An Analytical Study on Non-Performing Assets (NPAs) in Canara Bank: Causes, Trends, and Impact on Profitability

Abstract

Non-Performing Assets (NPAs) pose a significant challenge for the Indian banking sector, particularly for public sector banks like Canara Bank, where high NPA ratios directly affect profitability and operational efficiency. This study provides an analytical investigation into the causes, trends, and impact of NPAs on Canara Bank's profitability. Through a mixed-methods approach, including demographic analysis and hypothesis testing, this research explores both internal and external factors contributing to the growth of NPAs. The findings suggest that socio-economic factors, such as the borrower's financial status, are significantly associated with the likelihood of loan defaults. Meanwhile, the study finds no immediate relationship between NPAs and profitability, although long-term risks to financial stability are evident. Employee training and awareness of Reserve Bank of India (RBI) asset classification norms are also identified as crucial in managing NPAs effectively. Survey results reveal mixed opinions on the effectiveness of internal presentations on NPA-related policies, highlighting a gap in employee understanding that could be addressed through enhanced training. Overall, this study offers valuable insights for improving NPA management strategies, contributing to both policy decisions and practical banking solutions.