Non-Performing Assets and Financial Stability: A Decadal Analysis of Canara Bank (2015–2025)

Non-Performing Assets (NPAs) continue to pose a critical challenge to the banking sector, affecting both profitability and overall financial stability. This paper examines the influence of NPAs on the financial performance of Canara Bank over the period 2015–2025, utilizing a decadal dataset drawn from annual reports, RBI publications, and secondary databases. Key financial indicators such as Gross NPA Ratio, Net NPA Ratio, Provision Coverage Ratio, and profitability measures are analyzed to evaluate how variations in asset quality impacted liquidity, solvency, and stability. The study applies ratio analysis and trend evaluation, supported by regression models, to establish the correlation between NPAs and financial performance metrics. Findings reveal that higher NPA levels during the mid-decade (2016–2019) severely constrained profitability and capital adequacy, while subsequent recovery measures, consolidation, and improved provisioning practices contributed to stability in later years. The study concludes with policy recommendations for improved credit monitoring, stricter provisioning norms, and technological interventions in risk assessment. The implications are significant for policymakers, regulators, and bank management, highlighting the importance of robust asset quality management to sustain stability in the Indian banking sector. Keywords: Non-Performing Assets, Financial Stability, Canara Bank, Profitability, Asset Quality, Risk Management