Introduction to Factors for Non Performing Assets:

There are many factors that contribute to the non performing asset (NPA). Few of them are discussed below.

  • Distributing variety of funds in order to expand the business. Funds could also be distributed for expanding the modern techniques, for taking latest projects and also for helping in relevant considerations.
  • The factors such as time and investment should be considered during the implementation stage (Mr. P.K. Kaul, 2008).
  • Economic inequalities, short amount of power, increasing prices are some factors which makes more no of dues.
  • There are also some other factors like natural disasters, external links with other countries leads to permanent termination of non payment dues.
  • Failure condition of business, improper management, use of irrelevant technologies, technical and hardware problems in machinery.
  • Insufficient contracts with customers.
  • Modifications in government policies, controlling techniques for pollution, improper credit decision makings, adopting outdates systems, lending sectors in priority wise (Mandira Sarma, 2007).
  • Delay in releasing of funds and subsidies from the corresponding banks.
  • Tapping off the funds, frauds and arguments with managing directors.
  • No written policies for finalization and rehabilitation by BIFR. BIFR refers to the board of industrial and reconstruction.
  • No limitations for portfolio concentration and poor analysis and description of industry.
  • Crucial financial barriers and excessive trust on corresponding banks.
  • No divisions of assets and no standards of loan.
  • Lack of coordination between no of banks which are for commercial use, and misusing the funds (Kesar Dass B, 2003).