Copyright © CC-BY-NC 2020, CRIBFB | IJFB
Indian Journal of Finance and Banking; Vol. 4, No. 1; 2020
ISSN 2574-6081 E-ISSN 2574-609X
Published by Centre for Research on Islamic Banking & Finance and Business, USA
42
A Study of Gross and Net Non-Performing Assets of Select Public Sector
Banks in India for the Period 2007-2008 to 2017-2018
Abhay Korde PhD
Advocate
High Court Bombay
Mumbai, India
&
Alumni, JBIMS, Mumbai, India
E-mail: abhaykorde14@jbims.edu
Kavita Laghate PhD
Professor & Director
Jamnalal Bajaj Institute of Management Studies
University of Mumbai
Mumbai, India
E-mail: kavitalaghate@jbims.edu
Abstract
The Non-Performing Assets (NPAs) are considered as one of the important parameters for anlysing the health of the
Indian Banks. The Authors have taken a look at the Literature Reviews related to the non-performing assets related studies
looked into by other Research Scholars. The authors in this research study has made an attempt to study the secondary
data related to Gross and Net Non-Performing Assets or Loans of select Banks in India, which is available in the public
domain of the regulators of Indian Banks i.e. Reserve Bank of India (RBI) from April 2007 to March 2018 and has
performed the ABC analysis as per cumulative (decreasing method) to study the performance and the management and
governance of those Banks. Finally, the authors conclude that some of the select Indian Banks taken for study appear in the
various Groups formulated for study i.e. Group A (Poor Performance), Group B (Satisfactory Performance) and Group C
(Good Performance) are thus a matter of great concern to the economy of the country.
1. Introduction
The entire world has accepted that the country is galloping towards being the third largest economy of the world in the near
future and therefore, the financial and banking system or sector in India is required to play an important role to shape up its
economy. The main business of the banking system is to cater to the financial needs of the business and individuals, but
now it has also been vested with the responsibility to support other activities like the Insurance and supporting various
schemes announced by the government from time to time. The Banks are required not only to safeguard the deposits of the
Customers but also required to ensure that the loans or advances given are not defrauded by the business community or
certain individuals for their own vested interest, as it has been observed in the recent past. Therefore, to arrive at the
strength of the banking system in India the Non-Performing Assets (NPAs) are considered as one of the important
parameter for analysis. A sound banking and financial system is therefore, needs now.
2. Literature Review
The objective of study of Sanjeev (2007) was to identify critical factors, which were responsible for the loans of the banks to
go bad in the Indian commercial banking system. The Methodology adopted for the study was mainly related to primary
data collected from credit managers of banks operating in India. Their study revealed that the external factors have a higher
influence compared to the internal factors, which was also very surprising. The Economic downturn and willful default
have been found to be most critical factor. Also the poor credit scoring skill of managers, absence of suitable administrative
penalties and target completion have been found to have a significant influence amongst factors related with the loan
appraisal mechanism of the banks. The seizure and disposal of collateral have found to be the toughest challenges amongst
the factors related with the loan monitoring and controlling mechanism. The level of loan manager’s motivation, ,
manpower, skill to appraise collateral, effort to reduce costs, government and political intervention and soft budget
constraints have been found to have a lower influence.
However, the objective of study of Khushpatand & Rahul (2012) was to analyze the trends in Non-Performing Assets
(NPAs) in the Indian Banking Sector from 2004-2011, to assess the contributing factors to the NPA in the Indian Banking
Sector and to suggest measures to halt and curtail the rising burden of NPAs. They mainly dealt with the rising burden of
NPAs in Indian financial system and their likely impact and measures to minimize such adverse impact on the Indian
Keywords: Assets, Banks, Governance, Gross, Indian, Loans, Management, Net, Performance. .