The Way Ahead to Optimise the Problem of Non-Performing Assets – Study on Profitability of State Bank of India

Abstract

The statistics of 2017 on NPAs to Advances reveals that among 5
associate banks of SBI, 3 are in top 5 major banks facing the problem
of NPA. The abundant literature on NPAs reveals that increasing of
NPAs is worsening the efficiency of the banks by decreasing
profitability. Several steps have been taken by RBI and Government
of India to curb the menace of increase in NPAs. Among them one of
the steps taken was merging of 5 associate banks with SBI. With
merger loan defaulters from associate banks aimed to bring under
one roof of SBI, which makes recovery easier. At this juncture, the
present research is focused on understanding the possibility of SBI in
making the situation as good as possible in the days to come. The
present research made an attempt to test the impact of NPAs on
profitability using ratios. For the purpose of this study secondary
data is extracted from annual reports of SBI and from RBI data base
for a period of five years from 2013 to 2017. F-test results indicate
there is difference between the means and t-test exhibited
statistically insignificant relation.