The Causal Factors behind Rising Non-performing Assets of India’s Commercial Banks: A Panel Study

Jayaraman, Tiruvalangadu K.; Lee, Chin-Yu; Ng, Cheong-Fatt

doi:10.1108/s2514-465020190000007008

Cited by 2 publications

(2 citation statements)

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“…The banks were held responsible for risk-taking behaviour and poor monitoring of various projects, which led to an increased size of bad loans (Zee News, 2016).The condition of PSB was worse as most of the assets of these banks were either underperforming or not generating the expected income and required strict and pragmatic actions (Agarwala & Agarwala, 2019;Bhadury & Pratap, 2018;Das & Dutta, 2014;Joseph & Prakash, 2014;Singh, 2013). Poor recovery measures, lack of proper risk management system and wilful default are the other key issues in the poor performance of these stateowned banks (Jayadev & Padma, 2020;Jayaraman et al, 2019;Karunakar et al, 2008;Patnaik et al, 2011). Many studies have asserted that there is a requirement for realistic and structured management policies to curb the situation (Agarwala & Agarwala, 2019;Bawa et al, 2019;Barge, 2012;Bhaskaran et al, 2016;Dhar & Bakshi, 2015;Gupta, 2012;Joseph & Prakash, 2014;Singh, 2013;Batra, 2003)…”

Section: Background To the Perspectivesmentioning

confidence: 99%

Critical Perspectives to Non-performing Assets of Indian Banks, Shrinking Balance Sheet, Challenges and Way Ahead

Pramahender¹

2021

FIIB Business Review

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Indian banking sector is facing the problem of rising bad loans as gross non-performing assets (GNPA) of Indian banks is on continuous rise. The present study is an attempt to analyse rising bad loans scenario of Indian banks, various factors that contributes to non-performing assets (NPA), along with the present state of Indian banks. This study found that poor recovery measures, lack of proper credit and risk management system at bank level, wilful default by borrowers, lack of stringent regulation, poor level of corporate governance and misuse of funds by borrowers are the key factors behind the rising level of bad loans of Indian banks. It was found that public sector banks (PSB) are suffering the most from rising level of NPA, high rate of NPA of banks have adverse impact on banks’ balance sheets, their assets quality, increased provisioning coverage ratio of banks and low return on assets. Although various concerned stakeholders have taken numerous measures to curb the situation, such as recapitalization of PSB, construction of assets reconstruction companies (ARC), Debt Recovery Tribunals for speedy recovery of bad loans and enactment of insolvency and bankruptcy code (IBC),still there is much more to do, and have a huge scope to bring reforms in banking sector, especially in PSB of India.

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Section: Background To the Perspectivesmentioning

confidence: 99%

Critical Perspectives to Non-performing Assets of Indian Banks, Shrinking Balance Sheet, Challenges and Way Ahead

Pramahender¹

2021

FIIB Business Review

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“…It has been observed that the gross NPAs for banks across several hundreds of countries have collectively reached up to a level of 6.01 percent. Particularly, in India, the gross NPA levels have increased enormously, thereby reaching the mark of INR 10.25 trillion as of March 2018 (Shinde & Jagannathan, 2019;Jayaraman et al, 2019). As per RBI Financial Stability Report, 2020, this NPA could rise to nearly 14.7% of the total loans in the coming years, pertaining to the economic stress imposed by Covid-19 pandemic (RBI Financial Stability Report, 2020).…”

Section: Operational Risks and Challenges For Financial Institutionsmentioning

confidence: 99%

Financial solution for balancing global economy, poverty and hunger differences through blockchain secured real time traceability system

Balkrishna

Singh²,

Arya³

et al. 2021

Preprint

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The grave challenges of inequality, hunger and poverty are escalating in most of developing countries including India, thereby jeopardizing the overall growth of our country as well as the global economy. Under such crippling situations of poverty and inequality, the magnitude of inefficient and unsystematic lending practices, lack of monitoring by lenders and related fraudulent activities are on the rise, thereby causing a substantial build-up of non-performing assets as one of the emerging risks for the financial sector. The available finance management tools, in fact, lack the capability of real-time execution, fund deployment, credit risk assessment and project viability monitoring. This manuscript describes how a combination of process modeling, execution and measurement can be deployed for assessing financial traceability with accounting, billing, inventory & real-time project tracking and monitoring updates. The explicit process accounts primarily for due diligence framework; controls financial traceability; as well as geo-mapping, fencing & tagging based tangible process assessment of projects prior to lending, during and post implementation. Ultimately, the proposed blockchain secured finance solution (B-Bank™) will cause optimization of credit risk capital at both stages of pre-sanction, pre-disbursement and post implementation of projects, thereby balancing and strengthening the financial institutions and ultimately the global economy.

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The Causal Factors behind Rising Non-performing Assets of India’s Commercial Banks: A Panel Study

Cited by 2 publications

References 10 publications

Critical Perspectives to Non-performing Assets of Indian Banks, Shrinking Balance Sheet, Challenges and Way Ahead

Critical Perspectives to Non-performing Assets of Indian Banks, Shrinking Balance Sheet, Challenges and Way Ahead

Financial solution for balancing global economy, poverty and hunger differences through blockchain secured real time traceability system

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