Npas

The severity of the incidence of non-performing assets (NPA henceforth) in Indian public sector banks (PSBs henceforth), noted in the early 1990s, raised a mischievous hue and cry in various quarters. In fact, the worry started much earlier, which became evident from continued recapitalisation of many PSBs since 1985-86 . Whatever be the root cause, malfunctioning of the PSBs increased by the end of the 1980s. This lead to the setting up of the Narasimham Committee (1991), which, in fact, identified NPA as one of the possible causes/effects of the malfunctioning of the PSBs. In gild to quantify the NPA problem, Narasimham Committee (1991) made it mandatory on the pick of the banks to publish annually the magnitude of NPAs. NPAs are those categories of assets (advances, bills discounted, overdraft, cash credit etc) for which any amount remains due for a boundary of 180 days. Following the recommendations, banks started publishing in their annual reports NPA data, which were astonishingly high. RBI (1999) report on NPA stated that reduction in NPA should be treated as a national antecedence.

In the Task Force report on non-performing assets in the Indian financial system, it is argued that three NPA ridden banks (UCO bank, United Bank of India and Indian Bank) are open sores threatening the health of the entire financial system. The report went to the extent of stating that these banks were not viable candidates either for privatization or for merger, and thus they should be closed down. The Verma Committee (1999), on the early(a) hand, felt that these three banks could be revived if they submit themselves to the ascertain of a rigorous restructuring, underpinned with adequate infusion of funds and synchronic relief from the load of NPA and excess manpower. The difference in the respective(prenominal) recommendations has provoked protests of varying recounts of frenzy, from the unionised employees. The unions have argued that the banks have been the victims of the perverse default by... If you want to get a full essay, order it on our website: Orderessay

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