Rising NPAs: A Nightmare for Banking Industry

Banks’s performance is the true reflection of economy of any country. The Indian banking system has been facing serious problem of non- performing assets. NPA’s reflects the status of liquidity, Banks’s management efficiency, net worth, profitability and eroded value of assets of any banking company. The sound financial position of any company is reflected by level of NPA’s in that particular industry. Growth in NPA reflects that there is a need of strengthen the credit appraisal system of that industry because it shows the poor credit management system of the banks and it has negative effect on profitability of banks. The Indian banking system is facing the problem of continuously increment in level of NPA. This paper analyses the status of recovery mechanism through i.e. PROJECT SAKSHAT, SARFAESI Act, One time settlement (OTS) scheme, Lok-adalats and debt –recovery tribunals. This research paper also deals with capital adequacy norms regarding NPAs, major reason for conversion of loans into NPAs and to suggest measure for efficient management of NPA’s for improving both profitability and liquidity position of banking industry.