The Impact of Pandemic Covid -19 on Regulations Posed in NPA in The Indian Banking System
Prof. C K Shah1 CA Amarjit Chopra2 Abstract
The study has found a positive impact on the NPA value of the study. It has made positive impact on the development of the study. In the introduction part of the study, it has produced a general overview on the banking sector and several concepts about the Indian banking sector. The study has found findings that the NPA value has increased from 8.5 to 12.5%. In the literature review it has found a result of making the improvement of several impacts on the NPA value of banking sector. The study has modified a result in the part of the literature review. The literature review has discussed over the several impact on the study. In the methodology part, it has described the several methods used in the part of the study. The study has found a design and methods in the part of the projection of the study. The study has found an analysis in the part of the projection of the study. The study has found general findings in the regression and graphical analysis of the study.
The conclusion has projected the general result and findings of the study. The study has made a recommendation to improve the NPA in the banking sector.
Keywords: Non-performing assets, Disruption, Covid-19, exploratory, inflation rate, interest rate, deposit rate
Introduction
The pandemic situation due to COVID -19 has impacted on several economic sectors. This corona virus situation has severely impacted on the economic system and disrupted the normal life of the people. In the Indian sectors, the corona virus pandemic has made an impact on the country's economic future. In COVID -19, it has informal workers, self-employed, small businesses and farmers. It has impacted on the overall investment and banking sector of the country. After the
1 Dean & Professor, School of Commerce & Management, Apex University, Jaipur, Rajasthan, India
2 Research Scholar, Apex University, Jaipur, Rajasthan, India
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COVID-19 pandemic, the banking has severely impacted due to lockdown and the sharp slowdown in the economy (Jena, 2020). Before the corona virus pandemic, the overall NPA percentage in Indian banks was 8.5%. It increased in March 2020 to 12.5%. It has impacted on the economic condition of the country. The study will focus on the impact of the Indian banking system for COVID-19.
1.2 Rationale of the research What is the issue?
Banking sector plays a crucial role in making investment and also influences people to save in their daily life. Banking firms are also playing a key role in giving loans. After the COVID -19 pandemic, the banking sector of India has impacted for decreasing the GDP level and the banking sector makes a useful impact on the increasing the NPA value of the bank. In the current condition, it has made a valuable impact on the irregularity of repayment of loans in the banking sector.
Why is the issue?
The issue has been made due to irregularity in repayment of loans and it will make an increase in the part of the NPA. Banking sector makes a valuable impact on the economic growth of a country.
Increase in NPA makes a decline in growth of the country.
Why is it an issue now?
After the COVID pandemic, it has made an impact on the growth of the economical factor of a country. In recent time, the growth of the banking sector has impacted for increasing NPA (Khanna, 2020). In the Indian banking system, disruption has been made by COVID-19 pandemic and it has impacted a decline in the value of the assets of the banking sector.
What will be an issue in future?
Figure 1: presentation of banking deposits (Source: Jena, 2020)
In the projection of the NPA value, it shows a decline in the corona pandemic situation. In the banking sector, it has made a valuable impact on the economical factor of the company. The graph shows a decline in the part of the NPA value in the Indian banking sector. The study will shed light on the impact of COVID -19 in the Indian banking sector.
Conceptual frameworks
Figure 2: conceptual frame work
13 Indian banking sector influences by COVID-19
In the Indian banking sector, it has impacted in a different way and also makes several losses on productivity. Decreased flow in cash in lockdown has made a valuable impact on the economic condition of a country which has made an unhealthy economy of the country. The economical aspect has produced a huge loss in the global market. The financial market has faced a loss of
£59.87 trillion in the pandemic condition. In the economic stability of the country has influenced due to the bad impact of COVID-19. The main impact of COVID -19 outbreak is in the part of the declining asset value of the companies (Perwej, 2020). The assets value has deteriorated in small sectors, companies and enterprises. Most of the banks has been influenced in the way financial lending. It has also disclosed that the profitability of the bank has decreased. The reserve bank of India has taken several initiatives to mitigate the liquidity factor of banks.
Influences the area of NPA of the banking sector
In the pandemic condition, the value of NPA has increased which has made a valuable impact on the growth of the country. The global condition has been influenced by COVID -19 which has increased the NPA values of the bank. In the banking sector, it has projected a decline in the NPA value of the country. The NPA has been calculated in 2017 at 8.5% which has increased after COVID-19 pandemic is 12.5 %. It has increased by 4% of NPA throughout the year.
COVID impact on asset management of the bank
The Pandemic situation has made a valuable impact on the asset margin of several sectors. In the small sector companies have impacted due to COVID -19 and put a massive impact on the outflow of the asset value of the small sectors. The pandemic situation made an impact on declining asset value and it has put a valuable impact on the liquidity part of the banking sector.
Impact of stock market decline the banking sector
In the COVID -19 pandemic, the stock market has equally declined in the Indian as well as other countries. In the COVID pandemic, banking stock was impacted in the month of December to march. It has made a high decline in the banking sector bank. The euro STOXX has declined 40.18 per cent. On the other hand, the stock price has declined in North America and Asian banks
(Debataet al. 2020). The decrease in stock price makes a valuable impact on the asset value of the countries.
Credit management
Increase in non-performing loans in India has increased in the month of December to march. The Increase in NPA value makes trouble in repayment of the loan amount. The borrowers are struggling to pay off the interest amount and principal amount of the customer. In order to make a relationship with the customer, the banks are taking steps to mitigate the customer. Most of the borrowers are failed to pay off the debt amount of the bank which has made a positive impact on NPA margin.
Impact of COVID -19 in future progress
Figure 3: projection of a decline in the banking sector (Source: economictimes.indiatimes.com, 2021)
In the banking sector, the asset value of the banking sector has dropped. The pandemic condition has made an impact on the earnings of the country which has made a valuable impact on the development of the country. In the above graph, it has presented the declining transaction detail of Indian bank (Montemurro, 2020). The disruption of the transaction has been made due to the decrease of earnings of people and it has also put a value decline in the part of transection of people. The trend of repayment of the loan and other borrowing has gone on a downward slope.
Challenges faced by COVID-19
In the pandemic condition of the country, it has put a valuable impact on the daily lives of people. The declining condition of the bank has put an important impact on the interest
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rate and changes the expectation of the customer. Banking is considered as a backbone of the economical part of a country. The pandemic condition is able to provide customer support in the banking system (Mehta & Jha, 2020). The COVID -19 puts several challenges like reducing in revenue percentage, less demand, the decline in the transaction, decrease in assets value, the decline in loan repayment and reduction in the operational part of the Indian banking system.
Literature gap
In the study, it has certain gaps in making the part of theories. The study could not relate to the theories of the banking system. It has found a gap in the part of making the recommendation of the study. It may put a valuable impact on the analysis of the effect of the pandemic situation in the banking system.
3. Methodology
The methodology is a procedure of identifying and analysis of the selected information which is relevant for the study. In this part, it will describe the process of making the research.
Research philosophy
In the research philosophy, it has generally three types of philosophy is used in the study. The philosopy6 helps in proceeding with the research topic. The three philosophies are positivism, interpretivism and realism theory. In this research, it has used realism philosophy as the research has used real-life fact in the study.
Research approach
Generally, the research approach leads the study, in assuming the appropriate analysis of the study.
It has two research approaches; it has three types of research approach. One is an inductive approach, deductive and abdicative approach. In the study, it has used the inductive approach as it has taken the support of other journal and research files.
Research design
In the part of the research design, it has used three types of research design which have revealed the progress of the research topic. Three types of research designs are explanatory, exploratory, and descriptive. This research design has been used in projecting the research design of the study.
The research has applied exploratory to describe the condition of the NPA value of the Indian banking system.
Research method
The research methods help in the analysis of the research data and the result of the study. The
research method makes a crucial role in collecting the data for the study. Basically, it uses two types of research methods (Dev & Sengupta, 2020). Quantitative methods and qualitative methods are two types of methods that are used in the part of the research method. In this case, it has used the quantitative method for the study. In the quantitative method, it has used this method to make regression and chart analysis.
Data source
The study has used the data quantitative data sources and it has used the secondary data of the study. In the part of the projection of the study, it has also used the regression analysis to analyze and internet the data of the study. The study has also analyzed by making a chart and table of NPA values of the banking system. The study has taken several variables to measure these issues.
4. Research aims and objectives research aims
The aim of the research is to know the impact of the COVID -19 pandemic in the NPA value in the Indian banking system.
Research objective
● To focus on the impact of the corona pandemic in the Indian banking sector
● To identify the Reason of declining the NPA value of banking sector
● To analyze the probable challenges faced by the economy o the country
● To find several issues impact on the declining the NPA value of banking sector 5. Collection of data
In the collection of the data, the study has used the secondary data which has focused on the impact on the NPA of the Indian banking sector. The study has focused on the calculation of the declining part of the NPA value of the banking sector (Singh &Bodla, 2020). The study has used the secondary data and regression analysis of the banking sector. The study has constructed graphs and charts to present the condition of the banking system. The study has taken a deposit, inflation rate, interest rate and NPA as a part of the variable. The variables are used in the regression analysis.
17 6. Data Analysis
presentation of chart and graph analysis
Figure 4: projection of deposit (Source: self-created)
eIn the presentation of the chart, it has focused on the upward and downward slope of the deposit in the bank. The chart has presented a decline in the deposit in the bank. The chart has been presented on the basis of the deposit money of the country (Akhtar, Niazi & Khan, 2020).
The graph has presented the findings of the increase and decrease of the deposit factor of the banking industry.
Figure 5: projection of inflation (Source: self-created)
The study has also revealed the output of inflation rate in the country. The inflation rate in India has decreased in the year 2016 and 2017. The graph shows the increase in the inflation rate of the research. Due to the lockdown and COVID -19 issue, the inflation rate has been increased in the year 2019, 2020.
Figure 6: projection of interest rate (Source: self-created)
In the projection of the interest rate calculation, it has projected a higher interest rate in 2020.
The rate shows that the government has taken several initiatives which will help to increase the interest rate of the banking sector. The study has found a higher interest rate in the part of 2015.
The interest rate has been decreased in the month of 2020.
19 Figure 7: projection of graph
(Source: self-created)
In the above graphical presentation, it has projected the graph of three variables in the study. The study has projected the findings of the inflation, interest and deposit rate of the banking sector.
Descriptive analysis
Figure 1: regression (Source: self-created)
In the regression analysis of the study, it has projected the R square value 0.373 which is less than the ideal value 1. The observation has been taken 6. The study has projected the information of five years which will help in the analysis of the findings of the study (Prasanth & SUDHAMATHI, 2020). The study has found R square value which indicates the relation with the variables of the study.
Figure 2: Annova (Source: self-created)
In the above figure which is being presented is mainly depicting the significant factor which is approximately 0.5. It is said that the ideal factor is approximately 1 as the data computed is not close; it can be said that the data presented are not ideal.
21 7. Findings of the research
In the above table and figures which are being presented are mainly depicting that the number of deposits in the banking sector of the country India has increased from the year 2015 to the year 2020. It is showing an upward slope as the liquid cash in the hands of the people has increased. In the year 2018, the number of deposits is the lowest because of the recent case of the demonetization which has taken all the not necessary liquid cash from the hands of the public (Vyas, 2020). As far as the inflation rate is concerned it has also increased from the year 2015 to the year 2020 approximately 1%. When it comes to the interest rate of the company it can be said that the country is facing a situation where the interest rate on the deposits made by the bank has decreased from the year 2015.The research has presented the graph and chart analysis to present the current condition of the study.In the regression analysis of the study, it has presented a relation between the variables. The table, graph and regression analysis put a positive impact on increasing the NPA value of the country. The findings of the regression analysis, the study has found an interpretation in the part of the projection of the study. It shows a positive impact on the variables and it has made a positive result of making the NPA value of the country it has also found a result about the impact of the study.
8. Limitation of the study
The study has found a limitation on the part of the presentation of the data. The data of the COVID- 19 is very limited and the study has been unable to present the findings on the basis of the primary resources. The study has found a further limitation in the projection of the regression analysis.
The research has an insufficiency in the part of choosing the variables.
9. Conclusion
It is concluded that the study has found a result on the basis of the NPA value Indian banking sector. The banking sector has decreased the repayment of the loan and it has also found a negative impact due to COVID -19. The study has further findings on the basis of the regression analysis.
The research has presented the graph and chart analysis to present the current condition of the study. It has found an increased in the part of the projection of the study. The study has also evaluated several results in the part of the projection of the study. The study has also found a result
of increasing the NPA margin of the Indian banking system. The study has also evaluated a result of increasing the inflation rate, interest rate and deposit margin of the country.
Recommendation
It is recommended that the banking sector should improve the profit margin which will help in the implementation of the strategic plan for the country. The bank should collect the loan amount to reduce the NPA margin. In the improvement of the profit margin will improve and it will make a growth of the profit margin.
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