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Journal of Social Welfare and Management

Volume  12, Issue 3, October- December 2020, Pages 109-114
 

Original Article

Growth of Non-Performing Assets on the Profitability of Banks in India

D Amutha

Associate Professor Department of Economics, St Mary’s College (Autonomous), Thoothukudi Tamil Nadu 628001, India.

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DOI: http://dx.doi.org/10.21088/jswm.0975.0231.12320.3

Abstract

One of the big problems for banks in India is non-performing assets. NPAs reflect banks' results. From 2006-07 to 2019-20, the current paper explores the pattern and growth of the net profit of all banks and gross non-performing assets in India. The study has the following objectives 1. To analyse the growth of net profit of all the banks in Indiasince 2006-07 to 2019-20. 2. To identify the Gross Non-performing asset (NPA) and profitability of banks and 3. To examine thetrend and growth of net profit of all the banks and gross non-performing assets in Indiasince 2006-07 to 2019-20. It is mainly concerned with tapping specific secondary data collection sources. It gathers secondary data from academic papers, dissertations of academics, reference books, standard publications and records of institutes and organisations, journals, newspapers, internet, etc. Statistical instruments such as percentage techniques, linear pattern and compound growth rate have been used. It is found that the trend coefficient was found to be statistically significant for net profit of all the banks and Gross Non-performing assetin India. It indicates, on average, it had increased by 6.7 percent for net profit of all the banks and 4.1 percent for Gross Non-performing assetper annum. The growth rates are found to be 7.384 percent, and 4.957 percent for net profit of all the banks and Gross Non-performing assetin India.The value of R2 indicates that the net profit of all the banks (0.613), and Gross Non performing asset (0.571) explain variations independent variables to the extent of 61 percent, and 57 percent respectively. Therefore, the banking sector should now primarily concentrate on the efficient management of NPAs in order to improve their profitability and thereby provide the industry with as much funding as possible.

 


Keywords : Economic growth; Financial institutions; Allocation of resources; Net profit; Non-performing assets.
Corresponding Author : D Amutha