An Empirical Analysis of Non-Performing Assets in District Cooperative Central Banks: A Comparative Study of Rayalaseema, Coastal, and North Andhra Districts in Andhra Pradesh

Abstract

Lending is a crucial component of the Indian banking system, comprising banks and Non-Banking Financial Companies (NBFCs). As the primary source of income for these institutions, lending operations have recently slowed down, accompanied by a rise in non-performing assets (NPAs). This phenomenon poses a significant threat to the banking industry and other sectors. This research study aims to systematically review existing literature and articles on NPAs in India to identify the primary causes and contributing factors of rising NPAs in financial institutions. The study also highlights areas that require further research, ultimately contributing to developing strategies to mitigate the risk of NPAs in the Indian banking system. The study highlights regional variations in NPA levels, with Rayalaseema, Coastal, and North Andhra districts showing different trends. To mitigate the risk of NPAs, DCCBs should enhance credit appraisal processes, improve collection management, and strengthen risk management practices. Implementing robust risk management practices, such as regular audits and stress testing, can also help identify potential NPAs early on. Future studies can focus on analysing the impact of NPAs on the financial performance of DCCBs and exploring strategies to improve asset quality.