African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4058

Full Length Research Paper

Impact of non-performing assets on the profitability in Indian scheduled commercial banks

Kavitha Nachimuthu
  • Kavitha Nachimuthu
  • Department of Rural Development and Agricultural Extension, College of Agriculture and Rural Transformation, University of Gondar, Ethiopia.
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Muthukrishna Veni
  • Muthukrishna Veni
  • Department of Management Studies, Velalar College of Engineering and Technology, Erode, Tamilnadu, India.
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  •  Received: 04 October 2018
  •  Accepted: 10 December 2018
  •  Published: 28 February 2019

Abstract

Banking in modern times is the kingpin of all economic activities. It is instrumental in shaping the economic destiny of a country. Banks are considered as the nerve-centres of economics and finance of any nation and the barometer of its economic prospective. Since the banks have stupendous investment potential, they can make a significant contribution in eliminating poverty and problem of unemployment. It can bring about a progressive reduction in inter-regional/ state, inter-sectoral and inter-personal disparities in India. The banking sector is facing the problem of rising NPAs at present. The purpose of the study is to measure the impact of NPAs on the profitability of Indian scheduled commercial banks for the period of ten years. The study discusses the impact of NPA on the profitability in India scheduled commercial banks for the past ten years from 2007-2008 to 2016-2017. The ratio analysis, regression analysis, tests of equality of means, cross correlogram with the help of E-Views 10 software were used to identify the variables pertaining to NPAs on the profitability of the banking sector.  There is an increasing trend of NPAs of Scheduled commercial banks in India.

 

Key words: Gross NPA, Net NPA, gross advances, net advances, total assets and profitability.

Abbreviation

Abbreviation: NPAs, Non-performing Assets; RBI, Reserve Bank of India.