RECOVERY OF NPAS IN INDIAN COMMERCIAL BANKS

The problem of non-performing assets has shaken the entire Indian banking sector. The main reason of high percentage of NPA’s is the target-oriented approach, which deteriorates the qualitative aspect of lending. NPA’s put detrimental impact on the profitability, capital adequacy ratio and credibility of banks. The paper highlights the most significant factors contributing towards the problem of nonperforming assets from the point of view of top bankers from public sector banks in India, some foreign banks and the measures required for management of NPA’s like reformulation of banks’ credit appraisal techniques, establishment of monitoring department. The best indicator for the health of the banking industry in a country is its level of Non-performing assets (NPAs). High NPAs are one of the major concerns for banks in India. It reflects the performance of banks. Reduced NPAs generally gives the impression that banks have strengthened their credit appraisal processes over the years and growth in NPAs involves the necessity of provisions, which bring down the overall profitability of banks. The Indian banking sector is facing a serious problem of NPAs. To improve the efficiency and profitability of banks, NPAs should be reduced and controlled. This paper deals with recovery of NPAs from various Channels, major causes and effects of NPAs on Indian banks.