INTRODUCTION
The State Bank of India (SBI) was nationalized on July 1, 1955. It is the biggest and first-established commercial bank in India, with a
history of over 200 years tracing its descent to the Bank of Calcutta, which was established in 1806. It has over 22000 across India.
SBI reaches most rural areas in remote regions and ensures financial services; it has 230 foreign offices spread across 30+ counties
and supports international trade globally. Its 92 percent capital is owned by the Reserve Bank and 8 percent by the old shareholders
of Imperial Bank and others. and expanding the branches of banks, lending to priority sectors and creating employment, etc.
(NPAs) stands for non-performing assets. These are loans or advances used by financial institutions that cease to generate income
from non-payment of principal and interest for a specified period. Assets with a delay of 1–90 days are categorized under Special
Mention Accounts (SMA-0, SMA-1, and SMA-2). (NPAs) presences capital adequacy, liquidity, and profitability affect the bank’s,
higher triggering provisioning norms under Basel III and RBI guidelines. The Classification of non-performing assets (NPA) includes
a) Standard assets b) Substandard assets c) Doubtful assets d) Doubtful assets e) Loss Assets.
Techniques Used to Manage Non-Performing Assets (NPAs)- Managing Nonperforming Assets
When the borrowers of a bank fail to return their loans, the loans go into default, leaving the bank with non-performing assets.
Non-performing assets weaken the bank system, making it less able to lend. Banks use a variety of techniques to manage and
recover these bad debts, including restructuring loans (which is cooperative on both sides), one-time settlements negotiated in
conjunction with the borrower so that bankruptcy proceedings are forestalled/amended under Insolvency & Bankruptcy Code (IBC
2016), recovering through call-down mechanisms or repayment schedules that may allow borrowers more time to repay their debts
if they come forward when asked by a bank for such action, appeal against DRT's order and liquidate units sold directly to state(s),
Asset Reconstruction Companies (ARCs), Lok Adalats, early warning systems of all kinds, loan write-offs.
Banking is the backbone of an economy as it transfers idle savings, i.e., deposits, to productive uses in society for housing,
agriculture, education, and other commercial projects. The banking industry in India has grown considerably since the liberalization
process that began in the 1990s and has played an important role in contributing to economic development. Initially, banks focused
mainly on diversifying their portfolios (lending) and expanding the branches of banks, lending to priority sectors and creating
employment, etc.
In the past two decades, NPAs have become a big issue for Indian banks. Various initiatives have been taken by the Reserve Bank of
India (RBI) and other regulatory bodies to tackle non-performing assets (NPAs). Only some large banks like SBI and Punjab National
Bank were reported by RBI to have under-reported NPA provisioning during 2018-19. This would help not only PSBs but private
sector banks like Yes.
SBI, UCO Bank, and Bank of Baroda, several Indian banks, were found to have underreported their non-performing assets (NPAs).
The RBI discovered underreported bad loan cases from 2016 to 2019, with FY 2018-19 being one of the worst years. The RBI
assessed that SBI reported a gross NPA of 1,84,682 crores but underreported 11,932 crores. Punjab National Bank has assessed the
Gross NPA stand at 81,089.7, reporting 2,617 crores.
Effects of NPA ON Banks
1. NPAs decreased last trend from 2023, 2024, and early 2025 (3.9%,2.7%,2.6%). In this scene, Better improvement
form last years.
2. During COVID-19 IN (2019) Around 8.2% of the Gross NPA ratio of Scheduled Commercial Banks in March 2020. Financial
Stability Report scenes NPAs has risen up to --12.5% by March 2021 under Baseline stress and increase up to 14.7%.
3. Due to economic slowdown and inflation increases.
a) Recently, it decelerated, and India has a slow growth rate of 6.4% for the fiscal
i. -end of March 2025, the slowest in the last four years.
Review of Literature
1) (Sudeshna Sarkar,2020): They studied the performance of the State Bank of India in the 5 financial years (2013–2017),
analyzing the return and liquidity of recourses and the Issue discussed is Non-Performing Assets (NPAs). Based on this
secondary data, the study uses Trend Analysis and One-Way ANOVA to analyze the changes in two important financial
ratios, e. Gross NPAs to Gross Advances and Net NPAs to Net Advances. The results show no significant difference
through the years, showing that asset quality remains a real issue. The report, however, adds that NPAs continue to
remain a risk to profitability and capital in the banking sector. It ends up finding that even big banks such as SBI cannot
be spared of such financial vulnerability risks.
2) (P. Geetha (2022): They studied this report. The banking sector is an expanding unit of all economies; however, it is
increasingly becoming quite complex. With modernization and automation, people are more comfortable taking loans,
which has helped in business growth and development in the economic landscape. If these loans are not paid back, they
turn into a Non-Performing Asset (NPAs), which drastically affects the bank’s income, credibility, and performance.
Loans facilitate industrial development, but increasing NPAs can be a serious risk. P. Geetha’s work demonstrates this
challenge and shows that asset quality issues are not limited to smaller banks and that all financial institutions can fail
when bad loans go too far.
3) (Kalpesh Gandhi,2015): They identify that the study on the banking system has evolved over the years, allowing for
speedier and more efficient economic development and capital formation. Now, banks are central to steadying financial
adjustment and jump-starting economic activity. But one of the biggest challenges the sector faces is the increasing level
of Non-Performing Assets (NPAs). With loans being issued more easily, loan recovery is a big concern. NPAs affect a
bank's income, credibility, and operational stability negatively. NPAs: Definition, Causes, Possible Solutions The
Definition of NPAs (Non-Performing Assets) refers to loans or advances that have not been repaid for a specified period
of time, leading to a potential loss for the bank.
4) (Radhika Nichamalle's,2022)A central point of Radhika Nakamalle's paper is that Non-performing Assets (NPAs) have been a serious
problem for banks on an international scale. The paper even suggests that they had no place in overall operations and had no
relationship with the bank's net worth at the time. NPAs also point to larger financial effects due to increased credit failure: lower
bank net worth decreases its economic strength while asset values are eroded. With a descriptive research design based on annual
reports, their study was to find out how NPA influences (or "effects") performance at a bank. Indeed, the paper notes that improved
resources in commercial banking have made loans more obtainable for all sorts of other people since the last century began – yet
one key challenge remains loan recovery. In order to assure the stability of the Nonperforming Assets environment, this article not
only examines its causes and effects but also prescribes some ways out for better management.
Classification of Non-Performing Assets-
1) Stander Assets