Non-Performing Assets: An overview

Finance is very important for every economy to run effectively and having a good financial position depends on its financial institution and banks. Banks ensure financial stability and effective utilization of funds. But, maintaining such financial soundness becomes difficult when the funds of banks are being misused or not repaid. The problem of Non- Performing Assets (NPAs) is not new to the banking Sector. For a long time, banks have seen loans being turned into bad assets and efforts have been made to reduce the number of NPAs. There are multiple reasons which together have given rise to the increasing number of NPAs. Over the past few years, some big fraud cases have occurred in the banking sector that caused huge losses to banks. The increasing number of bad loans and loss of public funds have insisted banks to bring changes and adopt a new mechanism to resolve the cases relating to NPAs.