Non-performing Assets in the Indian Banking System, 2008–2018

Non-performing Assets in the Indian Banking System, 2008–2018

Current Strategies and Long-term Solutions

RELEASE DATE
22-Feb-2019
REGION
South Asia, Middle East & North Africa
Research Code: PA47-01-00-00-00
SKU: CI00606-SA-MO_22886

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Description

This study is an analysis of the current status of the non-performing assets (NPAs) prevalent in the Indian banking system. The various measures that are being taken by the government of India to stem the surge in NPAs and the strategies and practices can serve as long-term solutions to the problem are the main questions that this study addresses.

Research Scope

The increase in NPAs has largely been attributed to the economic slowdown. With high interest rates and slow economic growth, repayments from corporates have been scarce, fuelling the surge of NPAs. However, reversal of economic cycles cannot be the only reason behind this phenomenon; there is a range of other reasons (internal as well as external) which have been fuelling it.

The corporate sector in India has not only been affected by the domestic slowdown but the global slowdown as well. Exports contribute nearly 40% to India’s GDP and a slow global economy has adversely affected the export of various goods such as leather goods, engineering goods, gems, and textiles. This, in turn, has affected the repayment rate from the corporates. Various delays in environment-related permits, bans on mining projects, power shortage, and fluctuating prices of raw materials have also affected a range of corporates in different sectors (iron and steel, power) in India. Other factors that have contributed to the issue have also been discussed in this study.

The government of India (GOI) has been taking a range of course-correcting steps, out of which some prominent ones are the setting up of a prompt corrective action (PCA) framework, Project Sashakt, the SAMADHAN scheme, and the Insolvency and Bankruptcy Code (IBC). While these mechanisms have helped to a certain level, the easiest way to cut down on NPAs is by either recovering loans or preventing these loans from going bad in the first place. A range of innovative models and best practices, which has been discussed in the study, can shape a permanent solution to this issue.

Key Questions this Study will Answer:

• How has the banking setup evolved over the last 5 to 10 years?
• What have been the areas of growth and what has been the downside?
• What are non-performing assets?
• What is the status of non-performing assets in the Indian banking sector?
• What policies has the government of India adopted to curb the growth of NPAs?
• How have countries with the same banking setup as that of India dealt with the problem?
• What are the best possible solutions, in terms of a financial model, technology, and due diligence?

Author: Akshay Sharma

Table of Contents

An Overview of Non-performing Assets in the Indian Banking System

  • An Overview of Non-performing Assets in the Indian Banking System
Related Research
This study is an analysis of the current status of the non-performing assets (NPAs) prevalent in the Indian banking system. The various measures that are being taken by the government of India to stem the surge in NPAs and the strategies and practices can serve as long-term solutions to the problem are the main questions that this study addresses. Research Scope The increase in NPAs has largely been attributed to the economic slowdown. With high interest rates and slow economic growth, repayments from corporates have been scarce, fuelling the surge of NPAs. However, reversal of economic cycles cannot be the only reason behind this phenomenon; there is a range of other reasons (internal as well as external) which have been fuelling it. The corporate sector in India has not only been affected by the domestic slowdown but the global slowdown as well. Exports contribute nearly 40% to India’s GDP and a slow global economy has adversely affected the export of various goods such as leather goods, engineering goods, gems, and textiles. This, in turn, has affected the repayment rate from the corporates. Various delays in environment-related permits, bans on mining projects, power shortage, and fluctuating prices of raw materials have also affected a range of corporates in different sectors (iron and steel, power) in India. Other factors that have contributed to the issue have also been discussed in this study. The government of India (GOI) has been taking a range of course-correcting steps, out of which some prominent ones are the setting up of a prompt corrective action (PCA) framework, Project Sashakt, the SAMADHAN scheme, and the Insolvency and Bankruptcy Code (IBC). While these mechanisms have helped to a certain level, the easiest way to cut down on NPAs is by either recovering loans or preventing these loans from going bad in the first place. A range of innovative models and best practices, which has been discussed in the study, can shape a permanent solution to t
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No Index No
Podcast No
Author Akshay Sharma
Industries Cross Industries
WIP Number PA47-01-00-00-00
Is Prebook No
GPS Codes 9A7B-EM