Management Perspective of Non-Performing Assets : A Challenge For Indian Banking Sector in the Post Economic Reform Era

A bank is an establishment, which is indulged mainly in accepting of all kinds of deposits and lending money to the needy people/sector to disburse its role or function as a banker for the upliftment of the weaker section of the society. The concept of NPA has emerged as an obstacle for the banking sector on the way of achieving their targets .Non-performing assets are one of the major concerns for banks in India .A high level of NPAs suggest high probability of a large number of credit defaults that affect the profitability and net-worth of banks and also erodes the value of the asset. The Indian banking sector is facing a serious problem of NPAs. To improve the efficiency and profitability, the NPAs have to be scheduled. It is highly impossible to have zero percentage of NPAs. But at least Indian banks can try competing with foreign banks to maintain the international standard in this respect. The problem of losses and lower profitability of Non-Performing Assets (NPAs) and liability mismatch in banks and financial sector. An attempt is made in this paper regarding management of NPAs, the factors contributing to NPAs, the magnitude of NPAs, reasons for high NPAs and to manage NPA in Indian banking operations. Besides this an attempt will be made to find out the ratio of NPAs belonging to Public as well as Private sector banks, management of credit risk and measures to control the menace of NPAs.