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Public Sector Banks Essay

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THE PERFORMANCE BARRIERS IN PUBLIC SECTOR BANKS:

The public sector banks act as the main middlemen between the government and public. It provides the services to both the government and public and maintains the balance in the funds flow of the nation. However, this sector suffers with some barriers which affect its performance. They are internal and as well as external factors. Some of the crucial barriers are capital inadequacy, unhedged foreign exchange market, transformation of employees and technology and non-performing assets. Among these barriers non-performing asset is one of the major barriers to the performance of the public sector banks. It is reflecting the financial performance of public sector banks adversely. The banks are not in the position to grant loans and advances to the new customers due to the impact of it.

Thus, the public sector banks are facing big problem due to the increase of non-performing assets. As the study is mainly related to non-performing assets and its impact on the performance on the public sector banks, there is a …show more content…

It is an asset of the bank that ceased to generate principal and interest amount of the loan. Every bank gives the loans and advances to its customers. If customers or borrowers do not pay the principal or interest amount for a specific period of time then the loan becomes the bad loan. This bad loan in the banking sector termed as non-performing assets. Reserve Bank of India, has defined the non-performing assets as the term loans on which interest or installment of principal amount or both remain overdue for a period of more than 90 days from the end of a particular quarter. Further, the RBI has issued the guidelines on non-performing assets in the master circular on Income Recognition, Asset Classification, Provisioning and Other Related Matters . According to it, an account can be declared as the non-performing assets on the following

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