Priority and Non-priority Sector NPAs in India

Description

Any developing economy requires a consistent and efficient financial system to function. With the assistance of a stable financial system, the benefits of governmental welfare policies can be distributed to all societal classes. The primary contributors to the efficient operation and expansion of the nation’s financial system are the banks’ effectiveness and performance. Banks play an important role in providing capital creation financing by acting as the primary financial intermediary and bridging the gap between money demand and supply (Gaur and Mohapatra, 2020). The NPAs are thought to be a crucial factor in determining how well-performed and financially sound institutions are.
Non-performing assets of PSBs and the Indian banking sector have grown over time (Arora, Arora, & Kanwar, 2018). Banks are continually burdened by rising stressed assets and slow loan growth (Gaur & Mohapatra, 2020). Managing gross non-performing assets (GNPAs) has been one of the most pressing issues confronting India’s commercial banks since the
implementation of revenue recognition, asset categorization, and provisioning regulations in the banking sector (Gautam & Shrivastava, 2017).