Npa Management-Always a Critical Issue for Banking Industry

Abstract

After the prologue of financial sector reforms in India, the non-performing assets of the · banking industry have been getting highly focused attention. Non-performing Asset (NPA) has emerged since over a decade as an alarming threat to the banking industry in our country sending distressing signals on the sustainability and endurability of the affected banks. Therefore, the question of NP A in banks is a cause of worry to all concerned, may it be the management of banks, the government, industry, federation of the public at large. The NP As have direct impact on banks' profitability, liquidity and equity. The NP As of Indian Banks are relatively huge by international standard. Therefore, the biggest ever challenge that the banking industry now faces is management of NPAs. It is true that banks have to restrict their lending operations to secured advances only with adequate collateral securities, because NPA is an important parameter in the analysis of financial performance of banks.