Non – Performing Assets: The Bad Loans Problem of Indian Banking System

N on-performing assets are the asset which does not yield any returns or are not able to give any returns because of several including insolvency or bankruptcy or slowdown in the economy. Banks perform an important task of granting loans to individuals, institutions and corporate houses and if those loans are not recoverable or they are doubtful they become non-performing assets for the banks. NPAs have become a big barrier on the way of Indian banking system to progress and the burden of NPA is increasing quarter by quarter. The NPA problem which our banks are facing today is the result of negligent lending, mishandling of funds, lack of legal protection to bank, etc. At present NPA in India stands at 9 lakh 40 thousand crore rupees and GNPA percentage of 9.31%. The problem of NPA is more chronic in the public sector bank as compared to private banks. To handle the NPA parliament has passed Insolvency and Bankruptcy Code 2016 to fastrack the resolution of bad loans and increase the recovery and had also announced to recapitalize the public sector banks. This paper focuses on the depth of the problem, its reasons, impact and possible solutions.