Review of Literature
Indian Institute of banking and finance describe NPAs as An asset, including a leased asset, which ceases to generate income for the bank or NPA (as classified by financial institutions) refers to loans that are in jeopardy of default. In banking sector, the problem of NPAs has been revisited in several studies. The concept of Non-Performing Assets was introduced following introduction of Income Recognition and Asset Classification (IRAC norms), in the year 1993. Y. V. Reddy (2009), in his article “Global Financial Turbulence and the Financial Sector in India: A Practitioner’s Perspective” states as under: “During 1992-93, the prudential norms relating to income recognition, asset classification and provisioning were introduced and are being continuously monitored and refined to bring them on par with international best practices. To keep aligned with these norms, large number of measures were introduced in 2005-06. In November 2005 and January 2007, the provisions for standard assets were revised through the series of changes, in view of the perpetual high credit growth in the personal loans, credit card receivables, real-estate sector and loans and advances qualifying as capital market exposure and a higher default rate with regard to personal loans and credit receivables, which comes out as a matter of grave concern.” Narendra Yadav (2003), in his paper “The Reserve Bank of India’s Balance Sheet: Analytics and Dynamics of Evolution” states: The analysis shows that terms of credit variables have effect on the banks’ non-performing assets. For instance, the bank size measured in terms of capital, has positive impact on NPAs, while the measure of bank size in terms of assets has negative effect.
Dr. Nandita Rajput (2012), in her paper on “Management of Non-Performing Assets- A study on Indian Public Sector Banks” has said that Non-Performing asset pose a serious threat to banks all over the world. The non-recovery of loan instalment...
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