The study of non-performing assets in Indian private banking sector

The study of non-performing assets in Indian private banking sector

Author’s- Gagan Arora MBA (Investment Banking and Marketing), Lovely Professional University,

 Shubham Kumar MBA (Financial Consulting and Marketing), Lovely Professional University

, Mahir Singh MBA (Financial Consulting and Marketing), Lovely Professional University

Abstract—Non-Performing Assets (NPAs) have emerged as a critical concern in the Indian private banking sector, significantly impacting the financial health and operational efficiency of these institutions. This research delves into the rising trends of NPAs within private sector banks in India, exploring the root causes, the impact on bank performance, and effective strategies for managing and reducing these bad loans. A combination of primary data collected through surveys and secondary data from industry reports was analyzed to identify key factors contributing to NPAs, including economic downturns, aggressive lending practices, and insufficient credit risk assessment. The study also evaluates the effectiveness of regulatory measures such as the Insolvency and Bankruptcy Code (IBC) and the SARFAESI Act in addressing the NPA issue. Findings indicate that while regulatory interventions have brought about some improvement, issues like weak borrower profiling, sectoral concentration risks, and governance failures remain significant challenges. The study concludes with practical recommendations aimed at enhancing credit risk management frameworks, adopting advanced technological solutions for loan monitoring, and strengthening governance practices to mitigate NPA accumulation and ensure long-term stability within the banking sector.

Keywords: Non-Performing Assets (NPAs), Private Sector Banks, Credit Risk Management, Regulatory Measures, Financial Stability, Insolvency and Bankruptcy Code (IBC), SARFAESI Act, Banking Sector, Risk Assessment, Governance.