Management of Non-Performing Assets in Public Sector Banks

Abstract

Banking sector in India has given a positive and encouraging response to the financial sector reforms, which were brought the Indian financial system closer to global standards. With the entry of new private banks and foreign banks has shaken up Public Sector Banks (PSBs) in the competitive changing financial scenario and have opened up opportunities for banks to expand their global presence through self-expansion, strategic alliances, etc. After the liberalization of the Indian economy, the Government has announced a number of reform measures based on the recommendation of the Narasimhan Committee to make the banking sector economically viable and competitively strong. The RBI has been introduced the concept of Non-Performing Asset (NP A) and certain norms with effect from 1.4.1992 which are useful not only to know the true financial position but also to take corrective steps for improving the performance of their loan portfolios. The issue of mounting NPAs is giving jitters to banking sector particularly in many a developing economy. This article attempts to focus on the asset-wise, sector-wise NP As and also examined the quality of loan assets as well as the distribution of PSBs by the ratio of net NP as to net Advances.