenges factors to examine the study. A total of 135bank officials of different public sector banks branches were contacted and 100 responses were received. The data collected was subjected to statistical analysis. The results showed that all the causes for NPA are prominent; inappropriate Legal Measures and asset quality tools required careful scrutiny to reduce risk of NPA.