The efficiency of any of the bank cannot be obtained only from the balance sheet size but also it is calculated by assets return level in the bank. For banks the NPAs will not create interest income but simultaneously banks are very much necessary in order to provide terms for NPAs with their profits that are existing in current. Being the NPAs have harmful impact on the arrival on assets are in this methods.
- Banks interest income can fall down and accounted on the basis of receipt.
- Profitability of Banks is caused harmfully due to offering of doubtful debts and ensuing contain it as terrible debts.
- ROI (Return on investments) is decreased.
- The adequacy ratios of capital are termed as NPAs and are following into its estimation.
- Maximizes the capital price.
- Variance of liability and assets will expand.
- EVA (The economic value addition) by banks get trouble for the reason that EVA is similar to the profit of net functioning less capital cost and
- It margins funds recycling.