Impact of NPAs on profitability of Commercial Banks in India in the post reform Era: With special reference to Public Sector Banks

Abstract

NPAs (Non Performing Assets) affect the profitability of banks irrespective of the ownership pat/em. NPA is an important parameter for the analysis of financial performance of hanks. The Public Sector Banks (PSBs) have had the largest share of NPA. Most of the NPA of PSBs are lefgacy of the post-reform period. Though in percentage terms, NPA have shown a declining trend throughout the period under review, in absolute terms, and in terms of the ratios of both total advances and total assets the decline is noticeable in years following 2002. The improvement in recent years indicates healthy results of the recovery efforts made by the banks.