IMPACT OF MERGERS IN PUBLIC SECTOR BANKS ON THEIR NON-PERFORMING ASSETS

Abstract

This paper analyses the process of mergers of Public Sector Banks (PSBs) in India and studies the impact of these mergers on their Non-Performing Assets (NPAs). NPAs are loans or advances that have been defaulted for a long time (reliant upon the terms of each bank/loan). NPAs significantly affect the profitability of banks which in turn can disturb the entire economy. The public and shareholders lose faith in banking institutions which is harmful for the economy. Hence, it is important to understand how the measures taken to reduce NPAs fare in the long run.