``Only two banks have NPAs in the range of 5 to 10 per cent which is a tolerable level under the prevalent economic and industrial development scenario,'' it observed. The report said that factors external to the banks and the borrowers such as changes in government policies to someextent also could cause default in loans. The report attributed the rise in NPAs to failure in rendering honest dedicated and dilligent service in the discharge of responsibility to the borrowers. Poor motivation and inadequacy of professional skills for assessment of business risks and corporate failures both in the public sector and the private sector also contributed to high NPAs, it said.

The committee noted that in percentage terms, NPAs came down significantly from 23.18 per cent as on March 1992 when prudential norms were introduced, to 17.84 per cent (provisional) as on March 31, 1997, a reduction of 5.34 per cent in a period of four years.

Another notable feature is that banks have been able to avert further growth in NPAs in absolute terms vis-a-vis growth in lending, it says adding in absolute terms these NPAs have accumulated from Rs 39,253 crore as on March 1993 to Rs 43, 577 crore as on March 1997.

``The committee has been informed by the IBA that there are no well defined safe limits asfar as non-performing assets of banks are concerned. But as per international standards the tolerable levels of NPAs are around 3 to 4 per cent,'' it said. On capital adequacy ratio standards, the report observed that the Bank for International Settlement (BIS) has prescribed certain capital adequacy standards for banks which are being implemented in a number of countries. The BIS standard seeks to measure capital adequacy as a ratio of capital to risk weighted assets, and the ratio prescribed thereunder is 8 per cent, the report observed..