Empirical study of Non Performing Assets in Indian Commericial banks: Aid to Banking Sector Reform

The management of NPAs is one of the main business objectives of banks which require appropriate appraisal, monitoring and management of issued loans. The increased level of NPAs in banks and other financial institutions has been a high matter of concern . The present study attempts to discuss the banking sector reforms in India, explains the conceptual and regulatory framework governing NPAs including the changes in provisions and policies on NPAs and analyzes the trends of NPAs among different bank groups. On the basis of the study it has been found that the NPAs have reduced drastically. Although, the FBs are at the top in terms of assets quality, yet their assets quality is declining while the assets quality of PSBs and PBs has been improving. It is further suggested that the reform measures such as creation of proper data base, recovery of dues through compromise settlements, approaching DRTs and Lok Adalats, asset liability management etc can be of great help to the bankers in managing their NPAs.