Name: Ravi Mahali (2008 -2010)




A strong banking sector is important for flourishing economy. The failure of the banking sector may have an adverse impact on other sectors. Non-performing assets are one of the major concerns for banks in India.

NPAs reflect the performance of banks. A high level of NPAs suggests high probability of a large number of credit defaults that affect the profitability and net-worth of banks and also erodes the value of the asset. The NPA growth involves the necessity of provisions, which reduces the overall profits and shareholders’ value.

The issue of Non Performing Assets has been discussed at length for financial system all over the world. The problem of NPAs is not only affecting the banks but also the whole economy. In fact high level of NPAs in Indian banks is nothing but a reflection of the state of health of the industry and trade.

This report deals with understanding the concept of NPAs, its magnitude and major causes for an account becoming non-performing, projection with special reference to ICICI bank.



The main objective of the research is to understand the concept of nonperforming assets. What is the definition of nonperforming assets. Why they are increasing? What are the causes of NPA’s? How we can control this thing? Through this project we can also analyse the banking industry. What type of challenges this industry is facing. I also include Basel committee report in my project which tells about the risk management in the banks. I choose ICICI BANK for my study of NPA. It is the leading private sector bank. They control NPA in very good manner. That why it is interesting to know how they able to do this one, To carry out my project I have used the descriptive research. Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs, as it exists at present. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening. It is also called as ex post facto research. Most ex post facto research projects are used for descriptive studies in which researcher seeks to measure such items as, for example, frequency of shopping, preferences of people, or similar data. Descriptive research also includes attempts by the researcher to discover causes even when they cannot control the variables. The methods of research utilized in descriptive research are survey methods of all kinds.



The limitations that I felt in my study are:

It was critical for me to gather the financial data of the every bank of the Public Sector Banks so the better evaluations of the performance of the banks are not possible.

Since my study is based on the secondary data, the practical operations as related to the NPAs are adopted by the banks are not learned.

Since the Indian banking sector is so wide so it was not possible for me to cover all the banks of the Indian banking sector.

Provision for the classification of the Assets / NPA’s differs within each public sector bank & this information is not available Publicly.

The RBI norms for the classification of assets / NPA’s  are available on a pay site & not publicly available through any source .


Conclusion and Suggestions

The issue of Non-Performing Assets (NPAs) in the financial sector has been an area of concern for all economies and reduction in NPAs has become synonymous with functional efficiency of financial intermediaries. Although NPAs are a balance sheet issue of individual banks and financial institutions, it has wider macroeconomic implications. It is important that, if resolution strategies for recovery of dues from NPAs are not put in place quickly and efficiently, these assets would deteriorate in value over time and only scrap value would be realized at the end. It should, however, be kept in mind that NPAs are an integral part of the business financial sector and the players are in as they are in the business of taking risk and their earnings reflect the risk they take. They operate in an environment, where there would be defaults as well as deterioration in portfolio value, as market movements can never be predicted with certainty. It is in this context, that countries have adopted regulatory measures and the guiding structure has been provided by the Basel guidelines

.There are various reasons for assets turning non-performing and there can be alternative resolution strategies. Identification of the reasons and timely action are the key to improved profitability of financial sector intermediaries. In this context, the details of the CAMEL model that RBI introduced for evaluating performance of banks and the need for this arose from the systemic generation of large volume of NPAs. CAMEL covers capital adequacy, asset quality, management quality, earnings ability and liquidity.

The above article was extracted from dissertations in Marketing, Finance, Human Resources, Strategy, Information Systems by the students from Skyline College. Skyline College is amongst the top MBA and BBA institutes in Delhi, Gurgaon (NCR).

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