Non Performing Assets (NPA) and Their Effects on Countries Progress

Abstract

During the few decades before the rapid expansion and nationalization of the bank in 1969, the growth of the financial industry was truly extraordinary in terms of existence. As the branch network of the banking system grew at a rapid and massive rate in the early 1990s, it became clear that the efficiency of the monetary system was assessed not only in terms of quantitative growth (increased bank branch growth and deposits or advances), but also in terms of qualitative development (fulfilment of social responsibility). After the first phase of economic liberalization in 1991, significant changes took place in the banking industry and therefore in debt management. Whereas the main objective of banks is to lend money to various industries including agriculture, small scale industries, micro loans, education loans, personal loans, housing loans and industrial loans. "Proverb" Without money, a person is like a bird without wings; it highlighted the importance of money. A bank is a type of financial institution that specializes in dealing with money. Accepting and lending money are the basic activities of all commercial banks. Banks play a vital role in raising capital and allocating them to priority and non-priority sectors for the growth and development of the economy. The major issue of commercial banks is to successfully disburse funds to high quality assets (loans and advance), lest they become NPAs. A bank is considered efficient when it is able to manage or overcome both external and internal factors and constraints, as well as keep up with the development of new technology. A sound financial system of a country is an important component of that country's economic prosperity.