By Charudutt Sehgal
The economic progress of a nation and development of its banking sector is invariably interrelated. The banking sector is an indispensable financial service sector supporting development plans through channelizing funds for productive purpose, intermediating flow of funds from surplus to deficit units and supporting financial and economic policies of the government. Banks serve social objectives through priority sector lending, mass branch networks and employment generation. Maintaining asset quality and profitability are critical for banks survival and growth. In the process of achieving such objectives, a major roadblock to banking sector is prevalence of Non-Performing Assets (NPA). In India, the problem of bad debts was not taken seriously until it was mandated by the Narasimham and Verma committee. The committee mandated the curbing of the particular issue because NPA direct towards credit risk that bank faces and its efficiency in allocating resources.
The aim of this research paper is to study the current trend of NPAs in Indian scheduled banks (up to 2013-14 only). The paper further examines the critical reasons behind the rise of this issue, its impact on Indian banking sector and Indian economy. In order to understand the criticality of the problem an effort has been made to study what impact NPAs have on ease of doing business rankings. Furthermore, the paper concludes with some of the important measures which if implemented then can improve the current scenario of NPAs in SCBs.
Meaning: Describes human emotion that drives consumer confidence.
A term used by John Maynard Keynes in his 1936 publication (“The General Theory of Employment, Interest and Money”), animal spirits emphasizes the importance of confidence and the ‘gut instincts’ of businessmen on their future business prospects. It also refers to the risk involved in taking decisions which invariably have an element of risk attached to it. The term itself is drawn from Latin – spiritus animales, which may be interpreted as the spirit that drives human thought, feeling and action.