NET commercial banks for providing socio economic services to

NET PERFORMING ASSETS:Introduction  A Bank is an institution which handles money andgives other financial services. Banks accept deposits and make loans and earn aprofit from the difference in the interest rates which are paid by the customers.The main function of banks is to use their customers money to lend it toothers, who would be able to use it to buy houses, start their own businessesor invest in a way that they will be benefited etc. Banksgenerate money in the economy by accepting deposits and lending loans. Banksplay a very important role in the economic development of every nation.Thebanking sector plays a large role in channelizing the money from one end to anotherend. In general there are several challenges opposing the commercial banks inits day to day operations.

The main challenge that banks are facing nowis the paymentof funds in standard assets such as (loan and advances) or otherwise, it will leadto Non-performing assets. Non-performingassets are referred to an asset,which has been classified by a bank orfinancial institution as doubtful, as per the rules and regulations that arebeen framed by the RBI with respect to the classification of assets. AfterLiberalization the Indian banking sector developed in many ways. The RBI alsotook necessary steps to nationalize sufficient amount of commercial banks forproviding socio economic services to everyone.

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The public sector banks haveshown tremendous performance as far as the financial activities are concerned.However, the only problem of the public sector banks these days is theincreasing level of the non-performing assets which effects the overallfunctioning and performance of the banks. The level of NPAs is one of thedrivers of financial stability and growth of the banking sector.    The bankinginstitutions are a powerful instrument to provide credit. They circulate all theresources of the country by accepting deposits and contribute to theindustrial,agricultural and national development.

Thus the banking sector playsavery crucial role in the economic development of the country. NEED RECOGNITION: Themain focus of this study is to analyze the various factors responsible for theNON-Performing assets in MSME sector. OBJECTIVES: Followingare the objectives of this study ·        To understand the meaning and nature ofNon-performing assets.·        To find out various reasons for the occurrenceof the NPA.·        To understand the impacts of NPA on theorganization as well as on the banks.·        To know the proper precautions/processthat can be taken before lending money to the organizations.·        To know the different steps are beingtaken by the Indian banking sector to reduce the NPAs.·        To highlight the measures and different strategiesfollowed by the banks for the effective management of NPAs.·        What are the different schemes that governmentsprovide to support MSME sector mainly to those who are affected by the NPAs?