Non-Performing Assets of Public Sector and Private Sector Banks in India: An Empirical Analysis

Abstract

The problem of non-performing asset is one of the major concerns for banks in India. NPAs reflect the performance of banks. The problem of NPAs is not only affecting the banks but also the whole economy. Various steps have been taken by government to reduce the NPAs. It is highly impossible to have zero percentage NPAs. The Public Sector Banks have shown very good performance over the private sector banks as far as the financial operations are concerned. The only problem of the Public Sector Banks these days are the increasing level of the non-performing assets. The non-performing assets of the Public Sector Banks have been increasing regularly year by year. On the contrary, the non-performing assets of private sector banks have been decreasing regularly year by year except some years. Generally, reduction in NPAs shows that banks have strengthened their credit appraisal processes over the years and increased in NPAs shows the necessity of provisions, which bring down the overall profitability of banks. The magnitude of NPA is comparatively higher in public sectors banks than private sector banks. To improve the efficiency and profitability of the banks, the NPAs have to be scheduled.