Non Performing Asset (NPA) as an important performance indicator for the banks and the economy

Authors

  • Sentulal Debbarma, Dr.Amit Kumar Das

Abstract

The banking sector in India plays an important role in the economic development of the country. As banks major income is earned by the interest they make from their lending to the customers, so it becomes necessary to maintain its capital solvency. The Non Performing Asset (NPA) acts as the performance indicator for the bank. The Non Performing Asset (NPA) is the major concern for the bank. The management of NPA is becoming the burning topic in today’s study. NPA being one of the tools for measuring the performance of the bank, so, the rise of the NPA due to poor recovery of advances will indicate that the bank is with a defective symptom like low profits and reduction in share of its stakeholders. On the contrary, even if the bank have a high NPA rate but the timely recovery is very efficient, still the bank will earn profit and goodwill in the market. Therefore, the bank should carefully deal with their lending policy and management. The efficient handling of NPA by the bank is of great importance. In this review study the researcher will highlight the genesis of NPA in India, types of NPA, asset classification and the reason for the rise of NPA.

Published

2020-11-01

Issue

Section

Articles