Essay on NPA Crisis in India | NPA Crisis in India Essay | Non-performing Assets (NPA) Crisis Essay
NPA Crisis has been major concern for banking sector as well as economy since long time. This is very important essay topic for all competitive exams specially for banking exams like ibps po, sbi po exams. Here we have written essay on NPA crisis in India which is very helpful for your exam.
Essay on NPA Crisis in India
Non-Performing Assets (NPA) is the biggest overhang on credit growth and banking sector health in India and is great concern for the banking system and economy. There are various reasons for growing banking NPAs including bad credit decisions, poor monitoring, laxity in vigilance, routine business downturns etc. Huge NPA has prompted the government to initiate some measures to tackle the NPA crisis in India.
Non-performing Assets (NPA)
In simple words, Loans or advances for which the principal or interest payment remained overdue for a specified period generally 90 days and above are classified as Non-Performing Assets (NPA). Further, NPAs are classified into three categories i.e. 1. Substandard Assets, 2. Doubtful Assets, 3. Loss Assets depending upon the overdue period.
Non-performing Assets (NPA) in India
Gross non-performing assets (NPA) of banks increased to 11.50% of total loans in 2017 which was 2.3% in 2008. However, as per Economic Survey 2019, the gross non-performing asset (NPA) ratio of public sector banks (PSBs) decreased to 10.1% in December 2018 which was 11.5% in March 2018. Though after initiating various measures to tackle the NPA crisis in India, still a huge proportion of a bank’s loan are not generating income for the bank which result in lower bank’s profitability and its decrease its ability to grant further credit.
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Causes of NPA crisis in India
There are various reasons for growing banking NPA in India. Economic crisis in the year 2008 made various loan under NPAs as it decreased repayment capability of various corporations which resulted in financial stress for banking sector as well as corporate sector. Another major reason for NPA is corporate frauds which contributed to rising NPAs. In addition to this, there are various reason for growing NPAs including bad credit decisions, poor monitoring, laxity in vigilance, routine business downturns etc. Download PDF of this Essay: Click Here
Measures taken to control Non-performing Assets (NPA)
To control the growing NPAs both regulatory measures like the Insolvency and Bankruptcy Code and remedial measures have been taken. Insolvency and Bankruptcy Code was introduced in 2016 to resolve claims involving insolvent companies which consolidated all laws related to insolvency and bankruptcy and to tackle Non-Performing Assets (NPA). Other necessary measures like Amendments to IBC, Fugitive Economic Offender Act 2018, 4R Strategy, Project Sashakt, Amendments in Banking Regulation Act, 1949 etc. have been initiated to curb down growing NPA.
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Conclusion
Despite several initiatives by the Government, Reserve Bank of India and Financial Institutions, the problem of non-performing assets (NPAs) is still unfinished. A well-researched practical laws and strict compliance of the same is required to solve the problem of NPA and inclusive growth of India.
Hope you liked this essay on NPA Crisis in India and it helped you in your exam preparation.
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2 Comments
it is very helpful thank you
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