Non-performing assets (NPA) are the loans given by a bank or a financial institution where in the borrower defaults or delays interest and / principal payment. The management of NPAs therefore, is a very important part of credit management of banks and financial institutions in the Country. Currently NPA estimates in India are predominantly obtained from figures published by the Reserve Bank of India (RBI). However it would be helpful for banks and financial institutions to have an estimate of the NPA as soon as loan amounts are disbursed. This study attempted to develop a predictive model for the NPA% at both the gross and net level from the total assets of one of India’s largest public banks. A strong correlation was observed between gross and net NPA% and the total assets suggesting that estimates of gross and net NPA can be made from total assets. Linear and non linear models were fit to predict the NPA% from the total assets. A non linear model linking both Gross and net NPA to total assets provided the best curve fit and the least deviation from actual values. Thus by simply looking at the banks total assets an overall picture of the banks NPA level can be ascertained.
Inhaltsverzeichnis
- Introduction
- Literature Review
- Methodology
- Results and Discussion
- Conclusion
- References
Zielsetzung und Themenschwerpunkte
This study aims to develop a predictive model for the Non-Performing Assets (NPA) percentage of a large Indian public sector bank, using total assets as the predictor variable. The study seeks to establish a relationship between total assets and both gross and net NPA percentages, allowing for the estimation of NPA levels based on the bank's total assets.
- Relationship between total assets and NPA percentages
- Predictive modeling of NPA percentages using total assets
- Comparison of linear and non-linear models for NPA prediction
- Assessment of the accuracy and effectiveness of the developed model
- Implications for bank management and asset quality monitoring
Zusammenfassung der Kapitel
The introduction provides an overview of the importance of NPA management in the Indian banking sector, highlighting the role of bank finance in supporting industrial activity and the challenges posed by economic downturns and business failures. The literature review examines existing research on the determinants and causes of NPAs in various financial systems, including studies on the impact of macroeconomic factors, bank-specific factors, and credit terms on NPA levels. The methodology section outlines the data sources and analytical techniques employed in the study, including the use of historical data on total assets and NPA percentages from the Reserve Bank of India and Capitaline financial database. The results and discussion section presents the findings of the study, including the analysis of the relationship between total assets and NPA percentages, the development and evaluation of predictive models, and the implications of the results for bank management and asset quality monitoring. The conclusion summarizes the key findings of the study and discusses the limitations and future research directions.
Schlüsselwörter
The keywords and focus themes of the text include Non-Performing Assets (NPA), total assets, Indian Public Sector Bank, Gross NPA, Net NPA, Linear Model, Non Linear Models, asset quality, credit management, bank finance, economic downturns, business failures, macroeconomic factors, bank-specific factors, credit terms, predictive modeling, asset quality monitoring.
- Citar trabajo
- Rajveer Rawlin (Autor), Shwetha M Sharan (Autor), 2011, Modeling the NPA of a Large Indian Public Sector Bank as a Function of Total Assets, Múnich, GRIN Verlag, https://www.grin.com/document/183722
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