Nonperforming assets in Indian banking sector a diagnostic study

Abstract

The present study is significant because of its futuristic approach, addressing the problem of NPAS by focusing on trends in NPAS and diagnosing asset quality, and suggesting alternatives for converting all NPAS into performing assets. The sample consisted of 9 banks including both public and private sector banks listed on the nifty banking index for a period of ten years from 2009-2018. Panel data regression has been invoked to perform the data analysis to study the impact of performance indicators on non-performing assets and the impact of financial distress on asset quality. Furthermore, the viewpoint of bank managers and recovery measures of non-performing assets are presented through a variety of tables and statistical techniques. The results showed that return on assets and liquidity have a significant influence on performance whereas all the independent variables have insignificant influence on financial distress. The analysis also indicates that there is no significant difference in the perception of managers regarding the factors causing non-performing assets in the Indian banking sector. No significant difference has been found in the perception of managers regarding internal or external factors as recovery measures of non-performing assets in the Indian banking sector. Based on these results, specific suggestions have been made to reduce and recover the non-performing assets in the Indian banking sector. newline