Banks play the game of snakes and ladders to manage NPAs.

The Indian banking system, considered to be the lifeline of the country’s economy, has undergone a paradigm change over the years. The post-nationalization era witnessed a phenomenal change of focus for the public sector banks, giving thrust to social and mass banking and expanding the network. Globalization opened up the economy forcing Indian companies to compete internationally. Especially for a service industry like banking, it is all the more imperative to be in tune with international best practices. The introduction of internationally accepted prudential norms during the 1990s required the banks to regulate their credit flow and monitor it effectively.

The presence of huge Non Performing Advances (NPAs) in public sector banks had an adverse impact on the banking system. Their continued amelioration in absolute terms proved survival extremely difficult. Banks which function as intermediaries, have to be financially sound and stable and they should enjoy public confidence to be able to impart an efficient and effective service role. Public confidence depends on the intrinsic strength of banks, their sound balance sheet and strong fundamentals, for which effective management of NPAs is a must.

The Analyst Magazine, Management of NPA, Indian Banking System, Public Sector Banks, Globalization, Non Performing Advances, NPAs, Effective Management, Indian Banking Scenario, Financial System, CDR Mechanism, Board for Industrial & Financial Reconstruction, BIFR, Corporate Governance, Securitization,Asset Reconstruction Companies, ARC.