📄 Abstract
Overleveraged balance sheets in the corporate sector in India led to a hype in non-performing loans in the banking sector. NPAs represent 9% of total banking assets, but 12% of all borrowings by the public sector. To reduce high NPAs and strengthen the banking sector, RBI has introduced the Financial Stability Framework as part of the NPA control program. A study focused on whether the Prompt Corrective Action (PCA) Framework led to a reduction in NPAs during the study period of 12 banks (eleven public sector banks and one private sector bank) that were suffering from large NPAs. As per the study, all public sector banks reported a reduction in net NPAs in total GNPAs by allocating huge provisions to NPAs as part of RBI directions. In addition, banksâ?? assets (advances loans) must be surged through the recovery of loans, not through excessive provisioning, which has a negative impact on their profitability and liquidity. Consequently, the current strategy of clearing bad loans through the allocation of provisions has reduced net NPAs in GNPAs, but not the proportion of gross and net NPAs in gross and net advances.
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📚 How to Cite:
G. Obilesu, Dr. G. Ranganatham , THE EFFECT OF THE PROMPT CORRECTIVE ACTION FRAMEWORK ON NON-PERFORMING ASSETS IN SELECTED INDIAN PUBLIC SECTOR BANKS: A COMPREHENSIVE STUDY , Volume 8 , Issue 11, november 2021, EPRA International Journal of Economics, Business and Management Studies (EBMS) ,