Measuring the Effect of Non-Performing Assets on the Profitability of the Public and Private Sector Banks in India

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1 Measuring he Effec of Non-Performing Asses on he Profiabiliy of he Public and Privae Secor Banks in India Mohsin Raja Suden, Shri Maa Vaishno Devi Universiy Dr. Sushil Kumar Meha Assisan Professor, Shri Maa Vaishno Devi Universiy Absrac: This curren research is based on he objecive of analysing he impac of non-performing asses on he profiabiliy of he public and privae secor banks. In his research aricle impac of NPA on he profiabiliy of banks has been quanified. In his research, a sample size of 45 banks has been aken ou of which 26 are public secor banks and 19 are privae secor banks. The curren research paper is based on secondary, quaniaive daa for he period o and Regression analysis was applied in which dependen variables for profiabiliy are reurned on asses, reurn on equiy and ne ineres margin whereas independen variables used for non-performing asses are Gross NPA o Gross advances raio and Ne NPA o Ne advances raio. The overall resuls of he curren sudy show increasing rend wih respec o non-performing asses of public secor banks and privae secor banks ou of which public secor banks NPA are comparaively higher han privae secor banks whereas reurn on asses, reurn on equiy and ne ineres margin of boh secors are showing decreasing rend. On he basis of he curren sudy reurn on asses, reurn on equiy and ne ineres margin for public secor banks have shown negaive and significan relaion wih gross NPA o gross advances and ne NPA o ne advances raio whereas reurn on asses and reurn on equiy for privae secor banks have also shown negaive and significan relaionship wih boh he raios bu ne ineres margin has shown posiive and insignifican relaion wih gross NPA o gross advances and ne NPA o ne advances raio. Keywords: Banks, India, Non-performing asses, Ne Ineres Margin, Profiabiliy, Reurn on Asses, Reurn on Equiy, Gross NPA o gross advances raio, Ne NPA o ne advances raio, Public secor, Privae secor I. Inroducion There has been a buzz in he economy regarding hesignifican rise in non-performing asses which is a maer of concern for banking secor as well as for an economy as a whole. A recen repor by CARE Raings revealed ha India is ranked fifh in he world wih respec o amoun of NPA s and is on op spo among he BRICS naions as shown below. According o RBI guidelines non- performing asse (NPA) is a loan or an advance where ineres and/ or insalmen of principal remain overdue for a period of more han 90 days 1. Non-performing asses are furher classified ino hree caegories i.e. subsandard asse, doubful asse, and loss assesand sum of hese deermine he qualiy of asse.non-performing asses are like virus for banking secor which affec profiabiliy, deeriorae qualiy of asses and survival of banks(narula & singh, 2014). The general blame for such rough banking siuaion is because of global downshif, unsable marke order, poliical force, inadequacy in banking procedures and policies, misbehaviour by he borrower ec.,(charan & Brar, 2016).The Reserve Bank of India (RBI) and Cenral Governmen are rying o sabilize he crisis.to manage he crisis governmen of India has announced recapializaion of public secor banks by infusing 2.11 Crores approximaely and srucural reforms like demoneizaion, GST and amendmens in IBC.The resoluion mechanism such as he Insolvency and Bankrupcy Code (IBC)2016were incorporaed. Before he Insolvency and Bankrupcy Code (IBC) 2016 here were laws such as he Recovery of Debs Due o Banks and Financial Insiuions Ac 1993, or Securiizaion and Reconsrucion of Financial Asses and Enforcemen of Securiy Ineres Ac ( SARFESI ) 2002, and oher deb resrucuring opions such as Corporae Deb Resrucuring ( CDR ), Sraegic Deb Resrucuring, Scheme for Susainable Srucuri ng of 1 hps:// 656 Mohsin Raja, Dr. Sushil Kumar Meha

2 Sressed Asses ( S4A ) as per he guidelines of RBI(deloie, 2017). The gross non-performing asse raio(gnpa) of public secor banks sood a 14.49% and for privae secor banks sood a 3.79%as of March 31, 2017.The reason for such huge gap of GNPA beween he wo is because ha public secor banks provide loans o he prioriy secor and here is a huge poliical inervenion(jayakkodi & Rengarajan, 2016). The main reason behind hese large NPA s from he las 2-3years can be aribued o Asse Qualiy recogniion (2015)which was inroduced hen by RBI Governor Raghu Ram Rajan 2. Due osuch increase in NPA level he banks have o make provisions as well as o wrie-off bad loans which inurn decrease he profiabiliy as well as overall performance of he banks. High level of NPAs II. Lieraure Review According o (KIRAN & T., 2016) every counries economic growh depends upon he proper funcioning of he financial secor. They have done a selecive sudy on public secor banks in India o evaluae he impac of Non-Performing Asses on he profiabiliy of banks.in heir sudy hey have seleced SBI and 5 naionalized banks and he relaion beween ne profi and gross Non-Performing Asses has been measured. The resul showed ha all he banks are having negaive correlaion wih heir ne profis and gross Non Performing Asses excep for SBI and he SBI is having coninuous profis wih no having any effec from Gross Non Performing (Mishra & Pawaskar, 2017) Sudies he Non-Performing Asses and is Impac on Banking Secor and did he raio analysis of banks for he period beween In heir sudy hey find ha here is a increase in NPA from las four years and he banks should do proper due diligence before choosing he cliens.the banks should have proper credi appraisal sysem,proper legal sysem which needs proper suppor of he governmen in order o reduce he NPA level and o bring efficiency and profiabiliy. (Charan & Brar, 2016) Conduced a research on Sressed Asses and Banking in India and concluded ha in India here is a surge in Sressed asses in public secor banks han privae banks. A number of facors can be idenified ha have led o his siuaion hose include global slow down, governance relaed issues, poliical facors as well as mal-inenions and misconduc. Consequenly, significan losses are incurred by he public as well as he Union Governmen which basically owns public secor banks. The chances of misconduc are subsanially large in case of infrasrucure projec especially under public privae parnership and hey suggesed ha beer raining of he saff, sandardizaion of norms, improvemen in credi appraisal, posdisbursemen supervision, credi monioring can be used improve recovery and also advised PPP model for infrasrucure projecs. (Jayakkodi & Rengarajan, 2016)Did a sudy on Impac of non-performing asses on reurn on asses of public and privae secor banks in India and found ha here is a high degree of negaive correlaion beween GNPA raio wih ROA of PNB (-0.98), BOB (-0.99), BOI (-0.96), ICICI (-0.68) HDFC (-0.79) and here is a posiive correlaion beween GNPA raio wih ROA of SBI (0.21), AXIS (0.98) and FEDERAL Bank (0.59). The daa was analysed using saisical ools such as raio and correlaion and came o he conclusion ha he privae 2 hps:// 657 Mohsin Raja, Dr. Sushil Kumar Meha

3 secor banks have beer secured loan policy han public secor banks. The public secor are seen o be giving more imporance o op prioriy secors and here is also high poliical inervenion. (Rahore & Sharma, 2016) Conduced he researchbased on he secondary daa for he period o Regression analysis was used in he research where; reurn on asses, reurn on equiy and ne ineres margin have been used as a dependen variables for profiabiliy of he banks while Gross NPA o Gross advances raio and Ne NPA o Ne advances raio has been used as independen variables o denoe he non-performing asses of he banks. I was found from he research ha currenly here is an increasing rend of non-performing asses in Indian scheduled commercial banks while all he hree measures of profiabiliy raios have shown a declining rend. I was also found in he sudy ha NPA has an adverse impac on he profiabiliy of he banks. Reurn on asses and reurn on equiy is found o be negaively and significanly relaed o he gross NPA o gross advances raio while ne ineres margin has shown negaive bu insignifican relaionship wih boh he raios of NPA. (Narula & singh, 2014)Saed ha NPA s are virus for banking secor and affecs liquidiy,profiabiliy, qualiy of asseand survival of banks. In his paper hey examined he impac of profiabiliy in relaion o oal advances, Ne Profis, GROSS & NET NPA of Punjab naional bank.the sudy uses he annual repors of Punjab Naional Bank for he period of six years from o The daa has been analysed by using ables and coefficien of correlaion. The decline of NPA is essenial o improve profiabiliy of banks. Advances provided by banks need o be done pre-sancioning evaluaionand pos-disbursemen conrol o conrol rising non-performing asses in he Indian Banking secor. While analysing impac of NPA level on PNB hey derived he conclusion ha here is a posiive relaion beween Ne Profis and NPA of PNB. I simply means ha as profi increases NPA also increases. I is because of he mismanagemen on he side of banks (Chakrabory, 2017)In his sudy analysed he five scheduled commercial banks NPA s and ry o find ou he impac on profiabiliy. These banks were Axis Bank, HDFC Bank, ICICI Bank, Sae Bank of India and Punjab Naional Bank and he ools he used for his research were Raio Analysis and Saisical Tools (i.e.) Mean and ANOVA. He concluded ha Profiabiliy raios are used by he managemen in order o assess how efficienly hey carry on heir business operaions and also i is suggesed for he enire bank o ake effecive seps o improve he operaing efficiency.public Secor Banks (PSBs) in India have performed raher poorly over he pas 3-4 years. For he mos par his has been on accoun of Non-Performing Asse (NPA) relaed worries which have so far been brushed under he carpe. III. Objecive of he Sudy 1. The objecive of his research paper is o measure he effec of Nonperforming asses on he profiabiliy of he public and privae secor banks of India. 2. The research also aims o measure he rend of NPA in during las seven years. IV. Research Mehodology The sudy is based on he secondary daa aken from he annual publicaions of RBI accessed from he official websie of he reserve bank of India. The period of he sudy is from o In his research Regression analysis has been used o measure he impac of NPAs on he profiabiliy of he public and privae secor banks. In his research sample of 45 banks have been aken ou of which 26 are public secor banks and 19 are privae secor banks. Public secor banks are caegorised in wo sub-caegories hey are; SBI & is associaes and naionalized banks. Profiabiliy of hese banks has been measured using hree differen variables namely; Reurn on asses, Reurn on equiy and Ne ineres margin. The measure for nonperforming asses used in he sudy are namely; Gross NPA o Gross Advances raio and Ne NPA o Ne Advances raio. Profiabiliy measures have been used as dependen variable in he sudy while measures of NPA have been used as independen variables in he regression model. The hypohesis which were formulaed and esed during he curren sudy are as follows: H01: There is no relaionship beween Reurn on asses and Gross NPA o Gross Advances raio. 658 Mohsin Raja, Dr. Sushil Kumar Meha

4 H02: There is no relaionship beween Reurn on asses and Ne NPA o Ne Advances raio. H03: There is no relaionship beween Reurn on equiy and Gross NPA o Gross Advances raio. H04: There is no relaionship beween Reurn on equiy and Ne NPA o Ne Advances raio. H05: There is no relaionship beween Ne Ineres margin and Gross NPA o Gross Advances raio. H06: There is no relaionship beween Ne Ineres margin and Ne NPA o Ne Advances raio. V. Profiabiliy measures used in he research aricle A. Reurn on Asses: ROA measures he abiliy of bank managemen inuilizing bank s asses o generae reurns.the lesser raio depics ha he bank s asses has no been uilized properly and resuls in lower profis. Reurn on Asses = B. Reurn on Equiy: ROE measures he effeciveness of bank managemen in uilizing is shareholders funds. Lesser he raio lesser will be he profiabiliy of he banks. Reurn on Equiy= C. Ne Ineres Margin: This raio shows he difference beween he ineres received on loans or advances and ineres paid on deposis as a percenage of oal asses.greaer he spread greaer will be he performance of he banks. Ne Ineres Margin =. Daa Inerpreaion & Analysis Graph 1 GROSS NPA TO GROSS ADVANCES RATIO Gross NPA o Gross Advances Raio Mohsin Raja, Dr. Sushil Kumar Meha

5 This Graph 1 shows he Gross NPA o Gross Advance raio for he public secor banks for he period o Inhis graph i can be inerpreed ha he raio of gross NPA o gross advances has been coninuously bu slowly increasing from 2.07% o 5.71% during he period o bu afer ha Gross NPA o Gross Advance raio sars increasing a alarming pace from 5.17% o 9.35% and 9.35% o 14.49% during he period o due o he inroducion of Asse Qualiy Review(2015) by RBI. This drasic increase in he raio has drasically decreased he profiabiliy of he banks of he public secor banks. Graph 2 NET NPA TO NET ADVANCES RATIO Ne NPA o Ne Advances Raio This Graph 2 shows he Ne NPA o Ne Advance raio for he public secor banks for he period o In his graph i can be inerpreed ha he raio of ne NPA o ne advances has increased coninuously form 1.01% o 3.21% bu a a lower rae from during he period from o Afer ha period here is a significan increase from 3.21% o 5.91% during he period o and from 5.91% o 9.08% during he period o This huge increase in raio is due o he inroducion of Asse Qualiy Review (2015) by RBI. As he Gross NPA increase s Ne NPA also increases and Ne NPA is deermined by making he deducions from he Gross NPA like provisions, loss asses ec. so, any increase in NET NPA will decrease he profiabiliy of ban Graph 3 PROFITABILTY RATIOS Reurn on Asses Raio Reurn on Equiy Raio Ne Ineres Margin Raio Reurn on Asses Raio Reurn on Equiy Raio Ne Ineres Margin Raio Mohsin Raja, Dr. Sushil Kumar Meha

6 This Graph 3 shows he profiabiliy measures of public secor banks for he period o In his graph i can be inerpreed ha all he hree raios are decreasing from las seven years due o he increase in NPA. The reurn on asses raio has been coninuously decreasing from 0.98% o -0.50% for he period o The rend shows only decrease in he reurn on asses raio during las seven years. Similarly, he reurn on equiy raio has decreased from 17.52% o-9.32% during las seven years. The rend shows only he decrease in he value of reurn on asses. Same is he case wih ne ineres margin as he rend shows only decreasing bu no as likely as ROA and ROE. I has decreased from 2.79% o 2.05% from las seven years. Thus, i can be inerpreed ha he profiabiliy of public secor has been coninuously decreasing due o increase in he NPA level. Graph 4 GROSS NPA TO GROSS ADVANCES RATIO 3.79 Gross NPA To Gross Advances Raio This Graph 4 shows he Gross NPA o Gross Advance raio for he privae secor banks for he period o In his graph i can be inerpreed ha he raio of gross NPA o gross advances has been decreasing from 2.06% o 1.75% during he period o bu afer ha Gross NPA o Gross Advance raio sars increasing from 1.75% o 3.79% during he period o So, i can be inerpreed ha i has shown boh upward and downward rend from las seven years. Graph 5 NET NPA TO NET ADVANCES RATIO Ne NPA To Ne Advances Raio Mohsin Raja, Dr. Sushil Kumar Meha

7 This Graph 5 shows he Ne NPA o Ne Advance raio for he privae secor banks for he period o In his graph i can be inerpreed ha he raio of ne NPA o ne advances has increased coninuously form 0.56% o 1.24% bu a a lower rae during he period o Afer ha period here is a significan increase from 1.24% o 1.61% during he period o and from 1.61% o 2.07% during he period o This huge increase in raio is due o he inroducion of Asse Qualiy Review (2015) by RBI. As he Gross NPA increase s Ne NPA also increases and Ne NPA is deermined by making he deducions from he Gross NPA like provisions, loss asses ec. so, any increase in NET NPA will decrease he profiabiliy of banks Graph 6 PROFITABILITY RATIOS Reurn on Asses Raio Reurn on Equiy Raio Ne Ineres Margin Raio This Graph 6 shows he profiabiliy measures of privae secor banks for he period o In his graph i can be inerpreed ha reurn on asses is coninuously decreasing from las seven years. I has decreased from 1.18% o 0.86% for he period o The rend shows only decrease in he reurn on asses raio during las seven years. Similarly, he reurn on equiy raio has decreased from 14.03% o8.85% during las seven years. The rend shows only decrease in ROE bu from period i has shown increasing rend. Also, i can be inerpreed from graph 6 ha here is no a much decline in ne ineres margin as he graph shows mixed rend. I has decreased from 3.12% o 3.07% from las seven years Reurn on Asses Raio Reurn on Equiy Raio Ne Ineres Margin Raio VII. Resuls of Regression Analysis Table 1 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Gross NPA o Gross Advances Raio 662 Mohsin Raja, Dr. Sushil Kumar Meha Unsandardized 1 (Consan) VAR a. Dependen Variable: Reurn On Asses

8 Inerpreaion: In Table 1 dependen variable is reurn on asses and independen variable is Gross NPA o Gross Advances Raio of public secor banks. In his he regression coefficien of indicaes ha here is a srong negaive correlaion beween he wo variables. The R square of saes he variance of 95% in reurn on asses is due o Gross NPA o Toal Advances Raio and remaining 5% is due o oher facors.the p value is less han which is highly significan a 5% level of significance and here is a saisically highly relaionship beween he wo variables. Thus hese resuls indicae ha GNPA has an impac on ROA and hus null hypohesis is rejeced. Table 2 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Ne NPA To Ne Advances Raio Unsandardized 1 (Consan) VAR a. Dependen Variable: Reurn On Asses Inerpreaion: In Table 2 dependen variable is Reurn on Asses and independen variable is Ne NPA o Ne Advance Raio. In his able he regression coefficien is which indicaes ha here is a negaive correlaion beween he wo variables. The R square is.965 which indicaes ha 96.5% variance in reurn on asses is due o he Ne NPA o Ne Advance Raio and he remaining 3.5% is due o oher facors. The P value is less han which is highly significan a 5% level of significance and are having saisically significan relaionship.so, i can be said ha Ne NPA o Toal Advances Raio has an impac on he profiabiliy of public secor banks and hus null hypohesis is rejeced. T Table 3 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Gross NPA o Gross Advances Raio 663 Mohsin Raja, Dr. Sushil Kumar Meha Unsandardized 1 (Consan) VAR a. Dependen Variable: Reurn on Equiy T

9 Inerpreaion: In Table 3 he dependen variable is Reurn on Equiy and independen variable is Gross NPA o Gross Advances Raio. In his able he regression coefficien is which means here is a negaive correlaion beween he wo variables and he R square is.945 which saes ha 94.5% variance in ROE is due o Gross NPA o Gross Advances Raio and he remaining is due o oher variables. The P value is less han which is highly significan a 5%level of significance and hus are having saisically significan relaionship. So, Gross NPA o Gross Advances Raio has an impac on he ROE and hus null hypohesis is rejeced.. Table 4 Table Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan),Ne NPA o Ne Advances Raio Unsandardized 1 (Consan) VAR a. Dependen Variable:Reurn on Equiy Inerpreaion: In Table 4 he dependen variable is Reurn on Equiy and independen variable is Ne NPA o Ne Advances Raio. In his able he regression coefficien is which means here is a srong negaive correlaion beween he wo variables and he R square is.958 which saes ha almos 96% variance in ROE is due o Ne NPA o Ne Advances Raio and he remaining is due o oher variables. The P value is less han which is highly significan a 5%level of significance and hus are having saisically significan relaionship. So, Ne NPA o Ne Advances Raio has an impac on he ROE and hus null hypohesis is rejeced. Table 5 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Gross NPA o Gross Advances Raio 664 Mohsin Raja, Dr. Sushil Kumar Meha Unsandardized 1 (Consan) VAR a. Dependen Variable: Ne Ineres Margin Inerpreaion: In Table 5 he dependen variable is Ne Ineres Margin and independen variable is Gross NPA o Gross Advances Raio. In his able he regression coefficien is which means here is a negaive

10 correlaion beween he wo variables and he R square is.762 which saes ha almos 76% variance in NIM is due o gross NPA o gross Advances Raio and he remaining is due o oher variables. The P value is ha is 1.0% which is highly significan a 5%level of significance and hus are having saisically significan relaionship. So, Gross NPA o Gross Advances Raio has an impac on he NIM and hus null hypohesis is rejeced. Table 6 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Ne NPA o Ne Advances Raio Unsandardized 1 (Consan) VAR a. Dependen Variable: Ne Ineres Margin Inerpreaion: In Table 6 he dependen variable is Ne Ineres Margin and independen variable is Ne NPA o Ne Advances Raio. In his able he regression coefficien is which means here is a srong negaive correlaion beween he wo variables and he R square is.789 which saes ha almos 79% variance in NIM is due o Ne NPA o Ne Advances Raio and he remaining is due o oher variables. The P value is ha is 0.8% which is highly significan a 5% level of significance and hus are having saisically significan relaionship. So, Ne NPA o Ne Advances Raio has an impac on he NIM and hus null hypohesis is rejeced. Table 7 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Gross NPA o Gross Advances Raio 665 Mohsin Raja, Dr. Sushil Kumar Meha Unsandardized 1 (Consan) VAR a. Dependen Variable: Reurn on Asses Inerpreaion: In Table 7 he dependen variable is Reurn on Asses and independen variable is Gross NPA o Gross Advances Raio of privae secor banks. In his able he regression coefficien is which means

11 here is a srong negaive correlaion beween he wo variables and he R square is.931 which saes ha almos 93% variance in ROA is due o Gross NPA o Gross Advances Raio and he remaining is due o oher variables. The P value is less han which is highly significan a 5% level of significance and hus are having saisically significan relaionship. So, Gross NPA o Gross Advances Raio has an impac on he ROA and hus null hypohesis is rejeced. Table 8 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Ne NPA o Ne Advances Raio Unsandardized 1 (Consan) VAR a. Dependen Variable: Reurn on Asses Inerpreaion: In Table 8 he dependen variable is Reurn on Asses and independen variable is Ne NPA o Ne Advances Raio of privae secor banks. In his able he regression coefficien is which means here is a srong negaive correlaion beween he wo variables and he R square is.931 which saes ha almos 93% variance in ROA is due o Ne NPA o Ne Advances Raio and he remaining is due o oher variables. The P value is which is highly significan a 5% level of significance and hus are having saisically significan relaionship. So, Ne NPA o Ne Advances Raio has an impac on he ROA and hus null hypohesis is rejeced. Table 9 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Gross NPA o Gross Advances Raio 666 Mohsin Raja, Dr. Sushil Kumar Meha Unsandardized 1 (Consan) VAR a. Dependen Variable: Reurn on Equiy Inerpreaion: In Table 9 he dependen variable is Reurn on Equiy and independen variable is Gross NPA o Gross Advances Raio of privae secor banks. In his able he regression coefficien is which means here is a negaive correlaion beween he wo variables and he R square is.804 which saes ha almos 80% variance in ROA is due o Gross NPA o gross Advances Raio and he remaining is due o oher variables.

12 The P value is which is highly significan a 5% level of significance and hus are having saisically significan relaionship. So, Gross NPA o Gross Advances Raio has an impac on he ROA and hus null hypohesis is rejeced. Table 10 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Ne NPA o Ne Advances Raio Unsandardized 1 (Consan) VAR a. Dependen Variable: Reurn on Equiy Inerpreaion: In Table 10 he dependen variable is Reurn on Equiy and independen variable is Ne NPA o Ne Advances Raio of privae secor banks. In his able he regression coefficien is which means here is a srong negaive correlaion beween he wo variables and he R square is.875 which saes ha almos 87.5% variance in ROA is due o Ne NPA o Ne Advances Raio and he remaining is due o oher variables. The P value is which is highly significan a 5% level of significance and hus are having saisically significan relaionship. So, Ne NPA o Ne Advances Raio has an impac on he ROA and hus null hypohesis is rejeced. Table 11 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Gross NPA o Gross Advances Raio 667 Mohsin Raja, Dr. Sushil Kumar Meha Unsandardized 1 (Consan) VAR a. Dependen Variable: Ne Ineres Margin Inerpreaion: In Table 11 he dependen variable is Ne Ineres Margin and independen variable is Gross NPA o Gross Advances Raio of privae secor banks. In his able he regression coefficien is.549 which means here is a posiive correlaion beween he wo variables and he R square is.302 which saes ha almos 30% variance in NIM is due o Gross NPA o Gross Advances Raio and he remaining is due o oher variables. The P value is 0.202ha is 20%which is insignifican a 5% level of significance and hus are having saisically insignifican relaionship. Thus he null hypohesis is acceped.

13 Table 12 Summary R R Square Adjused R Square Sd. Error of he Esimae a a. Predicors: (Consan), Ne NPA o Ne Advances Raio Unsandardized 1 (Consan) VAR a. Dependen Variable: Ne Ineres Margin Inerpreaion: In Table 12 he dependen variable is Ne Ineres Margin and independen variable is Ne NPA o Ne Advances Raio of privae secor banks. In his able he regression coefficien is.386 which means here is a posiive correlaion beween he wo variables and he R square is.149 which saes ha almos 15% variance in NIMis due o Ne NPA o Ne Advances Raio which is no significan and he remaining is due o oher variables. The P value is 0.393ha is almos 40%which is highly insignifican a 5% level of significance and hus are having saisically insignifican relaionship. Thus, he null hypohesis is acceped. VIII. Conclusion I can be concluded from he research ha non-performing asses are coninuously increasing and are having an adverse impac on he profiabiliy of he public as well as privae secor banks. The overall resuls of he curren research show increasing rend wih respec o non-performing asses of public secor banks and privae secor banks ou of which public secor banks NPA are comparaively higher han privae secor banks whereas reurn on asses, reurn on equiy and ne ineres margin of boh secors are showing decreasing rend. On he basis of he curren sudy reurn on asses, reurn on equiy and ne ineres margin for public secor banks have shown negaive and significan relaion wih gross NPA o gross advances and ne NPA o ne advances raio whereas reurn on asses and reurn on equiy for privae secor banks have also shown negaive and significan relaionship wih boh he raios bu ne ineres margin has shown posiive and insignifican relaion wih gross NPA o gross advances and ne NPA o ne advances raio. References; Chakrabory, S. A., Effec of NPA on Banks Profiabiliy. Inernaional Journal of Engineering Technology, Managemen and Applied Sciences, 5(5). Charan, S. & Brar, J. S., Sressed Asses and Banking in India. deloie, Paradigm Shif in Banking Fuere sraegies, s.l.: s.n. Jayakkodi, D. & Rengarajan, D. P., Impac of non-performing asses on reurn on asses of public and privae secor banks in India. Inernaional Journal of Applied Research, 2(9), pp KIRAN, K. P. & T., M. J., EFFECT OF NON PERFORMING ASSETS ON THE PROFITABILITY OF BANKS A SELECTIVE STUDY. Inernaional Journal of Business and General Managemen (IJBGM), march, 5(2), pp Mishra, D. U. M. & Pawaskar, J. R., A Sudy of Non-Performing Asses and is Impac on Banking Secor. Journal for Research, 3(1). Narula, D. S. & singh, m., Empirical Sudy on Non Performing Asses of Bank. Inernaional Journal of Advance Research in Compuer Science and Managemen Sudies, january, 2(1), pp Rahore, p. & Sharma, S., Measuring he Impac of Non-Performing Asses on he Profiabiliy of Indian Scheduled Commercial Banks. IOSR Journal of Economics and Finance (IOSR-JEF), pp Mohsin Raja, Dr. Sushil Kumar Meha