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    BANK MANAGEMENT Role of Npa

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    Tarunvir Kukreja
    Non-performing loans are loans that are in default or close to being in default, often after 90 days. Rising non-performing assets (NPAs) reduce bank profits and threaten to erode half of public sector banks' capital. As banks have more NPAs, they are reluctant to fund industries or infrastructure projects, hampering economic growth. Large NPAs also weaken the banking sector and economy by reducing available funds and increasing interest rates, lowering demand overall.

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    BANK MANAGEMENT Role of Npa

    Uploaded by

    Tarunvir Kukreja
    19 views2 pages
    Non-performing loans are loans that are in default or close to being in default, often after 90 days. Rising non-performing assets (NPAs) reduce bank profits and threaten to erode half of public sector banks' capital. As banks have more NPAs, they are reluctant to fund industries or infrastructure projects, hampering economic growth. Large NPAs also weaken the banking sector and economy by reducing available funds and increasing interest rates, lowering demand overall.

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    BANK MANAGEMENT role of npa

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    Non-performing loans are loans that are in default or close to being in default, often after 90 days. Rising non-performing assets (NPAs) reduce bank profits and threaten to erode half of public sector banks' capital. As banks have more NPAs, they are reluctant to fund industries or infrastructure projects, hampering economic growth. Large NPAs also weaken the banking sector and economy by reducing available funds and increasing interest rates, lowering demand overall.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    19 views2 pages

    BANK MANAGEMENT Role of Npa

    Uploaded by

    Tarunvir Kukreja
    Non-performing loans are loans that are in default or close to being in default, often after 90 days. Rising non-performing assets (NPAs) reduce bank profits and threaten to erode half of public sector banks' capital. As banks have more NPAs, they are reluctant to fund industries or infrastructure projects, hampering economic growth. Large NPAs also weaken the banking sector and economy by reducing available funds and increasing interest rates, lowering demand overall.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    BANK MANAGEMENT

    A non-performing loan is a loan that is in default or close to being in default. Many loans
    become non-performing after being in default for 90 days, but this can depend on the contract
    terms.

    Role of NPA on Indian Economy

     Non-Performing Assets(NPAs) on Banks

    The increasing NPAs not only reduce the profitability of banks but also affect its credibility. In
    fact the massive amount of NPAs with commercial banks is threatening to erode half of the
    capital base of public sector banks. Once a bank started incurring losses, the problem may
    destabilize the confidence of the depositors and depositors may start withdrawing money from
    the banks leading to collapse of banking sector.

     Non-Performing Assets (NPAs) on Industry

    As a result of increasing NPAs in industrial sector, banks were reluctant to fund the needs of
    industrial sector hampering its growth. The shortage of funds to the industrial sector will affect
    the growth of the industrial sector. The continuous shrinking of credit to industrial sector is
    detrimental to not only industries but overall economy as well.

     Non-Performing Assets (NPAs) on Economy

    Strong banking sector is one of the most significant prerequisite of strong economy because it
    channels the savings into the investment. Today, the Indian banking industry is dealing with the
    mammoth amount of NPAs which is fifth largest in the world. Infrastructure accounts for biggest
    chunk of NPAs. Because of massive amount of NPA in infrastructure, the banks are now
    reluctant to fund this sector. As the infrastructure is one of the most important sectors in
    economy which fuels the growth of other sectors, draining of resources to infrastructure may
    hamper the growth of Indian economy.

    Overall impact of increasing Non-Performing Assets (NPAs) can be summarized as follows:


     The higher is the amount of non-performing assets (NPA) the weaker will be the bank’s
    revenue stream.
     Indian Banking sector has been facing the NPA issue due to the mismanagement in the
    loan distribution carried by the Public sector banks.
     As the NPAs of the banks will rise, it will bring a scarcity of funds in the Indian markets.
    Few banks will be willing to lend if they are not sure of the recovery of their money.
     The shareholders of the banks will lose of money as banks themselves will find it tough
    to survive in the market.
     This will lead to a crisis situation in the market.
     The price of loans, interest rates will shoot up badly. Shooting of interest rates will
    directly impact the investors who wish to take loans for setting up infrastructural, industrial
    projects etc.
     It will also impact the retail consumers, who will have to shell out a higher interest rate
    for a loan.
     All these factors hurt the overall demand in the Indian economy.

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