Genesis for Increase of Npas in Indian Banks - An Empirical Analysis

A strong banking sector is essential for a flourishing economy. A major hindrance faced by most banks today is the problem of non-performing assets (NPA’s).A high level of NPA’s suggests a high degree of credit defaults which, in turn affects the profitability of banks. Decreased profitability implies an unfavourable financial statement which in turn discourages investors from investing in the banks under consideration. Thus, the banks lose out on investments in the long run. Non-Performing Assets are a burning topic of concern for the public sector banks, as managing and controlling NPA is very important. This paper discusses the causes for increase of NPAs and they are ranked with the help of Garrett Ranking Technique. Therefore banks need to effectively control their NPAs in order to increase their profitability and efficiency.

Keywords: Efficiency, Garrett Ranking, NPAs, Profitability.