Abstract

Working Capital management is one of the core areas of managing the business. This paper will make an endeavor to study the impact of changes in working capital on the profitability of Indian Banking Sector. The period of study entails a period of four years from 2016 – 2020. To make this study independent as well as dependent variables have been used. The variables used in the study are Non Performing Asset (NPA) and Return on Assets (ROA).Current Ratio, Profitability Ratios and Debt to Liability Ratio are used as control variables. The analysis is done for two major public sector banks of India i.e. The State Bank of India and Punjab National Bank and two major private sector banks i.e. ICICI Bank and HDFC Bank. The variables are based on data for four years viz. 2016-2020 for these banks. The research method used is correlation analysis and ratio analysis. The result shows that NPA and ROA have a negative relationship. Also Debt ratio has a positive relation with Profitability ratios to an extent. Banking sector is a core sector with direct impact on the economic health of the country. The aim of the study is to give recommendations that will help in managing this key sector in a better way. This research also paves way for similar research which will help the sector go forward.

Key words: Profitability, Working Capital Management, Correlation.