A Study on Non-Performing Assets of State Bank of India
KRISHNAPRASANTH P
SRM Institute of Science and Technology, Kattankulathur.
Abstract – Non-performing assets are one of the major reduced up to
concerns for banks in India. NPA’s reflect the
performance of banks. A high level of NPA’s suggests
high probability of a large number of credit defaults
that affect the probability and net-worth of banks and
also erodes the value of the asset. The purpose of the
study is to know how NPA levels will affect the
profitability of banks. The research design used was
descriptive research. The study has been carried out
with the help of annual reports to determine the level of
non- performing assets. After the evolution of the
banking system, the development and growth has
become very prompt as banks provide a great deal for
the better and speedy capital formation in the economy.
Banking system has provided a greater amount of
facility for the financial adjustment of economic activity
which is an important tool for the banking system, of
which one of the biggest difficulties is the non-
performing assets of banks. To grant a loan is not a big
challenge but the recovery of loan is one of the biggest
issues. In this present paper the overview, causes and
suggestion for the maintaining NPA levels by banks is
analyzed.
Index Terms – NPA, Bank, Financial sector, Credit.
INTRODUCTION
India, a developing country, has been progressing
since independence with great support for the
banking system in the country. The role of banks in
the progress of the country is considered as a
benchmark. For the high rate of capital Formation,
the role of commercial banks has no other alternative.
But yet Indian needs a great amount of development
and growth for the time to come where again the
banking system will become a milestone but banking
system has only one big issue that is Non-Performing
Assets. In general, the non-performing assets are
found more comparatively in the public sector banks
in comparison to private banks because of liberal
rules for the debt recovery. Nowadays the RBI has
issued strict guidelines to reduce the NPA’s in the
banks and due to that the proportion of NPA’s has
the extent but not all together. In the present
paper a study is conducted to check the NPA’s of
State Bank of India during 2021 to 2024 and
suggestions to reduce the NPA’s has also been
drawn.
OBJECTIVES OF THE STUDY
1. To analyze the NPA levels of State Bank of India.
2. To study the procedure and policies followed
in SBI for Recovery of NPAs.
3. To identify the impact of Non-Performing
Assets on Performance of SBI.
4. The study of gross and net NPA of SBI year
2021 to 2025.
5. To study the causes of NPA of Banks.
REVIEW OF LITERATURE
The issue of NPAs has been a major area of
concern for the lenders and the policymakers.
Various research studies have been made to
understand the causes contributing to the rise in
NPAs, measures that should be taken to resolve
the issue in its nascent stage and reforms that
have come into effect to reduce the piling up of
NPAs.
Kumar (2018), in his study has found that NPAs
have a serious negative impact on the profitability
and liquidity of the banking sector. According to
him, if the issue of NPAs is managed efficiently,
then many microeconomic issues such as poverty,
unemployment, imbalances of balance of
payments can be reduced, the money market can
be strengthened, and thus, the image of the Indian
banking system can be improved in the
international market.
COLLECTION OF DATA
The secondary data is used in the present study.
The secondary data to non-performing assets
were collected from various issues of SBI Annual
Report and RBI bulletins from 2021 to 2024.
ASSET CLASSIFICATION AND PROVISIONS Insufficient management.
Time cost overrun during the project
Banks are required to classify the loan assets into four implementation.
categories viz. Strained Laboure relations.
1. Standard assets Inappropriate technological problems.
2. Substandard assets Poor credit appraisals, improper SWOT analysis on
3. Doubtful assets IV the part of banks.
4. Loss assets
External Factors
Standard Assets: ● Price escalation.
Are those, which do not disclose any problem and do ● Recession.
not carry more than normal risk attached to the ● Input or power shortage.
business. Such assets are considered to be performing ● Exchange rate fluctuation.
assets. A general provision of 0.25% has to be ● Manipulation by the debtors using political
provided on a global loan portfolio basis. influence has been a cause for high industrial bad
debts.
Sub Standard Assets: ● Changes in government policy such as excise,
With effect a substandard asset would be more, import and export duties, pollution.
which has remained NPA for a period less than or
equal to 12 months. Such assets will have well DATA ANALYSIS
defined credit weaknesses that jeopardize liquidation
of the debt and are characterized by distinct Table 1 Analysis of Gross NPA (RS.)
possibility that the bank will sustain some loss.
Particulars 2021 2022 2023 2024
Gross 2,23,427 1,72,750 1,49,092 1,26,389
Doubtful Assets:
NPA
There are the assets which have remained NPA’s for
Total 2,23,427 1,72,750 1,49,092 1,26,389
a period exceeding 12 months which are not
Above table shows Gross NPA for the year 2021 to
considered as a loss advance. Banks have to provide
2024. It is clear from the table that the amount of
100 percent of the scheme (Deposit Insurance and
gross NPA has been reducing from 2021 to 2024. It
Credit Guarantee Corporation) and a realizable
was 1,77,866 crores and it was 1,26,389 crores in the
amount of guarantee cover under ECGC (Export
year 2024.
Credit Guarantee Corporation) schemes.
Figure no 1 Classification Gross NPA(Rs)
Loss Assets:
Loss assets are those where loss has been identified
by the bank or internal /external auditors or RBI
inspectors but the amount has been written off,
wholly or partially. Any NPA’s would get classified
as loss assets. Companies have to provide 100% of
these outstanding advances.
REASONS OF NPAs IN BANKS
An account becomes an NPA due to causes
Table 2 Analysis of Gross NPA (%)
attributable to the borrower, the lender and for Particulars 2021 2022 2023 2024
reasons beyond the control of both. An internal study Gross
10.91 7.53 6.15 4.98
conducted by the RBI shows that in the order of NPA%
prominence, the following factors contribute to Total 10.91 7.53 6.15 4.98
NPAs. Internal Factors
Figure 2 classification of data of gross NPA % assets, Nipagin terms of rupees as well as in percentage
terms. Along with these findings have been
Table 3 Analysis of NET NPA (%)
Particulars 2021 2022 2023 2024
Net NPA % 5.73 3.01 2.23 1.50
Total 5.73 3.01 2.23 1.50
Above table shows Net NPA for the year 2018 to
2021. It is clear from the above table that Net NPAs
have also been decreasing from 2021 to 2024. It was
5.19
% and has decreased to 1.50% in 2024.
Figure no 3 Classification of Net NPA (%)
FINDINGS
NPA has been decreasing whether gross or net in
terms of rupees. NPA has been decreasing whether
gross or net in terms of percentage too. The
improvement in asset quality has majorly been due to
recoveries and higher write-offs by the multiple
banks. So The banks were successful in reducing the
NPA and its causes.
CONCLUSION
Net Performing Assets of SBI is studied in detail for
the given time period 2021 to 2024 with its type of
presented. In the above paper the SBI was
reducing the NPA from the 2021 to 2024. It will
help to protect the banks total profit of the
financial year and to avoid the losses. Compared
to 2024 t he NPA of SBI was reduced at a very
high rate.
REFERENCE
[1] http://rbi.org.in
[2] http://www.statebankofindia.com
[3] Kalpesh Gandhi, Lecturer in Satya Prakash
college, Saurashtra University, Rajkot (2015)
Study of Non-Performing Assets of State Bank
of India.
[4] Dr. S Ganapathy, A. Thangam, K. Seethal
(2019) The Perceptions of Non-Performing
Assets in State Bank of India.
