A Study of NPAs and Its Impact on the Profitability of Selected Indian Public Sector Banks
Abstract
Banking Sector plays a very important role for the economic development of the country. The problem of NPA is becoming very severe for the Indian banking sector as well as for the economy of the country. As per the prudential norms of RBI, an asset is said to be non-performing if the interest and/ or the principal amount remain unpaid for a period of 90 days or more. The main aim of the study is to examine the trends of NPAs and to analyze its impact on the profitability of selected Indian public sector banks. Seven public sector banks are selected and data have been analyzed through descriptive statistics, graphs, multiple regression analysis and one way ANOVA for the time period of ten years [2009-10 to 2018-19]. Return on Assets [ROA] and Return on Equity [ROE] are taken as dependent variables and GNPA, PCR, CAR, Size and LTDR are taken as independent variables for the regression analysis. The study revealed that the NPAs show the increasing trends during the time period of the study. It is also concluded that GNPA has significant negative impact on the profitability of sampled banks. PCR and CAR have also significant influence on the ROA and ROE of the selected banks.