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Stream/Area:
-
Subject:
-
Paper ID:
IJSREM43309
Volume:
9 |
4 |
Apr 2025
Pages:
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Non-Performing Assets (NPAs) have emerged as a significant challenge in the Indian banking sector, particularly in private sector banks, impacting their profitability, liquidity, and overall financial stability. This study aims to analyze the trends, causes, impact, and management strategies of NPAs in Indian private sector banks using secondary data from 2008 to 2023. The research is based on data sourced from RBI reports, financial statements of private banks, industry research publications, and banking sector analyses. The study identifies a steady rise in NPAs post-2010, driven by aggressive retail lending, unsecured loans, and economic downturns. Comparative analysis of key private sector banks—HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, and IndusInd Bank—reveals that banks with stronger credit risk frameworks maintain lower NPA levels, while those with high-risk lending portfolios experience greater defaults. The findings also highlight the negative correlation between NPAs and financial performance metrics such as Return on Assets (ROA) and Return on Equity (ROE), confirming that higher NPAs lead to reduced profitability and investor confidence. Regression analysis further suggests that a 1% increase in the Gross NPA Ratio results in a decline in ROA, emphasizing the critical need for effective risk management. The study also explores various NPA resolution strategies, including the SARFAESI Act, Insolvency and Bankruptcy Code (IBC), digital credit monitoring, and AI-driven predictive risk assessment models, which have proven effective in reducing bad loans. The research concludes that private sector banks must adopt a multi-faceted approach, including enhanced credit screening, real-time borrower monitoring, diversified loan portfolios, and strengthened recovery mechanisms, to mitigate NPA risks. By implementing data-driven risk assessment and proactive regulatory compliance, banks can improve financial resilience and long-term stability in the Indian banking sector.
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Publication Date
2/3/2025
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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Conflict of Interest
The authors declare no conflict of interest related to this research work.
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