Non-Performing Assets in The Indian Banking Sector: An Analytical and Comparative Study Between Public and Private Sector Bank

Abstract

Among the risks banks face are market risk, interest rate risk, liquidity risk, and borrower risk. One of the most significant threats the bank faces is when borrowers default on loans and advances. Most deposit funds are used for investments in loans and advances. Consequently, a new standard for evaluating financial institutions has been established. Using an empirical approach, we compare the performance of public and private sector banks in terms of NPA profitability metrics. NPAs are a sign of how well a bank is working. Banks' ability to make money is significantly impacted by the frequency of NPAs. Non-performing resources (NPAs) adversely affect a bank's productivity and net worth since they mirror a high pace of credit defaults. The NPA infection affects banks no matter how you look at it. The purpose of this article is to evaluate the operational performance of a few PSBs and private banks in India and examine how effectively they manage non-performing assets (NPA). One of the biggest issues Indian banks are experiencing right now is non-performing assets. Nonperforming assets are an indicator of a bank's success. Banks' bottom lines and access to funds are impacted. A persistent issue for the Indian banking system is the growth of non-performing assets. The bottom line of banks suffers as nonperforming loans rise. To lower overall profitability and shareholder value, allocations are required. The nonperforming asset crisis has implications for both banks and the whole economy. Non-performing assets (NPA) of public and private Indian banks are compared over a five-year period in this article. The nature and scope of nonperforming loans in Indian financial institutions, as well as the factors that have contributed to their recent growth. The process of recovering nonperforming loans (NPLs) in both public and commercial banks has been investigated. Non-performing assets are a big issue for Indian financial institutions. NPA is a metric used to evaluate bank efficiency. A high NPA indicates that borrowers are not paying back their loans, which may have a negative impact on a bank's bottom line and asset value. High nonperforming asset levels have an adverse effect on the liquidity and profitability of banks, threatening their very existence. The enormous and large NAPs have created serious problems for the Indian banking system. Nonperforming assets have a direct impact on a bank's bottom line.