Impact of Non Performing Assets (NPAs) Towards Liquidity of Banks in India

Abstract

he NPAs are considered as an important parameter to judge the performance and financial health of banks. The level of NP As is one of the driver of financial stability and growth of the banking sector. The presence of PAs ha an adverse impact on the productivity and efficiency of lndian bank w hich results in the ero ion of profits. To face the global challenges and to maintain the liquidity and profitability, it is essential to maintain the NP As at low level through efficient recovery (before they become bad debt). The issue of mounting NPAs is giving jitters to banking sector particularly in a developing economy. This article a ttempts to focus mainly on the impact of NPAs, suggestions to reduce the PAs, observing the scenario of nonperforming assets a t global level and at national level. The data on PAs in Indian scheduled commercia l banks have been collected for ana lysis. The results are derived from the statistical analysis and accordingly suitable suggestions are given to contain the P As.