Abstract

Banks' credit growth continues to decelerate in India due to huge non-performing assets (NPAs) overhangs in banks. Using the panel data methodology, this study empirically analyzed the determinants of NPAs of scheduled commercial banks in India during 2009- 2020. Results indicated that the excessive credit growth in the past increased the surge in the current NPAS. The economic slowdown also aggravated loan delinquencies in Indian commercial banks. While higher priority sector lending created higher loan delinquencies, higher banks size and higher profitability reduced it. This study suggested that counter capital buffer, dynamic provisioning and a sound credit appraisal NPA improved the financial stability and monetary policy effectiveness. These findings will be useful for policymakers, bankers and other stakeholders to make appropriate strategies to resolve the NPA issue in India. 

Description

Indian Journal of Economics and Development
Volume 17 No. 4, 2021, 941-947

DOI: https://doi.org/10.35716/IJED/21246
NAAS Score: 5.15
Indexed in Clarivate Analytics (ESCI) of WoS
Indexed in Scopus
UGC Approved