Non–Performing Assets: Status and Trends of the Select Public and Private Sector Banks in India

Abstract

Non-Performing Assets (NPAs) continue to pose a significant threat to the financial stability and efficiency of the Indian banking sector, particularly among Public Sector Banks (PSBs). This study examines the trends and status of NPAs in six selected public and private sector banks viz., State Bank of India, Punjab National Bank, Bank of Baroda, HDFC Bank, ICICI Bank, and Axis Bank over the period 2014-15 to 2023-24. The statistical tools such as mean, standard deviation, coefficient of variation, and ANOVA applied and, the research analyzed Gross and Net NPA Ratios to evaluate asset quality differences between the two sectors. Results indicate that public sector banks consistently exhibit higher NPA levels due to weak credit appraisal systems, policy obligations, and regulatory lapses, whereas private banks demonstrate better performance through stronger risk management practices. Hypothesis testing confirms significant variation in NPA ratios among the select banks. The study further explores the root causes of NPAs, including willful defaults, industrial sickness, fraudulent practices, and coordination failures among lenders. The growing burden of NPAs hampers credit growth, raises interest rates, undermines public confidence, and weakens capital adequacy, ultimately slowing down the overall economy. This analysis offers valuable insights to aid policymakers, regulators, and banking institutions in devising targeted strategies for effective NPA management and sustainable financial development.