Indian banking sector is facing the problem of rising bad loans as gross non-performing assets (GNPA) of Indian banks is on continuous rise. The present study is an attempt to analyse rising bad loans scenario of Indian banks, various factors that contributes to non-performing assets (NPA), along with the present state of Indian banks. This study found that poor recovery measures, lack of proper credit and risk management system at bank level, wilful default by borrowers, lack of stringent regulation, poor level of corporate governance and misuse of funds by borrowers are the key factors behind the rising level of bad loans of Indian banks. It was found that public sector banks (PSB) are suffering the most from rising level of NPA, high rate of NPA of banks have adverse impact on banks’ balance sheets, their assets quality, increased provisioning coverage ratio of banks and low return on assets. Although various concerned stakeholders have taken numerous measures to curb the situation, such as recapitalization of PSB, construction of assets reconstruction companies (ARC), Debt Recovery Tribunals for speedy recovery of bad loans and enactment of insolvency and bankruptcy code (IBC),still there is much more to do, and have a huge scope to bring reforms in banking sector, especially in PSB of India.

The purpose behind this research work is to recognise the measures of financial literacy, examine their relative importance and develop causal linkages among them. The study has employed the method of DEMATEL to achieve the objective. For this study, the interviews were conducted with experts from India between March and May of the year 2019. Three main measures and nine sub‐measures were identified. The results of the research work pointed out that financial knowledge gets the top priority. Among sub‐measures, financial education, financial experience, financial behaviour and financial awareness are on the top in the priority list. On the basis of R–C values, the measures have been classified into groups based on cause and effect relationships.