NPAs to advances : A temporal study of performance differentials by Banks in India from 1991-92 to 2019-20

Banks in India have changed after the introduction of liberalisation, Privatisation, and Globalisation in 1991. The asset position of the banks became vulnerable due to the non-repayment of loans and advances during the last twenty-nine years (1991-2020). The basic question is on Non-Performing Assets (NPAs) and their influence on assets already accumulated in the banking system. The research questions addressed are: Whether gross and net NPAs to gross and net advances ratios are significant over time? and Are there trend differentials by type of banks? Using ANOVA fixed Effects model by types of bank, the results indicate that the All Scheduled Commercial Banks Gross Non-Performing Assets to Gross Advances ratio & Net Non-Performing Assets to Net Advances ratio is statistically significant. Further, no statistical significance is found for GNPAs to Gross Advances ratio and NNPAs to Net Advances ratio in the case of Public Sector Banks. The Private Sector Banks show statistical significance at 0.000% level both for gross and net NPAs to gross and net advances ratio. Foreign Banks show statistical significance in both ratios. The performance trend indicates the need for structural reformation of Public Sector Banks for better performance in the forthcoming years