Assessing the Impact of COVID-19 on Non-Performing Assets in Regional Rural Banks: A Case Study of Manipur Rural Bank

Abstract

The financial sector, particularly banking, holds a pivotal role in facilitating economic growth by providing essential credit facilities to individuals and businesses. For a nation to progress economically and improve the standard of living of its citizens, it's imperative to ensure access to credit, especially in rural areas. Recognizing this, regional rural banks were established in India on 2^nd October 1975, including Manipur Rural Bank (MRB) in 1981, with the aim of fostering economic development in rural communities, particularly among the marginalized sections. However, the recent onset of the COVID-19 pandemic has presented unprecedented challenges, exacerbating the issue of Non-Performing Assets (NPAs) in financial institutions like MRB. NPAs, as conceptualized by the Narasimhan committee, signify loans that are not being repaid within the stipulated time frame. In this paper, we undertake an analysis of NPA management in MRB, examining both the pre- and post-COVID-19 scenarios. The non-recovery of loans not only impacts the profitability of the bank but also strains its financial resources, limiting its capacity to participate in capital markets. Indeed, the level of NPAs significantly distinguishes between the performance of a robust, well-managed bank and one facing challenges