Strengthening the Financial Sector: Government Strategies to Reduce NPAs

Abstract

Banks in India consider NPAs to be a leading problem, as they disrupt the country’s economy
and financial stability. Reforms, recapitalization, the foundation of the Insolvency and
Bankruptcy Board of India (IBBI) and the adoption of the Insolvency and Bankruptcy Code
(IBC) by the government have all helped deal with the crisis. The paper examines if the
support measures provided by the government help lessen NPAs in banks in India. This study
uses both interview data and statistical results to review developments, policies and their
results after the government intervened. It also points out any missing areas and suggests
ways to improve policies ahead. The research suggests that while we have improved, more
coordinated and lasting efforts are needed to keep compromised assets reasonable and fix
weaknesses in banking.