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Analysis of Non-Performing Assets (NPAs) In C...

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Analysis of Non-Performing Assets (NPAs) In C...

Analysis of Non-Performing Assets (NPAs) In Commercial Banks

Author Name : Sujit Kumar Nath, Subhasish Basu, Dr.Garjraj Singh Ahirwar

ABSTRACT: Developing of sound and healthy financial institutions (especially banks) is an essential criterion for over all stability and growth of the financial system of the country. The high level of NPAs in banks and financial institutions has been a matter of concern to the government as bank credit is the catalyst to the economic growth of the country and any bottleneck in the smooth flow of credit, one cause for which is the mounting NPAs, is creating adverse repercussions on the financial system of the country which in turn affects the economy. When the loans taken are not repaid and cross the pre-determined period, much of the funds go out of financial system and the cycle of lending- repaying-borrowing is broken. The banks have also to repay their depositors and others from whom the money had been borrowed. If the borrowers do not repay the loan, it affects the financial performance of banks A nonperforming loan (NPL) is the sum of borrowed money upon which the debtor has not made his scheduled payments for at least 90 days. A nonperforming loan is either in default or close to being in default. Once a loan is nonperforming, the odds that it will be repaid in full are considered to be substantially lower.