Impact of Institutional Variables on Non-Performing Assets of Scheduled Commercial Banks during Pre and Post Crisis Period in India

Abstract

This study addresses the contemporary issues of non-performing assets of Indian banking sector. The objectives of the present study are to find out an association between institutional variables and NPAs of scheduled commercial banks during pre and post crisis; and to find out the impact of institutional variables on Gross NPAs Ratio and Net NPAs Ratio of scheduled commercial banks during pre and post crisis. The study period is 2000-01 to 2019-20. It is divided in to pre-crisis period (2000-01 to 2007-08) and post-crisis period (2009-10 to 2019-20) to know the impact of institutional variables on NPAs of Indian banks. The secondary data was collected from the Reserve Bank of India (RBI) website and applied a multiple regression was used to establish an empirical relationship between institutional variables and NPAs of scheduled commercial banks. The results were drawn by using the Statistical Package for Social Sciences (SPSS) 20.0. It can be observed that there is a statistically insignificant relationship between Gross and Net NPAs Ratio of SCBs; and Cash Reserve Ratio and also Gross and Net NPAs Ratio of SCBs and Repo Rate during pre and post crisis period. So the Cash Reserve Ratio and Repo Rate should be maintained at an optimal level from time to time based on the liquidity position of the economy and inflation to control the NPAs of commercial banks.