Swot Analysis Of Banks

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A well developed banking system is sina qua non for the economic development of a country. It is explained in the literature that the quality and stability of banks can be determined based on the way the its asset quality behaves during financial crises. Considering this view, banks in India are efficient in comparison to banks in many other countries. This efficiency is relative and does not indicate the overall efficiency of Indian banking sector in the post - millennium period. The data analysis revealed a decrease in the asset quality of Indian SCBs ever since the financial crisis and recessionary pressures affected worldwide. A period of credit boom followed by recessionary pressure resulted in deterioration of asset quality. This study…show more content…
A regular review of the project should be carried out and any change in their performance from the targeted performance needs to notified. Such a review assists the bankers to determine whether the project moved into a higher risk category or not. This will enable bankers to take corrective measures if necessary, in order to avoid the chance of getting the asset into non performing in nature. 6) The research has identified that the distribution of NPA follows an 80-20 rule, wherein the 20% of the customers are responsible for 80% of the value of impaired assets and vice versa. The analysis also revealed an increased fresh NPA (additions to NPA) every year that indicate the deficiencies in the credit appraisal process followed by banks. Hence, in order to manage NPA, it is important that loan proposals should not be influenced by the social and economic background of the promoter, but should be valued objectively based on the merit of the project…show more content…
Both these indicators present a fair view on the asset quality of banks. It may be remembered that the efficiency of NPA management can be (1) efficiency of credit risk management of the bank, and (2) efficiency of recovery measures initiated by the RBI. Considering this view, in addition to using gross NPA and net NPA, it is important to evaluate asset quality and efficiency of NPA management using (1) Total Addition to NPA every year (2) Net Additions to NPA (3) Reductions to NPA every year, and (4) Gross Non Performing Generation Rate. While Addition to NPA indicates the efficiency of credit risk management, Reduction to NPA may indicate the efficiency of recovery measures, which are mostly the measures applied by RBI. To analyze the overall efficiency, Net Addition to NPA and Gross Non Performing Generation Rate may be

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