Impact of Non-Performing Assets on Financial Performance: An Empirical Analysis of Primary Agricultural Development Banks in Punjab

This paper investigates the impact of Non-Performing Assets (NPAs) on the financial performance of Primary Agricultural Development Banks (PADBs) in Punjab. Utilizing financial data from 2010 to 2020, the study employs a panel regression model to analyse how NPAs affect key financial metrics. The results demonstrate a significant negative correlation between NPAs and financial performance indicators such as Return on Assets (ROA) and Return on Equity (ROE), highlighting the detrimental effects of high NPA levels on PADBs' financial health. It underscores the need for robust risk management practices, enhanced governance, and effective recovery mechanisms to mitigate the impact of NPAs. The findings suggest that addressing these challenges through targeted reforms and aligning PADBs with broader financial sector improvements is crucial for sustaining agricultural development and economic stability in Punjab. Keywords: NPAs, PADBs, Financial Performance, Risk Management, Agricultural Policies