AN ANALYSIS OF NON PERFORMING ASSETS OF INDIAN SCHEDULED COMMERCIAL BANKS

Non-performing Asset breaks the recycling procedure of deposit and investment as it does not generate substantial income and blocks the cash flow. The motive of the paper is to conduct comparative analysis among Gross NPA, Net NPA, and Net Profit by adopting correlation, ANOVA, the average for selected bank groups which are analyzed in MS-EXCEL and SPSS. The aggregate data of 16 years from 2004-05 to 2019-20 is taken from the RBI website. Public Sector banks acquire more GNPA and NNPA and less Net Profit as compared to other two due to various reasons explained in this paper. Pearson correlation in SPSS shows that there is strongly negative and significant correlation between net profit and GNPA of public sector bank group which reflects that rising bad assets can reduce the banks’ profitability. But in case of foreign banks group, a strong but positive association between net profit and GNPA is observed. The Private bank group shows no significant association between these two variables. ANOVA test result shows there is a significant difference in the movement of GNPAs and NNPAs (in amounts) for different groups of banks during the study

. Even though no. of cases referred to Lok Adalat were being higher all these years, but amounts involved in SARFAESI Act were higher except for 2017-18 in which the amount involved in DRTs was the highest. Recovery percentage was also better in the case of SARFAESI Act, till 2016-17, after then the Insolvency and Bankruptcy code had the highest recovery percentage as compared to others. So, IBC is giving speedy recovery as compared to others. Some curative measures are recapitalization, One Time Settlement, Debt Recovery Tribunal, Lok Adalat, Securitization and Financial Assets and Enforcement of Security Interest (SARFAESI Act, 2002), Assets Reconstruction Companies, Insolvency and Bankruptcy Code, Stressed Assets Management Groups, liquidating assets pledged as security or sale of debt to any collection agency at a discount, etc.
Public sector banks in India use the Core Banking Solution (CBS) to regularly monitor the progress of nonperforming assets which is without doubt a step in the right direction (Rajput, Arora, & Kaur, 2011).

Recent Measures Taken By Government
To clean up the banking system, the Government has implemented 4 R's strategies; Recognition with transparency, Resolution/Recovery, Recapitalisation, and Reforms in the financial system. RBI (Prudential Framework for Resolution of stressed Assets) direction 2019 has introduced newly revised norms, applicable from Jan 2020 for early recognition, timely report of stress assets, classification of assets as Special Mention Accounts (SMA), additional provisioning, the new framework of thirty days gap for stressed assets recognition instead of one-day that apply to all financial institutions. After identification of the defaulters, other lenders should review the account of 479 the borrowers within thirty days i.e. called 'Review Period'. Within these stipulated days, the lenders should make some strategies for resolution procedures, such as the sale of loans to other parties, legal action against the defaulters, change in ownership, restructuring, discloser under 'Note on account' of the balance sheet, etc. Within one eighty days from the last date of the 'Review Period' banks should start the implementation process of the resolution plan. The new norms are introduced on 7th June 2019, have withdrawn the previous resolution strategies with immediate effect. The RBI has warned against any concealing or ever-greening of any kind of accounts from the lender's side.

Relevance of the Study
Comparative assessment of GNPA and NNPA among different categories of banks is very crucial to gain an indepth idea about NPAs. The reasons behind the differences among variables should be highlighted and analyzed for adequate and effective solutions. The study enlightens the shareholders, investors, bankers, academicians about NPAs status in the country and helps them in building new strategies to manage and maintains bad assets in our banking sector.
The rest of the paper is divided into four sections; Section 1 covers the introductory part, Section 2 discusses some existing literature reviews, Section 3 explains data analysis and in Section 4 the summary and conclusion are discussed.
Objectives:-1) To study the trend and composition of NPAs and the net profit in various groups of banks in India.
2) To conduct a comparative analysis of GNPA, NNPA and Net Profit among different groups in India.

1)
There is no significant correlation between the net profit and the NPAs of various groups of banks taken under consideration.
2) There is no significant difference in the movement of GNPA for different bank groups during the study period.
3) There is no significant difference in the movement of NNPA for PSBs, PRBs and FBs during the study period. 4) There is no significant difference in the movement of Net Profit for PRBs, PSBs and FBs during the study period.
Review of Literature:-P. J. Nayak Committee was set up on 20th Jan, 2014 to examine the working of boards and suggested that the discussion should be upgraded including issues of strategy, growth, governance and risk management. According to him, the capitalization into the public sector banks is enough to resolve NPAs and to achieve Basel -III levels of tier-I capital.
Jha (2019) conducted a comparative study of NPA, advances, total assets between PNB and ICICI during 2011-12 to 2017-18. Results showed that PNB was a worse performer in the recovery of its defaults as compared to its counterpart. ICICI bank was performing better as Shareholder's Risk Ratio is lower in ICICI as they had enough provision for GNPA as compared to PNB.

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Somisetti, Babu and Kumar (2015) explained some conceptual aspects of NPA and compared NPA with the performance of both PSBs and PRBs from 2002-03 to 2013-14. The banks with a significant amount of GNPA and restructured loans were CBI at the top, followed by UBI, P and S bank and PNB respectively. They recommended some preventive and curative measures to deal with NPA.
Chawla and Rani (2019) had conducted a comparative study by taking data on NPAs (gross, net, addition, reduction, and provision) of PNB from 1997-1998 to 2016-2017. The result showed that significant differences in GNPA ratio, NNPA ratio, addition to NPA, provision for NPA, priority and non-priority sector advance ratio, and segment-wise NPA ratio were observed in PNB across three sub-periods.  and current loans defaults, fraudulency, corruption. But the GNPA ratio was well maintained by the Private bank group (CAGR% is 2 percent), which reflected that total advances were sanctioned adequately to maintain NPA in banks.     The reasons of the highest NNPA and GNPA in the PSBs could be the inappropriate lending process, improper monitoring, and asymmetric information, defaulter friendly management system, directed lending to priority sector, etc. Even though there is no significant difference exists among the Net Profits for all categories of banks, still, the PSBs are facing net loss for the last three consecutive years due to rising NPAs.
Pearson correlation in SPSS shows that there is a strong negative and significant correlation (84 percent) between net profit and GNPA of the Public sector bank group which reflects that rising bad assets gradually reduce the profitability of the Public sector banks. A similar result is found by Roy and Samanta (2017). In case of the foreign banks group, a strong but positive association (78 percent) is shown between net profit and GNPA. The private bank group shows no significant association between these two variables. ANOVA test result shows that there is a significant difference in the movement of GNPAs and NNPAs (in amounts) for the different groups of banks during the study period. But in the case of Net profit, no significant difference was observed for these bank groups.
In case of Foreign Bank, a significant positive association between net profit and GNPA is observed which is an exception, as FBs manage to maintain higher Profit by diversifying and expanding their services and operations. The reasons of the highest NNPA and GNPA in the PSBs could be the inappropriate lending process, improper monitoring, and asymmetric information, defaulter friendly management system, directed lending to Priority sector, etc. Even though there is no significant difference exists among Net Profits for all categories of banks, still, the PSBs are facing net loss for the last four consecutive years due to rising NPA.

Summary and Conclusion:-
The motive of the study is to conduct a comparative analysis among Gross NPA, Net NPA, and Net Profit in distinct classes of banks. The paper uses basic statistics, correlation, ANOVA computed in MS-EXCEL and SPSS by taking the secondary data from the RBI website from 2004-05 to 2019-20. Government having more equity performs all its developmental activities through the public sector banks are always get influenced by political parties, government policies, high regulation, dual administration; priority sector lending causes a large number of bad assets in PSBs. Then the conflict between 'Social banking and Sound Banking' arises.
To track the loans and advances, NPA mobile tracker applications, 'Maximus Traction' is developed that is linked to the Core Banking Solution (CBS) system for basic information. It can provide advanced and updated information to the lender about borrowers by systematical interaction through direct contact (SMS & email, mobile, and internet) and track through GPS, SARFEASI details, and initiate follow-up actions for easy and immediate recovery. Banks with the help of 'Delinkure' (product of Sesame Software Solution) and 'Neptune' (tool of NPA management) can efficiently and successfully manage the loan recovery process by giving early warning signals, reporting, managing legal procedures, maintaining systematic and frequent contact, taking early and cost-effective actions for current and prospective delinquencies. The current paper is based on secondary data. The calculation and analysis may not give cent percent accurate results. Only the aggregate values of all variables of various types of banks are taken for study.