Stressed Assets in Indian Banking: Causes and Measures

Abstract

An attempt has been made to analyze the stressed assets scenario in Indian banking industry for diagnosing causes of poor assets quality and suggestion to improve assets quality in banks. The stressed assets being amid concerns of the government and RBI, banks are directed to clean their balance sheet by year 2017 with the implementations of some major decisions. The major reasons of mounting stress on the assets quality in banks are presented herein the article. Today banking industry is operating in an environment which is highly competitive due to integration of global markets. Post reform epoch has changed the whole structure of banking sector in India. In this article an attempt has been made to analyze scene of raising NPAs and stress in loan portfolio of banks in India. The major reasons of hike in stressed assets have been explained with the suggestive measures to curtain stress in banking as preventive and curative measures. These shall help to improve health of credit portfolio of banks with appropriate credit appraisal and risk management mechanism.