NPAs, A NightMare for Banking system

Abstract

NPAs are always being a challenge for any banking system across the world. As banks are primarily meant for depositing and lending the money to the customer. In India public sector banks are more loaded with the NPAs as compare to the private sector banks and their are many reasons apart from the political influences . Indian became the developing country in real sense after the liberalisation in the year 1991 and emerge as the emerging economy itself and also at the world level. Banking is the most important part of any country and its supplies the blood to country’s financial system. Indian banking system is most important part of country’s economy since internationalisation happened in 1969 and its transformed after many times year on year. It has the very critical job as its supplies the money through a formal way to the countryman and so its reaches to the right people and hence its gets again invested in the agriculture, manufacturing, difference services and utilities and thus creates the employment and jobs. Lots of other processes are also coming in between. 1 Indian Banking system has passed through many phases and since 1969 and with the development of the country it also emerged as on the big banking system in the world. A banking system is placed for depositing and withdrawing the money and it was its core purpose and same is for any bank in the world. In India but lots of money was only lended to big business man, politician or the influential people in the country after the independence of the country and to come out from this scenario there was a policy established for the priority sector lending and since then lending is divided into 2 parts. One is Priority sector lending and other in Non- Priority sector lending. After many phases of struggle and one by one changing the banking policy and lending strategies government has started to its goal of sustainable development and then after liberalisation in year 1991 Government has decided to give license to private players to open the bank so technology and competition in the banking system comes and hence ultimate beneficiary customer get the good services of banking and we also compete at the world level. There are private players like ICICI, HDFC, UTI and others which got the banking license to open the new generation private banks and since then indian banking system has started upgrading itself multifold year on year and shown the exponential growth. Since 2018 there was other banking license are given and result of that new Small Finance Bank, Payment Banks also took the birth.Now one of the biggest problem in front of the Banks is today is NPAs which has just became the Nightmare for the Government as well as for the RBI and for the Bank which has lended money to the concerned Entity/ Individual. These NPAs many a time become non recoverable thing and then it hurt the profitability of the bank and ultimately investors and shareholders and in between also many investors are hampered in this entire process. Also the most big part of it is, money did not belongs to these banks, these the liability for them so borrow from the public who deposit the money in bank and then bank lend them under the guidance.