Methodology to Predict NPA in Indian Banking System

Abstract

Banking sector is the backbone of any economy and plays a pivotal role in the development of the nation. With the ever increasing need of involvement of banks in the economic growth process, the issue of non-Performing Assets (NPAs) has assumed mammoth proportions. Subsequently, as gov-ernment in emerging countries pushes for financial inclusion, the risk associated with bank assets increases. With this background, this paper analyses problem of non-Performing Assets (NPAs) in Indian banking system. The authors have devised a unique way to forecast the NPAs in Indian banking system in 2020. The focus was to devise a model which would play a pivotal role in fore-casting future NPAs in the Indian banking sector. This was achieved by looking into various method-ologies and zeroing in on a model, which could be implemented to help understand how NPAs could be predicted.