Mounting NPAS in Indian Commercial Banks
Dr. Mohan Kumar
Assistant Professor, Govt. College, Nahar Distt. Rewari (Hr.)
Govind Singh
Research Scholar, CMJ University
Download PDFAbstract
The problem of non-performing assets has shaken the entire Indian banking sector. The main reason of
high percentage of NPAs is the target-oriented approach, which deteriorates the qualitative aspect of
lending. NPAs put detrimental impact on the profitability, capital adequacy ratio and credibility of
banks. The paper highlights the most significant factors contributing towards the problem of non
performing assets from the point of view of top bankers from public sector banks in India, some
foreign banks and the measures required for management of NPAs like reformulation of banks’ credit
appraisal techniques, establishment of monitoring department.
As the build-up of NPAs has been a major factor in the erosion of profitability of public sector
banks in India, the Narasimham Committee (II) underscored the need to reduce the average level of
NPAs of all banks from 15 to 3 percent by 2002. The definition of weak banks given by this
committee has internalized the concept of NPAs. The Working Group on Restructuring Weak Public
Sector Banks supplemented the above definition by a combination of seven parameters covering
solvency, earning capacity and profitability.
Keywords: NPAS; Indian Commercial Banks; capital adequacy ratio
References
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