Impact of NPA Management on Profitability Analysis of Indian Commercial Banks

Abstract

The article explores the complex connection between managing Non-Performing Assets (NPAs) and analyzing profitability in Indian commercial banks. The escalating burden of NPAs has emerged as a critical concern, exerting substantial adverse effects on the banking sector's financial health and overall economic stability. The study scrutinizes the impact of efficient NPA management strategies on the profitability metrics of Indian commercial banks. Through a comprehensive analysis spanning a significant period, encompassing various bank-specific indicators, this research endeavors to elucidate the significant role of NPA management in shaping the financial landscape of Indian banks. The findings illuminate that effective NPA management directly correlates with enhanced profitability, evidenced by metrics such as return on assets and return on equity. Moreover, the research explores diverse bank-specific attributes, including net interest margin, non-interest income, and operational efficiency, to discern their influence on the interplay between NPA management and profitability. By investigating the dynamics of NPA management and its repercussions on profitability, this article aims to provide valuable insights and recommendations to enhance the financial resilience of Indian commercial banks, ultimately fostering a robust and stable banking sector contributing to the nation's economic growth and development.