Authors

1. Dr. Swati Jain

Affiliation

• Associate Professor, School of Management, Poornima University, Jaipur

Abstract

The banking industry in India has been going through rapid changes and noteworthy development
after nationalization of banks. In the varying circumstances of the operations and working system of
banks in India, the NPAs (non-performing assets) have been a foremost difficulty being faced by
them. The RBI and Government of India have taken a variety of measures to control non-performing
assets. The modifications in the Banking Sector in India have brought many positive changes like,
the enactment of the Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest (SARFAESI) Act, 2002 has been a benchmark reform in the banking sector of India.
The securitization act has provided much desired authority to the banks in India to deal with the NPAs
predominantly those bad assets (bad loans) which occur because of willful defaulting of the
customers.
The majority of previous researches in India are concentrated to the general review of the nonperforming assets and its management. No specific study has been conducted towards judging the
impact of SARFAESI Act on the Indian Banking Industry. This research paper makes an attempt to
decide whether the enactment of SARFAESI Act, 2002 is able to spread its encouraging impact on
the Banking Industry of India and its impact on the level of risk management of those institutions. This
research study is based on the secondary data and for data analysis; the paired t-test was used. The
study establishes that NPAs in Indian Banks have been constantly reducing ever since enactment
and implementation of the SARFAESI Act. The outcome also shows that SARFAESI Act, 2002 leads
to growth in performance, asset quality improvement, enhancement of loan portfolio and ultimately
better risk management. The study suggests that banking industry of India must continue to stay
focused in their hard work to improve the non-performing assets and bad loans, to preserve the
encouraging and efficient tendency of improving their asset quality

Keywords

SARFAESI Act 2002, NPA, Total Advances, Asset Quality, t-test

References

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