Assessing the Inter Bank Disparity in Non-Performing Assets (NPAs) Management in Indian Public Sector Banks
Published: 2017
Author(s) Name: Dhananjaya K., Krishna Raj |
Author(s) Affiliation: Doctoral Scholar, Centre for Econ. Studies and Policy, Inst. for Social and Econ. Change, Bangalore
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Abstract
In a bank-dominated financial system like India, the
strength of the overall financial system or financial
stability highly depends on the soundness of banks.
Indian Banking system proved to be strong and
resilient during the global financial crisis of 2008. But
of late, there has been increased concerns about the
continued deterioration in the stability of the banking
sector. Financial stability report of RBI confesses to the
fact that the risks to Indian banking sector have been
increasing in the post-recession period particularly
the risk of accumulating NPAs. This study attempts
to analyse the trend in profitability, NPAs, and the
effectiveness of recovery mechanisms and interbank
disparity in NPA management with respect to public
sector banks. We found that the profitability of public
sector banks is declining in the post-crisis period and
the amount of NPA has been on the rise. Further, the
recovery mechanisms have proved to be ineffective in
containing the problem of bad debts.
Keywords: Non-performing Assets, NPA management, Profit Coverage Ratio, and Profitability
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