Nonperforming assets now a day is not an uncommon phenomenon even for a man of ordinary prudence. The disaster in banking through NPA is being seen by public in last 1 year, probably never seen in last 5 decades. Specially in the context when public (Specially business group) is trying come out the failure policies of RBI or other agencies such as Demonetization and Implementation of GST without proper platform and planning, the occurrence of NPA in various different sectors with huge amount concentrated by few people has changed the mindset of public towards RBI Independence and its working efficiency. The position of NPA is getting worst. Well in this Article we are going to discuss the position of NPA with comparison between Public and Private Banks.
KEYWORDS: Non Performing Assets (NPA), Demonetization, Public and Private Banks, Measures.
Introduction In India Banking sector is served by two different kinds of Banks. One is Public and other one is private. Although entire Banking industry is governed by RBI and Central Government to some extent, however Public Sector Banks are largely controlled by Government. Is this the reason of having worst position of NPA in Public Banks? Well before answering to this question, it shall be need of discussion that which kind of banks has large volume of NPA’s. Here it shall be noted down that one of the major function of the Banks is Accept Deposit and Lend the Money. However Lending is made only out of monies provided by Depositor in form of Deposit. In case Advances given by Banks turns to be NPA, it has a direct effect on Depositors. Bank may show its inability to repay the deposits and may turn into Insolvent. Through this article we will discuss how NPA has increased (or decreased) and a comparison between Public and Private Banks as well as comparison between various years of NPA of Banks.
Non Performing Asset (NPA)
The non performing Asset means when a loan is not repaid by borrower even after its due date. In simple words default in repayment of loan is the cause of becoming NPA. Borrower may do default in repayment due to various reasons such as non availability of funds or unwillingness to repay or fraud. If the credit facility remains outstanding for considerable time (i.e. after due date), then it turns into NPA. Banks and financial institutions mainly depend upon the interest income they earn from advances. If a borrower defaults in repayment not only principal amount delayed also the interest income discontinues. Account becomes NPA in following Manner
