NET commercial banks for providing socio economic services to

NET PERFORMING ASSETS:

Introduction

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 

 A Bank is an institution which handles money and
gives other financial services. Banks accept deposits and make loans and earn a
profit from the difference in the interest rates which are paid by the customers.
The main function of banks is to use their customers money to lend it to
others, who would be able to use it to buy houses, start their own businesses
or invest in a way that they will be benefited etc.

 

Banks
generate money in the economy by accepting deposits and lending loans. Banks
play a very important role in the economic development of every nation.The
banking sector plays a large role in channelizing the money from one end to another
end. In general there are several challenges opposing the commercial banks in
its day to day operations. The main challenge that banks are facing nowis the payment
of funds in standard assets such as (loan and advances) or otherwise, it will lead
to Non-performing assets.

 

Non-performing
assets are referred to an asset,which has been classified by a bank or
financial institution as doubtful, as per the rules and regulations that are
been framed by the RBI with respect to the classification of assets.

 

After
Liberalization the Indian banking sector developed in many ways. The RBI also
took necessary steps to nationalize sufficient amount of commercial banks for
providing socio economic services to everyone. The public sector banks have
shown tremendous performance as far as the financial activities are concerned.
However, the only problem of the public sector banks these days is the
increasing level of the non-performing assets which effects the overall
functioning and performance of the banks. The level of NPAs is one of the
drivers of financial stability and growth of the banking sector.

 

 

 

 

The banking
institutions are a powerful instrument to provide credit. They circulate all the
resources of the country by accepting deposits and contribute to the
industrial,agricultural and national development.Thus the banking sector playsa
very crucial role in the economic development of the country.

 

NEED RECOGNITION:

 

The
main focus of this study is to analyze the various factors responsible for the
NON-Performing assets in MSME sector.

 

OBJECTIVES:

 

Following
are the objectives of this study

·        
To understand the meaning and nature of
Non-performing assets.

·        
To find out various reasons for the occurrence
of the NPA.

·        
To understand the impacts of NPA on the
organization as well as on the banks.

·        
To know the proper precautions/process
that can be taken before lending money to the organizations.

·        
To know the different steps are being
taken by the Indian banking sector to reduce the NPAs.

·        
To highlight the measures and different strategies
followed by the banks for the effective management of NPAs.

·        
What are the different schemes that governments
provide to support MSME sector mainly to those who are affected by the NPAs?