Non-Performing Assets in Indian Banking System–A Study With Reference to SBH (Before the Merger)

The Indian banking system is granting the loans to the agricultural, industrial, and service sectors for the economic progress but in return not getting its return in time. Therefore, the loans are being converted into the form of bad loans or nonperforming assets (NPAs). Issuing the loans to their customers is the primary duty of the banks; but, the recovery option is becoming the major hurdle for most of the Indian banks. The banks are facing many problems at the time of recovering the loan; thereby, the loan is becoming bad loans and banks are unable to pursue these loans. The banking sector in India is in a crisis with the increasing burden of bad loans provisioning and the decline in profitability of commercial sector banks, particularly public sector banks. Bankers are the heart and soul of any business. The economy of the country also mostly depends on the functioning of banking institutions. According to the Reserve Bank of India information, the annual growth of Indian bank credit is declining from time to time. It was nearly 30% during the period of 2007. But it reduced to 9.7% in the year 2014–2015. Further, it decreased to 9.4% during the beginning of the financial year 2015–2016. This decline in the credit growth is indicating that the performance of the banks is not smooth. It is being affected by the NPAs.