Non-performing Assets and Profitability in Commercial Banks of Nepal (With Reference to Himalayan, Everest, Nepal SBI and Nabil Bank Ltd)

Abstract

Banking sector is one of the constituents of financial system of the nation. Economy sustenance can be measured based on the sustenance of the banking sector of a particular nation and the prosperity of the nation’s economy depends on the banking system. A strong banking sector is important for flourishing economy. The failure of the banking sector in any country may have an adverse impact on other sectors. Non-performing Assets (NPAs) are one of the major concerns for banking sector in Nepal. Non-performing Assets also called NPAs is the term used in banking and finance sector. Basically this term (NPAs) is used in loan department of the bank. The assets of bank which do not perform any role in getting profit to the organization, such assets are called Non-performing Assets. NPAs reflect the performance of banks in any country. The more the NPAs the lower the performance of bank. The issue of NPAs has been discussed at length of financial system all over the world. The problem of NPAs is not only affecting the banks but also the entire economy of any country. In this research, an effort has been made to analyze the impact of NPA on profitability of Nepalese commercial banks. The study covered four commercial banks in Nepal over the period of past 10 fiscal year from 2007/08 to 2016/17. The study is diagnostic and exploratory in nature and makes use of secondary data. The study finds and concludes that the commercial banks have significantly improved their working performance in the areas of NPAs. Therefore, the results are valid for banking sector.