ANALYSIS OF NPA(NON PERFORMING ASSETS) AND ROLE OF

NARCL(BAD BANK)

1.1 INTRODUCTION
The banking industry plays a critical role in the Indian economy. Measuring and maintaining
the asset quality of banks is important for the development of the banking sector. Nowadays,
the asset quality in banks, especially the Public sector banks is constantly deteriorating and
thus causing intolerable stress to banking sector, regulators, and Indian economy. The
objective of the present study is to understand the level of non-performing assets and how it
impacts the profitability of the banks in the year 2022. This study also studies various
mechanism and role of NARCL to recover the NPAs.

NON-PERFORMING ASSET
A non-performing asset (NPA) is a classification used by financial institutions for loans and
advances on which the principal is past due and on which no interest payments have been
made for a period of time. In general, loans become NPAs when they are outstanding for 90
days or more, though some lenders use a shorter window in considering a loan or advance
past due. A loan is classified as a non-performing asset when it is not being repaid by the
borrower. It results in the asset no longer generating income for the lender or bank because
the interest is not being paid by the borrower. In such a case, the loan is considered "in
arrears." And types, impact of banking industries, why NPA is arising, how it is affect
economy growth etc. India has been facing a bad loan Problem from last few Years.
According to latest report of RBI, Stressed assets, which include non-performing assets
(NPAs) and restructured loans, form some 12% of the total loans in Indian banking now.

Problem statement
The asset construction route has also run into issues. Here the recoveries have slowed and the
ARCs are facing capital issues. Their security receipts are being downgraded by rating
agencies as the recovery expectations move downwards.

The ARCs are also reluctant to take up NPAs unless offered very steep discounts. The
defaulters with the active involvement of the ARCs may have a loophole by way of selling
and buying back the equities at a reasonable price there by wriggling out of the bad debt as
well as making a profit in the bargain.

OBJECTIVES
1. To analyze the NPAs of Indian Banking Sector .
2. To review the various steps taken by the Government to reduce the NPA.
3. To analyze the framework and the role of NARCL.
METHODOLOGY

Secondary data will be collected from websites of RBI, Money Control, Times Of India,
Economic Times, Corporate Finance

Tools used for the study are Graphs, Charts, Summary statics, Financial static analysis.