Analysis of NPA in Indian banking sector

Abstract

Banking plays an important role in the economic transformation of any country by becoming a significant channel for funds/financial resources to the public and corporates. Banks boost the real economy by acting as the financial intermediary handling the fund transfer from the savers to the borrowers in the most risk-free manner. They are the conducive passage for the monetary policy transmission. Thus, Banking is considered as the backbone of the economy. However, the mere existence and growth trajectory of the banks depend on their balance sheet as well as asset quality. The bad assets can shrink the size of the balance sheet and in the case of absence of adequate capital the bank is exposed to insolvency risk.