A STUDY ON NPA'S IN SCHEDULED COMMERCIAL BANKS AND THEIR IMPACT ON AGRICULTURE LENDING

Ms. M.SOUNDARYA; Dr. G.JAYABAL

Volume : IX, Issue : VII, July - 2020

A STUDY ON NPA'S IN SCHEDULED COMMERCIAL BANKS AND THEIR IMPACT ON AGRICULTURE LENDING

Ms. M. Soundarya, Dr. G. Jayabal

Abstract :

Banking system plays a very significant role in the financial existence of the nation; hence the strength of the economy is closely related to the reliability of its banking system. For any business enterprise, especially banking industry, the financial performance in terms of profitability and in a prudent manner is a benchmark. A Non- performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. However, increasing NPAs have a direct impact on the profitability of banks as legally banks are not allowed to book income on such accounts and at the same time, banks are required to make provision on such assets as per RBI guidelines .Agriculture is very important sector in India but despite of having so much importance it is increasingly facing many problems. Government and banks are continually working for the development of this sector, but the banks are facing major problem of NPA which decreases its profitability and leads to the less disbursement of credit among the farmers. The paper examines the trends of NPAs in scheduled commercial banks and their impact of NPA in agriculture sector. The use of secondary sources of data from authentic websites of RBI the data has been collected and tools which is used for the analysis such as growth rate and correlation. The findings of the study shows that there is positive correlation between the gross NPA of SCBs and NPA of Agriculture lending.