Non-Performing Assets (NPAs) have emerged as a critical challenge for the Indian banking sector, significantly affecting asset quality, financial stability, and investor confidence. In recent years, private sector banks such as ICICI Bank have faced increasing scrutiny over the management of NPAs, given their role in credit creation and financial intermediation. Profitability metrics such as Return on Assets (ROA), Return on Equity (ROE), Net Interest Margin (NIM), and Net Profit are essential indicators of a bank’s financial health and operational efficiency. This study aims to analyse the impact of NPAs on the profitability of ICICI Bank by evaluating trends over a specified period. The research employs secondary data obtained from ICICI Bank’s annual reports and RBI bulletins, using tools such as trend analysis, ratio analysis, and correlation techniques to assess the relationship between NPA levels and profitability indicators. The findings suggest a strong inverse relationship between the volume of NPAs and the bank’s profitability. As NPAs increase, key profitability ratios tend to decline, primarily due to higher provisioning requirements and reduced interest income. The study underscores the need for robust credit appraisal systems and proactive recovery mechanisms to minimize the adverse effects of NPAs on banking performance. These insights are particularly relevant for policymakers, regulators, and banking professionals aiming to strengthen financial sustainability in the Indian banking ecosystem.
SAINI et al. (Fri,) studied this question.