IMPACT OF NON PERFORMING ASSETS ON PROFITABILITY OF COMMERCIAL BANKS

Abstract

Indian banking sector is fairly dominated by public sector banks and private sector banks. Due to heavy competition and advanced technology, Banking institutions are trying to improve their profitability and productivity which is important to survive in an economy. The present study has been done to assess the impact of Non Performing Assets on profitability of Public Sector Banks and Private Sector Banks. Secondary data has been used. The sample consists of 10 banks each from public and private sector banks on the basis of size. The research concludes that NPAs affects the profitability of public and private sector banks. As the level of NPAs increasing profitability of banks has been decreasing. NPAs shown insignificant impact on interest income to total assets of public and private sector banks. Net interest margin of public and private sector banks has been also affected by increasing rate of NPAs.