Banks play a very useful and dynamic role in the economic life of every modern state. They are an important constituent of the financial market. They have control over a considerable part of the stock of money; in fact, their lending and investing activities cause changes in the quantity of money in circulation which in turn influences the nature and character of production in any country. However, the viability of banks depends largely on the adequacy of profits and profitability. One of the major causes of low profitability is the high presence of Non Performing Assests (NPA) in banking.
Looking to the changing scenario at the world level, the Non Performing Assests (NPA) problem becomes more ironic because any nation, at this juncture, cannot afford to remain unresponsive to global requirements The problem of NPA is multi -dimensional and unless it is checked and the NPA level is brought down to the international standard of the total loan assets, it is bound to weaken the banking system. No wonder NPA has become an important term in the banking industry because of its far reaching implications on the bottom lines of the banks which are already undergoing rigorous reform processes). NPAs are not a one-time phenomenon, it is a continuous process. Until the root cause of NPAs is eliminated, they will continue to generate with a vengeance in managing NPAs, one of the most important aspects is the need to curb incidence of NPAs amongst new loans sanctioned/granted by branches. There is utmost need to reduce NPAs at the earliest level.
It is not possible to eliminate totally the non-performing assets in the banking business but can only be minimized. It is always wise to follow the proper policy appraisal, supervision and follow-up of advances to avoid NPAs. In view of the steep rise in fresh NPA advances, credit monitoring needs to be strengthened.
Decision making in several fields related to financial managements is often a very complicated and ill-structured task involving the exploitation and evaluation of various information, data, and alternative solutions or actions. Managers and individual financial decision makers (portfolio managers, financial analysis, NPA managers, investors, etc) face such problems on a daily basis and the existence of a tool which is able to support them in making the appropriate decisions is considered to be of vital importance. The combination of decision theory with the new knowledge and the powerful tools offered by computer science and Information Technology, led to the development of new types of Artificial Neural Network (ANN) tools able to support decision makers and improve decision making process.
The focus of this book is on the development of ANN system to manage the loan assets which are vulnerable to become non-performing and the new loan assets which are to be sanctioned by the banks. ANN tools can overcome these problems and to provide support to decision makers in the field of NPAs eventually could considerably increase the effectiveness of the provided decision support.
The book concentrates on step by step developing a promising method as well as a software for improving the productivity of the bank by reducing NPAs. The method is applicable to all the l banks as the structures of all banks are more or less similar. Since the factors for the incidence of NPAs are common to most of the banks, the software has a wide range of applicability. This proposed application software has the potential to enhance the effectiveness of the management information system of all commercial banks irrespective of their size and regional diversity. This book is also useful for those who want to use information technology in different financial domains in their routine activities.
Suggestions for the improvement of the contents of this book are welcome.
