Asset quality review of NBFCs and Banks: An Eye Opener

Asset quality is one of the most critical areas in determining the overall
condition of a bank/ NBFC. The primary factors affecting overall asset
quality is are the quality of the loan portfolio and the credit administration
process. Loans typically comprise a majority of a bank’s assets and carry the
greatest amount of risk to their capital. Securities may also comprise a large
portion of the assets and also contain significant risks. Other items which
can impact asset quality are other real estate, other assets, off-balance
sheet items and, to a lesser extent, cash and due from accounts, and
premises and fixed assets.