Study on Non Performing Assets of Public Sector Banks

The reforms in Indian banking sector since 1991 is deliberated mostly in terms of the significant measures that were implemented in order to develop a more vibrant, healthy, stable and efficient banking sector in India. The effect of a highly regulated banking environment on asset quality, productivity and performance of banks necessitated the reform process and resulted the incorporation of prudential norms for income recognition, asset classification and provisioning and capital adequacy norms, in line with international best practices. The improvements in asset quality and a reduction in non-performing assets were the primary objective enunciated in the reform measures. In this context, the present research critically evaluates the trend in movement of nonperforming assets of public sector banks in India during the period 2000-01 to 2011-12, thereby facilitates an evaluation of the effectiveness of NPA management in the post-millennium period. The non-performing assets is not a function of loan/advance alone, but is influenced by other bank performance indicators and also by the macroeconomic variables. In addition to explaining the trend in the movement of NPA, this research also explained the moderating and mediating role of various bank performance and macroeconomic indicators on incidence of NPA.<br>

the issue of non-perfroming resources. The discoveries of our investigation are comparative with the investigations of which featured that the dimension of cost inefficiency have been high because of the nearness of more non-performing resources and the proportion for issue advances have been on higher side, in this manner, demonstrating the nearness of banks in various economies working a long way from the best practice outskirts. Taking a gander at the general situation of investigation, it has been seen that fundamentally, the wellspring of inefficiency is basically allocative inefficiency as opposed to specialized inefficiency. In this manner, saving money division in India needs to acquire greatest yield from a given arrangement of inputs, and utilize the inputs in ideal extents (given their separate costs and generation innovation) so as to work on the proficient wilderness. The conceivable purpose behind the relative increment in the dimension of allocative efficiency is the high variances in factor costs because of ceaseless swelling, The Imperial Bank of India was later nationalised in 1955 and was named The State Bank of India, which is currently the largest Public sector Bank.

2.LITERTURE REVIEW
Given below is a list of other banks which were established during the Pre-Independence period: Pre-Indepence Banks in India Bank Name Year of Establishment Following the Pre-Independence period was the post-independence period, which observed some significant changes in the banking industry scenario and has till date developed a lot.

Post Independence Period (1947-1991)
At the time, when India got independence, all the major banks of the country were led privately which was a cause of concern as the people belonging to rural areas were still dependent on money lenders for financial assistance.
With an aim to solve this problem, the then Government decided to nationalise the Banks. These banks were nationalised under the Banking Regulation Act, 1949. Whereas, the Reserve Bank of India was nationalised in 1949.
Following it was the formation of State Bank of India in 1955 and other 14 banks were nationalised between the time duration of 1969 to 1991. These were the banks whose national deposits were more than 50 crores.
Given below is the list of these 14 Banks nationalised in 1969:

Impact of Nationalisation
There were various reasons why the Government chose to nationalise the banks. Given below is the impact of Nationalising Banks in India: Relative to other banks, the employees of public sector banks enjoy more job security. They also enjoy other perks like pension after retirement. For this reason, many of these employees are reluctant to give their best service. As a result, the rate of loan defaulter is much higher in public sector banks. The promotion in the public sector banks is based on seniority, which de-motivate many employees.
Most public sector banks offer less customized service to customers. As a result, Customer complaint due to poor service is very common in public sector banks. However, public sector banks offer more interest rate to the customer. Customers can also get different loans with a small interest rate.

7.CONCLUSION
The business of banking essentially involves intermediation-acceptance of deposits and channeling these deposits in to lending activities. Since the deposits received from the depositors have to be repaid to them by the bank, they are known as banks" "Liabilities" and as the loan given to the borrowers are to be received back from them, they are termed as banks" "Assets" so assets are banks" loans and advances1 .
In the traditional banking business of lending financed by deposits from customers, Commercial Banks are faced with the risk of default by the borrower in the payment of either principal or interest. This risk in banking parlance is termed as "Credit Risk" and accounts where payment of interest and /or repayment of principal is not forthcoming are treated as Non-Performing Assets2 , as per the Reserve