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In: Economics

Assess the financial situations of commercial banks over the last 5 years.

Assess the financial situations of commercial banks over the last 5 years.

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Expert Solution

The condition of commercial banks from last 5 year is in dilemma because of the various reasons from the last 5 year commercial banks are facing a major problem of NPA that is known performing assets it means industrial units and individuals who took loan from the commercial bank are not able to payback in a fixed time period so in this situation the rotation and circulation of commercial banks are disturbed.

The main source of commercial bank is the difference between the interest rate of deposit and lending loan but nowadays commercial banks are more reserve in providing loan to the industrial units and individual because the payback capacity is low.

The capital accumulation of commercial banks are also hampered from the last 5 year and it created problem of investment by the commercial banks in different projects.

The money multiplier impact of commercial bank also affected from the last five year.

The secured and unsecured loan also not performed well from the last 5 year because of the low rate of return from the present investment projects.

Some sectors like real estate sector suffered a lot and the poor performance of credit cards also reduces the financial ability of the commercial banks.

Rahul Sunny answered 2 years ago
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