An Effectiveness Assessment of Preventive Management Strategies in order to Manage Non Performing Assets in Indian banks: A Case Study

Bharat Kumar Meher, G. L. Puntambekar, Iqbal Thonse Hawaldar, Cristi Spulbar, Ramona Birau, Cristian Rebegea

Abstract


There are two kinds of strategies to control Non Performing Assets i.e. curative and preventive. The paper is an attempt to focus on the effectiveness of various preventive strategies in controlling NPA in future.For this study primary data have been collected from 82 branches out of 138 branches of Sagar District in Madhya Pradesh of India. The respondents are the branch managers or recovery officer of each branch.The primary data are related to the causes of NPA, actual usage of preventive measures and effectiveness of each preventive strategy. It highlights few new causes which are barely covered by the earlier researches. The study also represents the actual usage of various preventive measures along with the effectiveness of preventive measures in averting NPA to be occurred in future. The outcome of this study could provide a valuable insight about which strategy is more effective to prevent these stressed assets. Besides that, it could aware the banking authorities regarding the problems faced by the managers in using the preventive measures.



Keywords


Non-Performing Assets (NPA), Preventive Management Strategies, Non-Parametric Tests, Early Warning Signals (EWS), Demonstration Effect on NPA.

JEL Codes


G21; G23, G24.

Full Text:

PDF

References


Bardhan, S., and Mukherjee, V., 2016. Bank-specific determinants of nonperforming assets of Indian banks: International Economic Policy. http://dx.doi.org/10.1007/s10368-016-0344-4

Bardhan, S., Sharma, R., and Mukherjee, V., 2019. Threshold Effect of Bank-specific Determinants of Non-performing Assets: An Application in Indian Banking. 18, 1-34. http://dx.doi.org/10.1177/0972652719831546

Bhakare, G., 2017. NPA Management: – Prevention is better than the cure. http://bankingscenario.in/npa-management-prevention-is-better-than-the-cure/.

Bhaskaran, R., Bhalla, L., Sarin, V., Kaur, S., Rahman, A., Singh, G., . . . Verma, P., 2016. Non-performing assets of public and private sector banks in India - a comparative study. International Journal of Services and Operations Management, 25(2), 155-172. http://dx.doi.org/10.1504/IJSOM.2016.078891

Bureau, E., 2017. Government may directly fund Rs 1.35-lakh crore bank recapitalisation. The Economic Times. https://economictimes.indiatimes.com/news/economy/finance/government-may-directly-fund-rs-1-35-lakh-crore-bank-recapitalisation/articleshow/61855015.cms.

Financial Express, 2002. RBI Lists Out Early Warning Signals To Arrest NPA Slide. from http://www.financialexpress.com/archive/rbi-lists-out-early-warning-signals-to-arrest-npa-slide/60523/

Indian Economy, 2017. What is Special Mention Accounts (SMA)? Indian Economy. Retrieved from https://www.indianeconomy.net/splclassroom/what-is-special-mention-accounts-sma/

Karunakar, M., Vasuki, K., and Saravanan, S., 2008. Are non - Performing Assets Gloomy or Greedy from Indian Perspective? , 3(1), 4-12.

Koju, L., Koju, R., and Wang, S., 2018. Macroeconomic and Bank-Specific Determinants of Non-Performing Loans: Evidence from Nepalese Banking System. Journal of Central Banking Theory and Practice, 7(3), 111. http://dx.doi.org/10.2478/jcbtp-2018-0026

Naik, S., 2017. What are Strategies used for reducing NPA? , from https://www.bankingschool.co.in/loans-and-advances/strategies-for-reducing-npa/

Naruka, P., and Yadav, M., 2017. Priority sector lending: Genesis, developments and trade off with bank's profitability. 2(3), 21-25.

PTI, 2015. SBI to put in place early warning signals to rein in NPAs. from www.economictimes.indiatimes.com,https://economictimes.indiatimes.com/

PTI, 2017. Govt infusing capital in banks only short term solution: AIBEA. from http://www.thehindubusinessline.com/money-and-banking/govt-infusing-capital-in-banks-only-short-term-solution-aibea/article9928172.ece

Rizvi, N. U., Kashiramka, S., and Singh, S., 2019. A hierarchical model of the determinants of nonperforming assets in banks: An ISM and MICMAC approach. Applied Economics, ooo, 1-21. http://dx.doi.org/10.1080/00036846.2019.1584377

Selvarajan, B., and Vadivalagan, G., 2013. A Study on Management of Non Performing Assets in Priority Sector reference to Indian Bank and Public Sector Banks (PSBs). Global Journal of Management and Business Research, 13(1), 110-114.

Sharifi, S., Haldar, A., and Rao, S. V. D. N., 2019. The relationship between credit risk management and non-performing assets of commercial banks in India. Managerial Finance, 45(3), 399-412. http://dx.doi.org/10.1108/MF-06-2018-0259

Spulbăr, C., and Birau, R., 2019. Emerging Research on Monetary Policy, Banking, and Financial Markets: IGI Global USA. http://dx.doi.org/10.4018/978-1-5225-9269-3

Spulbăr, C., Ejaz, A., Birau, R., and Trivedi, J., 2019. Sustainable Investing Based on Momentum Strategies in Emerging Stock Markets: A Case Study for Bombay Stock Exchange (BSE) of India. 66(3), 351-361. http://dx.doi.org/10.2478/saeb-2019-0029

Spulbăr, C., and Nitoi, M., 2012. Comparative analysis of banking systems (Sisteme bancare comparate): Sitech Publishing House Craiova.

Spulbăr, C., and Niţoi, M., 2013. Monetary Policy Transmission Mechanism in Romania Over the Period 2001 to 2012: A Bvar Analysis. Annals of the Alexandru Ioan Cuza University - Economics, 60(2), 122. http://dx.doi.org/10.2478/aicue-2013-0018

Spulbăr, C., Nitoi, M., and Stanciu, C., 2012. Monetary policy analysis in Romania: A Bayesian VAR approach. African Journal of Business Management, 6(36), 9957-9968. http://dx.doi.org/10.5897/AJBM11.1150

Subba Rao, P., 2003. Slippage of Non-performing assets – Preventive measures. from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=1275&Mode=0




DOI: http://dx.doi.org/10.47743/saeb-2020-0013

Refbacks

  • There are currently no refbacks.