Effects of Non-Performing Assets on the Banking Sector In India

Abstract

This research addresses a critical concern within the Indian banking industry - Non-Performing Assets (NPAs). NPAs often act as an impediment to the smooth operations of banks, leading to reduced profits or significant losses. Recent trends have witnessed the closure or merging of many banks, aiming for more effective control under larger entities. The Government and the Reserve Bank of India have implemented various policies to strengthen regulations and curb the persistent rise of NPAs in the banking sector. Stricter measures and laws against defaulters have contributed to some degree of control over NPAs. This study aims to shed light on NPA trends and their impact on bank returns, influencing the overall banking industry. Additionally, data will be collected from relevant stakeholders to gain deeper insights into the causes of NPAs and their repercussions. The research will explore effective measures to prevent loans from turning into NPAs, identify segments of society more susceptible to NPAs, and substantiate findings with numerical data. © 2024 IEEE.