A Study of the Impact of Non‑Performing Assets (NPAs) on Banks and the Indian Economy

Abstract

Non-Performing Assets (NPAs) have come to be recognized as a basic problem in the Indian banking system, and by extension, the economy as a whole. High levels of NPAs affect the profitability of banks, their capital adequacy, and their ability to transmit credits to the productive sectors of the economy, thus hindering economic growth. This paper presents the conceptual framework of NPAs, their development in the Indian context, and their impact on the financial health of banks and the economy as a whole, measured by GDP growth, credit growth, and employment. Using secondary data from Reserve Bank of India publications and current literature, this paper argues that effective management strategies and good governance are necessary to counter the negative impacts of NPAs on banks and the economy.