Corporate Governance and Sustainability Review/ Volume 4, Issue 1, 2020 65 NON-PERFORMING ASSETS IN INDIA: A CRITICAL ANALYSIS OF PUBLIC AND PRIVATE SECTOR BANKS Vinay Kandpal * * School of Business, UPES, Dehradun, Uttarakhand, India Contact details: UPES, P.O. Bidholi Via-Prem Nagar, 248007 Dehradun, India Abstract How to cite this paper: Kandpal, V. (2020). Non-performing assets in India: A critical analysis of public and private sector banks. Corporate Governance and Sustainability Review, 4(1), 65-73. http://doi.org/10.22495/cgsrv4i1p6 Copyright © 2020 by Virtus Interpress. All rights reserved ISSN Online: 2519-898X ISSN Print: 2519-8971 Received: 05.02.2020 Accepted: 17.04.2020 JEL Classification: C33, G21, E51, G11, C23 DOI: 10.22495/cgsrv4i1p6 The paper identifies and analyzes the causes that affect non-performing assets (NPAs), hinder its effective observance, and recommends appropriate measures to ensure their effective monitoring and control. The banks selected for this research work are having higher NPAs and are top banks in their sector. As per the Global Financial Stability Report of International Monetary Fund (IMF, 2009), identifying and dealing with distressed assets, and recapitalizing weak but viable institutions and resolving failed institutions are stated as the two of the three important priorities which directly relate to NPAs. This research work finds the reasons for non-performing loans by considering a set of 50 variables and provides the necessary measures. Statistical tool SPSS was used to run the factor analysis test. Sectoral disparities in the NPA ratio to advances in public and private sector banks were the main source of motivation to analyze and compare factors affecting non-performing assets (NPAs) of public and private sector banks in India. Some of the reasons for NPA are lack of frequent interaction or follow-up with borrowers, manipulation of income or financial statement by borrowers, industrial problem and death of earning member of the family. Keywords: Non-Performing Assets, Profitability, Banks, Public Sector, Private Sector, Bank Credit Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards. Declaration of conflicting interests: The Author declares that there is no conflict of interest. 1. INTRODUCTION Non-performing resources of banks have turned into a noteworthy worry in India, with a relatively general periodical event of extensive esteem credit defaults/cheats adding to the already humongous levels of NPAs in banks (particularly public sector banks). They are an immediate reflection on the execution of banks. An abnormal state of NPAs influences the gainfulness, total assets, and liquidity of banks, notwithstanding posturing risk on the nature of the benefit and pushing them to the verge of indebtedness. Banks have to make mandatory reserve, which reduces the overall profits and ultimately the market value of shares. The public sector banks provide financial supports and advances to various sectors in the without considering the pros and cons and the possibility of getting back the money advanced and without taking collateral as security. Management of non-performing assets is essential for the stability and development of the banking sector in India. Reserve Bank of India (RBI) noted an improvement in the NPA management process, as banks managed their NPA despite the adoption of credit time standards for 90 days. Management of NPA is crucial for the long-term sustainable growth of the banking sector with RBI and the Government of India. The steps for controlling NPA could be initiatives such as The Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFASEI) Act, 2002 (empowering banks to auction the residential or commercial properties of the defaulters to recover the loans), Capital Adequacy under Basel III Norms and Insolvency and Bankruptcy Code. RBI recommended the financial institutions to strengthen their credit standards, credit appraisal and follow up procedures of loan