Abstract:

This research paper presents a comprehensive analysis of literature in the context of NPA and its impact on the performance of banks, with specific reference to public sector banks and private sector banks. The analysis includes changing the definition and meaning of NPA by the regulator in India vis a vis its impact on the NPAs. Based on the analysis it is concluded that large no of intervention legal or otherwise such as merger and acquisition of the bank are followed by the regulator within Lakshmi Vilas bank, IDBI”. The banking sector is the most essential part of the Indian financial system. A major obstacle for Indian banks is achieving operating productivity appropriate for modern financial inter-mediation under the existing ownership framework. Given the rise in nonperforming assets (NPAs), it has been surprisingly safe for PSBs to recapitalize, as the government's powerful ownership system has minimized the conflicts of interest that private banks would face. NPAs are a major source of worry for public sector banks, as they must be managed and regulated. NPAs have a negative impact on bank loans because non-recovery of loan payments and interest on the loan account negate the efficacy of the credit dispensation scheme. The non-recovery of loans also harms bank performance. Furthermore, banks with a large degree of NPAs must hold more owned funds as resources, build buffers and provisions, and have a buffer for loan losses. The main aim of this paper is to have a review on the banking system in India, NPA, NPA rise, extent and effect and suggested govt. measures to Solve NPA.

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