A STUDY ON NON- PERFORMING

ASSETS (NPA) IN INDIAN

BANKING SECTOR
BY:-
ZAKIR KHAN
 ROCKHILL CONSULTANTS PVT. LTD.

▰ Rockhill Consultants Pvt. Ltd. was incorporated over 25 years ago and has a history of
dealing with leading HNC’s like Delhi Metro, L&T and Indian Railway etc. The head office
is located at the New Delhi House, Barakhamba Road, Cannought Place, New Delhi.
▰ Area of Focus
▻ Income Tax
▻ GST
▻ Auditing
▻ Financial Statements Analysis.

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 OBJECTIVES

▰ To know the Individual perception towards NPAs.

▰ To prepare a comparative analysis of Gross NPAs and Net NPAs of both public &
Private Sector banks.
▰ To calculate the NPAs of different banks in priority and non-priority sector.

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NPA
A nonperforming asset (NPA) refers to : -
▰ A classification for loans or advances that are in default or are
in arrears on scheduled payments of principal or interest.
▰ In most cases, debt is classified as nonperforming when loan
payments have not been made for a period of 90 days.

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 RESEARCH METHODOLOGY: -

DESCRIPTIVE & EXPLORATORY RESEARCH

SAMPLE YEAR OF STUDY THE METHODOLOGY OF ANALYSIS:

The study includes Data from the last 10 Analysis in the form of graphs,
data from all the years i.e. from 2007 tables, charts and figures while
Private & Public sector to 2017 is collected making use of statistical measures
banks in India. for the purpose of for e.g. CAGR (Compound Annual
this study. Growth Rate), Mean.

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SOURCES OF DATA:
Primary Data
The primary source of data
includes feedback from working
professionals, students, retired
professionals etc.
Secondary Data
Secondary sources of data in the
study include authenticated
websites, Annual reports of the
banks, data provided in the annual
reports of RBI, relevant articles,
data provided in the journals etc.
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 PRIMARY DATA ANALYSIS TECHNIQUES

▰ QUESTIONNAIRE

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 PRIMARY DATA ANALYSIS

▰ QUESTIONNAIRE

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 PRIMARY DATA ANALYSIS

▰ QUESTIONNAIRE

9
 PRIMARY DATA ANALYSIS

▰ QUESTIONNAIRE

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 PRIMARY DATA ANALYSIS

▰ QUESTIONNAIRE

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 PRIMARY DATA ANALYSIS

▰ QUESTIONNAIRE

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DATA ANALYSIS

Gross NPAs to Gross Advances

12.00

10.00

8.00
Axis Title

6.00

4.00

2.00

0.00

Axis Title

Public Sector Bank Private Sector Bank

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DATA ANALYSIS

Percentage Growth Rate of Average Gross NPAs

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%
2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08

Public Sector Bank Private Sector Bank 14

DATA ANALYSIS

Priority Sector NPAs as Percentage Share on Total NPAs

Composition of NPAs of Public Sector Banks

6000.00

5000.00

4000.00

3000.00

2000.00

1000.00

0.00
2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

priority sector non-priority scctor 15

 FINDINGS & LIMITATIONS

FINDINGS:-
▰ Public sector banks have shown an increased rate of NPAs as compared to private sector banks.
▰ NPA in priority sector is far lesser than NPA in Non-priority sector.
▰ Many Public sector banks’ employees also do not have enough knowledge regarding non-performing assets that
may be because of ineffective training programs

Limitations:-
▰ Banks cannot declare each and every data, as some of them are confidential, and therefore withheld and not
shown in the final statements which might impact the report.
▰ The secondary data gathered for the study is confined to 10 years only.
▰ The data gathered for study through primary sources contains the individual thoughts, which might be affected
by the individuals understanding of the NPAs.

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 Recommendation & Conclusion

Recommendations:-
▰ Effective regulation, creating awareness, and curbing unproductive borrowings.
▰ There must be multiple level of approval to sanction huge loans. Moreover, there should be transparent
mechanism and proper disclosure regulation.
Conclusion:-
NPAs has been a major issue for the banking industry in India. Growing NPAs affects the liquidity position of
banks and raises the cost of funds and these, in turn, demolish banks profitability also threatens financial
stability. Techniques such as

▰ Regular inspection of the projects, Project appraisals, employee awareness etc are some of the techniques to
counter NPAs can be used.
▰ Banks can also approach Debt Recovery Tribunals, use compromise schemes, CDR, ARC etc. to reduce the
NPAs
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