Perception of Bankers on Factors Causing Non Performing Assets in the Indian Banking Sector Dr. Subha M. V.*, Kumar R. Vishal** *Associate Professor, Anna University of Technology, Coimbatore, India **Assistant Professor, Happy Valley Business School, Coimbatore, India Online published on 2 August, 2016. Abstract Banking occupies a central role in a country's economy and is a catalyst for its overall growth. The banking sector acts as an intermediary to all industries and promotes savings, investment, production and trade. The sector has a significant impact on economic development through the money and capital markets. The banking system in India has had to serve the goal of economic policies enunciated in successive five-year development plans, particularly concerning equitable income distribution, balanced regional economic growth and reduction and elimination of private sector monopolies in trade and industry. Moreover the sector had been assigned the role of providing support to economic sectors such as agriculture, small-scale industries and exports. With the globalisation of financial markets and the consequent exposure of Indian banks to the global financial milieu, the changes in the financial markets, institutions and products, technological innovations and other developments, the sector has undergone a metamorphosis. To keep pace with the dynamic environment Indian banks resort to aggressive marketing which has exposed the banks to significant credit risks. These credit risks (risk of loan defaults) pose as a severe threat to the banking sector and defaults can jeopardize an economy on account of locked financial resources. While there are many studies on the performance, profitability and specific determinants of non-performing assets of Indian banks, there is scarce literature on the causes for non-performing assets. The extant literature in this area does not incorporate the opinion of the key persons involved in non-performing assets management- the credit officers/bank managers. This paper seeks to bridge that gap. In this paper we attempt to study the perception of credit managers as regards the burgeoning issue of non-performing assets. The paper identifies four major reasons for the non-performing assets fiasco, viz., internal anomalies, regulatory lapses, procedural shortcomings and borrower inadequacies. The authors spell out measures for curbing the problem based on the observations made during the course of their research. Top |