Open AccessA Study of Non Performing Advances and It’s Management With Special Reference to Punjab National Bank
Author(s) -
Martha Sharma
Publication year - 2021
Publication title -
international journal of advanced research in science, communication and technology
Language(s) - English
Resource type - Journals
ISSN - 2581-9429
DOI - 10.48175/ijarsct-1424
Subject(s) - non performing asset , loan , return on assets , profitability index , asset (computer security) , capital adequacy ratio , net interest income , business , non performing loan , financial system , national bank , credibility , finance , economics , actuarial science , interest rate , incentive , computer security , capital asset pricing model , computer science , political science , microeconomics , law
Banking industry plays an important role in the development of an economy. Banks have become very cautious in extending loans. The reason being mounting non-performing assets (NPAs). NPAs put negative impact on the profitability, capital adequacy ratio and credibility of banks. It is defined as a loan asset, which has ceased to generate any income for a bank whether in the form of interest or principal repayment. As per the prudential norms suggested by the Reserve Bank of India (RBI), a bank cannot book interest on an NPA on accrual basis. In other words, such interests can be booked only when it has been actually received. Therefore, this has become what is called as a ‘critical performance area’ of the banking sector as the level of NPAs affects the profitability of a bank. This paper touches upon the meaning and consequently the definition of a non-Performing asset, the conceptual framework of non-performing assets, classification of loan assets and provisions. The study also evaluates the adverse effect of non-performing assets on the return on total assets of Punjab National Bank Limited for the period 2013 to 2015, 2016-17, and 2019-20. Particularly discussing some remedial measures taken up by the Bank to overcome this situation of NPA.