EFFECT OF DEPOSITS AND NON-PERFORMING LOANS ON BANK PROFITABILITY – A CASE STUDY ON CONVENTIONAL COOPERATIVE BANK OF BARODA REGION
DOI:
https://doi.org/10.55829/ijmpr.v3i2.218Keywords:
Non-Performing Loans, Pragati Co-operative Bank Ltd., Net NPA Ratio, Provision Coverage Ratio, Credit to Deposit RatioAbstract
The banking sector plays a vital role in providing essential financial services, facilitating the allocation of funds to productive ventures, and aiding in the implementation of government fiscal and monetary policies. Historically, Non-Performing Assets (NPAs) have posed significant challenges for banks, but reducing NPAs has now become a top priority. The strength of a nation's economy relies heavily on the health of its cooperative banking sector. This study analyzes the non-performing assets (NPAs) of The Pragati Co-operative Bank Ltd. over a six-year period from 2017-18 to 2022-23. The research examines various aspects related to NPAs, including gross NPAs, net NPAs, provisions made towards NPAs, loans and advances, deposits, and relevant ratios such as net NPA ratio, provision coverage ratio, and credit-to-deposit ratio. The data analysis reveals that the bank maintained a zero net NPA throughout the period, indicating effective provisioning strategies. While gross NPAs fluctuated, the provision coverage ratio remained strong, suggesting the bank's ability to withstand asset quality pressures. The study also investigates the relationship between gross NPAs and net profits using correlation and regression analysis, finding a positive correlation but minimal significant impact of gross NPAs on profitability. Overall, the research highlights The Pragati Co-operative Bank Ltd.'s proactive approach to NPA management, financial stability, and adaptability to changing market conditions.
References
Akhter, N. (2023). Determinants of commercial bank’s non-performing loans in Bangladesh: An empirical evidence. Cogent Economics & Finance, 11(1), 2194128.
Anastasiou, D. (2023). Management and Resolution methods of Non-performing loans: A Review of the Literature. Crises and Uncertainty in the Economy, 187-201.
Budianto, E. W. H., & Dewi, N. D. T. (2023). Non Performing Financing (NPF) on Islamic and Conventional Banking: Mapping Research Topics using VOSviewer Bibliometric and Library Research.
Coita, I. F. (2017). Correlations Existing Between Share Capital And Social Patrimony. THE ANNALS OF THE UNIVERSITY OF ORADEA, 267.
Das, J. K., & Dey, S. (2017). Non-Performing Loans of Public and Private Sector Banks in India: An Empirical Study. Business Studies, 100.
Kanoujiya, J., Bhimavarapu, V. M., & Rastogi, S. (2023). Banks in India: a balancing act between profitability, regulation and NPA. Vision, 27(5), 650-660.
Khoirunisa, H., & Karnasi, R. (2023). Factors Affecting Non-Performing Loans of Conventional Banking in Indonesia Stock Exchange. Inisiatif: Jurnal Ekonomi, Akuntansi dan Manajemen, 2(2), 31-55.
Kiran, K. P., & Jones, T. M. (2016). Effect of Non Performing loans on the profitability of banks–A selective study. International Journal of Business and General Management, 5(2), 53-60.
Kryzanowski, L., Liu, J., & Zhang, J. (2023). Effect of COVID-19 on non-performing loans in China. Finance Research Letters, 52, 103372.
Matharu, R., & Chandel, P. A study of Non-Performing Loans of HP state co-operative bank Ltd.
Mishra, U. M., & Pawaskar, J. R. (2017). A study of Non-Performing Loans and its impact on banking sector. Journal for Research, 3(1).
Nabella, S. D., Rivaldo, Y., Sumardin, S., Kurniawan, R., & Sabri, S. (2023). the Effect of Financing on Islamic Banking Assets With Non-Performing Finance As a Moderating Variable in Indonesia. Jurnal Ekonomi, 12(01), 998-1004.
Patra, B., Padhan, P. C., & Padhi, P. (2023). Efficiency of Indian Banks–private versus public sector banks: A two-stage analysis. Cogent Economics & Finance, 11(1), 2163081.
Rokhmat, N., Zulaihati, S., & Susanti, S. (2023). The Effect Of Deposits And Non-Performing Loans On Bank Profitability:(Case Study on Conventional Commercial Banks listed on the Indonesia Stock Exchange for the period 2015-2021). Journal Of Management, Accounting, General Finance And International Economic Issues, 2(2), 416-435.
Shravya, M. Credit Risk Management with reference to Non-Performing Loans of Bangalore City Co-Operative Bank (BCCB).
Sobol, I., Dopierała, Ł., & Wysiński, P. (2023). Is the profitability of Islamic and conventional banks driven by the same factors?—A study of banking in the Middle East. PloS one, 18(8), e0289264.
Syafrizal, A., Ilham, R. N., & Muchtar, D. (2023). Effect Of Capital Adequacy Ratio, Non Performing Financing, Financing To Deposit Ratio, Operating Expenses And Operational Income On Profitability At PT. Bank Aceh Syariah. Journal of Accounting Research, Utility Finance and Digital Assets, 1(4), 312-322.
