Non-Performing Assets and Profitability: Commercial Banks in India

The paper examines the Non-Performing Assets and their impact on the profitability of commercial banks viz. public banks, private banks and foreign banks in India. The data collected from RBI database, for the period of eleven years from 1st April 2006 to 31st March 2017. Regression analysis has bee...

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Bibliographic Details
Published in:SCMS journal of Indian management 2018-07, Vol.15 (3), p.42-46
Main Author: Shaban, Majid
Format: Article
Language:English
Subjects:
Banking
Banking industry
Banks
Commercial banks
Comparative analysis
Credit policy
Loans
Profitability
Profits
Public sector
Regression analysis
Research methodology
Return on assets
Variables
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Summary:The paper examines the Non-Performing Assets and their impact on the profitability of commercial banks viz. public banks, private banks and foreign banks in India. The data collected from RBI database, for the period of eleven years from 1st April 2006 to 31st March 2017. Regression analysis has been used in the study where; return on assets and return on equity have been used as proxy variables for profitability of the banks while Gross NPA to Gross advances ratio and Net NPA to Net advances ratio has been used as independent variables to denote the non-performing assets of the banks. It was found that NPA has an adverse impact on the profitability of the banks. Furthermore, the results demonstrate that the profitability of the foreign banks is least affected by the NPAs compared to public and private banks.
ISSN:0973-3167