Vol. 3, Issue 8, Part K (2017)

Abstract
In spite of the significant improvement in the banking sector and the accelerated reforms during this period, NPA still poses a threat to the banking sector. Even though there were remarkable improvement in NPA management which is evident from the decline in NPA since post-liberalization, NPA still average around 3% of total advances of all SCBs in India. There are still concerns about asset quality of banks, which is evident from the reduction in asset quality during recessionary periods. A sound management of NPA should start with strengthening the internal systems through improved credit assessment, more staffs in the loan department, regular follow-up and assessment of loan, etc. Even though external factors such as recessionary pressures etc affect the quality of assets, it can be minimized if banks improve the internal efficiency on credit management.