2025, Vol. 6, Issue 2, Part G

The financial sector is an indispensable part of an economy's growth, as its operation has a direct impact on the rate of economic growth. The economic expansion of a country depends significantly on its financial position. Loans are one of the basic responsibilities of banks to extend to various sectors, including industry, agriculture, housing, and many more, so that resources are used productively. But in recent years, increasing non-performing assets (NPAs) have kept banks conservative in lending.

With the adoption of global standards for income recognition, asset classification, and provisioning, the management of NPAs has become a serious challenge for Indian banks. A loan is treated as a non-performing asset (NPA) when the borrower fails to follow the RBI’s guidelines by not paying either the principal or the interest within the prescribed time.

This research looks into SBI and HDFC Bank's trends in gross non-performing assets (NPAs), net non-performing assets (NPAs), net profit, and total advances. Both banks have experienced growth in net profit and total advances in the past three years. However, due to HDFC Bank's superior management of bad loans compared to SBI, it has managed to bring down its non-performing assets (NPAs).