A Study on the Influence of Non-Performing Assets on Public Sector Banking Stability

NPAs have become a major problem for the stability and health of public sector banks and are a significant issue in India which is an emerging economy. The research looks at the effects of NPAs on the stability of public sector banks by examining important financial hints and indicators for a period of ten years. It takes a closer look at how high NPAs influence a bank’s liquid assets, profit levels, capitalization and overall stability. By using mixed-methods, the research mixes the results of a financial analysis with opinions provided by banking professionals and authorities. According to the findings, large amounts of non-performing assets correlate with a decline in bank stability which shows reduced net interest margins, more money needed for provisions and a decrease in asset quality. According to the study, when NPAs remain, banks find it hard to lend and this results in slow credit growth and development. Moreover, it looks into if asset quality reviews, IBC bankruptcy cases and recapitalization activities assist in handling the challenges related to NPAs. It is evident from the analysis that these interventions assisted in controlling NPAs, yet poor credit analysis and inefficient recovery systems keep harming public sector banks’ financial position. It also covers how reforms in management and usage of new technologies can enhance risk management techniques to prevent any future NPAs. Thanks to its detailed view of the connection between NPAs and banking stability, the research recommends useful policy actions that can improve the robustness and stability of banks owned by the public. These findings matter to regulators, people working in the banking industry and people concerned with building a banking sector that helps everyone contribute to the economy equally. This research adds to the body of knowledge by mixing empirical results with strategic understanding, suggesting that fully integrated ways to deal with NPAs are essential for the continued