Impact Of Non-Performing Assets (NPAS) On Profitability Of Public Sector Banks In India
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Abstract
The Indian banking sector has undergone substantial changes in recent decades, with public sector banks (PSBs) playing a crucial role in the nation's financial system. However, amidst this evolution, the issue of Non-Performing Assets (NPAs) has emerged as a significant challenge for banks across all categories. This research paper explores the intricate relationship between NPAs and the profitability of public sector banks in India. The primary objective of this study is to thoroughly examine the extent to which NPAs influence the profitability of PSBs in India.
Through an extensive literature review, this research establishes the context of NPAs within the Indian banking system, detailing the regulatory framework, classification criteria, and historical trends. Building on the existing body of knowledge, this article highlights the global and Indian significance of NPAs for banking institutions.
This study investigates how NPAs, commonly referred to as bad loans, impact the profitability of public sector banks in India. The findings reveal that NPAs adversely affect the financial performance of PSBs and state the critical importance of effective NPA management for maintaining profitability and sustainability in the banking sector.
The banking sector in India has experienced significant transformations over the years, evolving into a dynamic and competitive landscape. Public sector banks (PSBs) have historically played a pivotal role in driving the nation's economic growth, contributing to financial inclusion and infrastructure development. However, the emergence of new private sector banks has introduced a fresh wave of innovation and market orientation, increasing competition and offering customers a broader range of financial products and services.