AN EMPIRICAL ANALYSIS OF TOXIC ASSETS, SHRINKING PROFITS IN VIEW OF NPA'S IMPACT ON BANK PROFITABILITY IN REFERENCE TO ICICI BANK

The economy of any country is dependent upon the financial institutions to render different kind of services such as accepting deposits, providing loans, insurance to the businesses and consumers. No business can survive without financial institutions. It is important to maintain well-being of financial institutions for upliftment of economy. The major part of income of financial institutions or banks is generated from lending or providing credit to individuals or businesses. When the default in loan is made from consumers of bank and they are not able to pay it back they are termed Non-Performing Assets (NPA). The purpose of this study revolves around the functioning of the India’s largest private bank i.e., Industrial Credit and Investment Corporation of India (ICICI) by ascertaining its relationship between profitability and NPA. The private bank is taken for the study due to increasing privatisation in the Indian economy. The type of research is Analytical Research, and this research is purely based on secondary data derived from the ICICI bank’s official website or RBI reports. To study the impact of NPA on profitability, the data of 10 years of ICICI bank is considered i.e., from FY2013- FY2023. The borrowers are asset for bank, but when they are unable to pay interest amount, they are considered as default and profit of banks suffers. Although banks make provisions against NPA, but still due to high asset size, it suffers higher loss which cannot be covered through provisions, therefore to measure this loss against profitability this research study is conducted.