Impact Of Non-Performing Assets On Profitability Selected Public And Private Sector Banks

Abstract

The impact of non-performing assets (NPAs) on the profitability of both public and private sector banks is a critical aspect of financial analysis. NPAs represent loans or advances where the borrower has ceased to make interest or principal repayments for a specified period, usually 90 days. In this abstract, we examine how NPAs affect the profitability of selected public and private sector banks. The study employs a mixed-method approach, combining quantitative analysis of financial data with qualitative insights from banking experts. Quantitative analysis involves examining the correlation between NPAs and various profitability metrics such as return on assets (ROA) and return on equity (ROE) for both public and private sector banks over a specific time period. The study also assesses the impact of NPAs on net interest income (NII), net interest margin (NIM), and provisioning requirements, which directly influence profitability. Qualitative insights are gathered through interviews or surveys with banking professionals, including bank executives, regulators, and industry analysts. These insights provide context to the quantitative findings, helping to identify the underlying causes of NPAs and their implications for profitability.The findings of this study contribute to a deeper understanding of the relationship between NPAs and bank profitability, offering valuable insights for policymakers, regulators, investors, and bank management. Understanding the impact of NPAs on profitability is crucial for formulating effective risk management strategies and ensuring the stability and sustainability of the banking sector.