Non-Performing Assets of Indian Commercial Banks Dr. Kaur Sandeep Department of Economics, Punjabi University, Patiala, Greater Mohali, Punjab Online published on 17 August, 2013. Abstract High level of Non-performing Assets (NPAs) is a matter of concern for everyone involved as credit is essential for economic growth and NPAs affect the smooth flow of credit. Banks raise resources not just from fresh deposits, but they also create credit by recycling the funds received back from the borrowers. Thus when a loan becomes nonperforming, it affects recycling of credit and in turn credit creation. Apart from the credit creation, NPAs affect the profitability as well, since higher NPAs require higher provisioning, which means a large part of the profits needs to be kept aside as provisions for bad loans. Thus, the present research paper is an attempt to study the conceptual framework of NPAs in Indian banking sector, to examine the trends in NPAs of the commercial banks in India by comparing Percentage of Gross NPAs with Gross advances, Percentage of Net NPAs with net advances, Percentage of Gross NPAs with gross advances, Percentage of Net NPAs with net advances, Percentage of Gross NPAs with total assets, Percentage of Net NPAs with total assets and sector-wise NPAs, and average NPAs of scheduled commercial banks in India. In order to investigate the relationship between NPAs and profitability of commercial banks effect of regression analysis has been used. Therefore, the problem of NPAs is not the concern for the lenders alone, but it a concern of policy makers as well who are involved in putting economic growth on the fast track. Top Keywords Non-Performing Assets, Banks, Averages, Profitability. Top |