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Impact of NPAs on Bank Performance

Author(s) : K. Moneesh Kumar, S. Gurusamy

Volume & Issue : VOLUME 3 / 2015 , ISSUE 2

Page(s) : 16


Abstract

The Indian Banks are considered to be the backbone of Indian financial system. Presently, the Indian financial system is in a process of rapid transformation. There are about 67,000 branches of scheduled banks spread across India. This study examines the perception of loan officers on the impact of NPAs on performance of banking industry and the general economy. Results reveal that the two factors found to be the internal impact of NPAs in both Public and Private sector banks in India are ‘Financial Performance’ and ‘Managerial Performance’. Two factors found to be the external impact of NPAs in both Public and Private sector banks in India are ‘Country Performance’ and ‘Bank Credibility’. Three clusters found from factors on impact of NPAs in the banking industry and in the general economy in India are Sagacious Loan Officers, Passive Loan Officers and Sturdy Loan Officers. The researcher concludes that NPA is a threat to the existence of a bank. Default on account of big borrowers is a major problem for both public and private sector banks though such borrowers are less in number.

Keywords

NPAs, Country Performance, Bank Credibility, Credit Management, Financial Performance and Managerial Performance

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