International Journal of Current Research and Academic Review
ISSN: 2347-3215 Volume 1 Number 4 (2013) pp. 17-26
NPAs of Nationalised Banks of India: A Critical Review
Sakshi Jhamb1 and H.V.Jhamb2*
1 JJT University, Jhunjhunu, Rajasthan, India 2Department of Commerce at SGTB Khalsa College, (University of Delhi), University Enclave, Delhi - 110007, India
Containment of NPAs has been in focus ever since the banking reforms were initiated in 1992. All the nationalised banks have been making efforts to contain the NPA level and reduce the drag on their profitability. Each individual bank has tried to grapple with this problem; the magnitude of the slippage of performing assets to NPA category has become a cause of permanent concern. Though the recoveries affected in NPA accounts by the nationalised banks during the last few years were significant but the level of fresh accretion during the period was also significant. Consequently the level of NPA has gone up, eroding whatever reduction was made with the ever increasing level of fresh NPAs and tightening of norms by RBI from time to time. Total elimination of NPAs is not possible in banking business owing to externalities but their incidence can be minimized. It is always prudent to follow proper policy for credit appraisal, supervision and follow-up of advances to avoid NPAs. Armed with the Securitisation Act made recently, the banking industry is targeting to reduce its NPA with full vigour. Although the Act has given a lot of leverage to the banks to recover their NPAs, the success shall lie in its proper and forceful enforcement. Given the situation that a large amount of NPAs is towards big industrialists who wield a considerable influence in the corridors of power, only strong political will on the part of the government to act against such elements will bring some tangible results to the fore
Containment of NPAs; Nationalized banks; NPA category.