A.D.

LATHIYA

A GRAND PROJECT REPORT ON ANALYSIS OF NON PERFOMING ASSETS

BHAVNAGER DISTICT CO-OPERATIVE BANK SIDSAR

PREPPAID BY;LATHIYA ANKIT D. T.Y.B.B.A. ACADEMY YEAR:-2011-12 ROLL NO.:-001

SUBMITED TO:SHASWAT COLLEGE OF B.B.A. BHAVNAGER UNIVERCITY

PROJECT GUIDE:KEYUR SHAH

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DECLARATION

I the undersigned LATHIYA ANKIT D, the student of T.Y.B.B.A., hereby declare that the project work presented in this report is my on work and has been carried out under the supervision of Keyur Shah of Shaswat College of B.B.A. , Bhavnager. My report is submitted as a part of the study curriculum and as a partial fulfillment of the degree of B.B.A.:-Bachelor of Business Administration. I guarantee that this project report has not been submitted for the awards to any other university for degree, diploma or any other such prizes. DATE;PLACE;-BHAVNAGER

_______________ (LATHIYA ANKIT D.)

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PREFACE
In todays era of cut-throat competition, bachelor of business administration (BBA) is sure to have an edge their counterparts. BBA education brings its students in direct with the real corporate world. This is project to be a real challenge for me, apart from out previous project done at difference place. I realized during training period that corporate world is drastically different than what we learn in theories. Thus, practical exposure to the industry is valuable for the students opting for finance. The prospect for co-operative sector seems to be at stake due to certain scams recently happening in this section. As the overall industry is doing through the recession phase it was interesting to have practical training at co-operative bank. The industry attracting newer players including from private banking sector vouches for the strong potential hear and scope for accommodation of more good players is certainly there. But due to the more sever norms recommended and policy change all banks have to compete and also fulfill their social obligation. Which Bhavnagar district co-operative bank is doing in a great manner? I, undergoing this project, learned about the bank work and role of NPA in financial soundness of the bank.

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AKNOWLEDGEMENT

I would like to express my deepest gratitude to all those who made this project possible. Firstly I would like to heartily thank Mr. And Mr. of giving me such an

opportunity to work with them. I find words inadequate to express my gratitude to who guided me throughout my project training and other people at Shri Bhavnagar district co-operative bank ltd., Bhavnagar, Who personally attended to my training need and also directed me towards the right path. I wish to acknowledge with deep sense of gratitude to Mr. N. F. Trivedi Sir, the Principal of Shaswat College of BBA and my project guide, Mr. Keyur Shah Sir, for recommending me necessary information for this report. His instilling support and enthusiasm, expert guidance and insight have lent my project a unique touch. At last but not the least, I am also thankful to my family member and friends who had given me their constructive advice, educative suggestions, encouragement and co-operation to prepare this report.

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INDEX

SR. NO.

PARTICULAR

PAGE NO.

INDUSTRY OVERVIEW

07

RDC BANK PROFILE

19

FRAMEWORK OF

32

RESERCH METHODOLOGY

41

ANALYSIS OF NPA DATA AND INTERPRETATION

49

CONCLUSION & FINDINGS

63

ABBREVIATIONS

64

BIBLIOGRAPHY

66

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INDUSTRY OVERVIEW INDEX

SR. NO PARTICULAR PAGE NO.

OVERVIEW OF ANKING SECTOR

08

DEFINITION OF BANKING

09

HISTORY OF BANKING INDUSTRY

10

INDIAN BANKING STRUCTURE

11

TYPE OF BANK

12

DEFINITION OF CO-OPERATIVE

14

ORGANIZATION STRUCTURE OF BANK

15

PRINCIPALS OFCO-OPERATIVE SOCIETY

17

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BANK OVERVIEW

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OVERVIEW OF BANKING SECTOR

INTRODUCTION:In the economic development of a nation banks occupy in important place. Banking institutions from an important part of the money market and are indispensable in a modern developing society. Banking is the life blood of modern economic. it may truly be said that modern commerce is so dependent upon banking that any cessation of banking activity. Even for a day or two, would completely parlay the economic life of a nation. From its original narrow scope and modest purpose of taking care of other peoples money and lending a part of it. Banking has developed to such an extent that, In countries likes England, France, and the U.S.A The importance of co-operative banking institution in India has been considered as the backbone of rural economy. At the industrial development of the country is taking place banking services are also expanding and efficiency of co-operative bank has a great impact on the performance of the bank in various channel. Due increasing trend in globalization and liberalization in the service industry like banking section co-operatives banks are playing crucial role before their competitors. Now a day co-operative activities of Gujarat is on the top and whole economy co-operative activities are such as it not depend on any government rules and regulations.

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DEFINATION OF BANKING
A bank company is defined as a company, which transacts the business of banking in India. The banking regulation act defines the business as banking by starting the essential of the bank. It also states the various other businesses a banking company may be engaged in and prohibits certain business to be performed by it. The term banking is defined as accepting. For the purpose of lending of investment of deposits of money from the public repayable on demand or otherwise and withdraw by cheque draft, order or otherwise.

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HISTORY OF BANKING INDUSTRY

Banking is as old as the authentic history and the origins of modern commercial banking are traceable in ancient times. The New Testament mentions about the activities of the money changers in the temples of Jerusalem. In ancient Greece around 2000B.C. the famous temples of Ephesus. Delphi and Olympia were used ads depositories for peoples surplus funds and these temples acted as the financial agents until public confidence was destroyed by the spread of disbelief in the religion. In Rome, the banks were called argent aril. Manchuria of coolly bistone. Some of the banks carried business on their account and other were appointed by the government to receive the taxes. They used to transact their business on similar lines as those of the modern banks. People used to settle their accounts with their creditors by giving a cheques or draft on the bank. If the creditor had also and accounts at the same bank, the transfer of such money by a draft was known as prescribe and describer and the draft was know as describer. This bank also received common in Rome. From loan banks. The poor citizen used to receive without paying interest. Then lent money for a period of three to four years on the security of land. The bank of Venice, established in 1157, is supposed to be the most ancient bank originally, it was being simply an office for the transfer of the public debt. History shows the existence of a monte is the Italian dictionary. As early as 1349, the business of banking was curried on by the drapers of Barcelona. There it was subject to official regulation. During 1407, the bank of Genoa was established. The bank of the merchants of the city. The bank also accepted one type of certificate now a day it called modern cheque. The beginning of English banking may correctly attributed to London goldsmiths. They used to receive their customers valuables and funds for safe custody and issue receipts acknowledging the same. Banking on European lines started in india, when two British managing agency houses namely Ferguson and co. and Alexander and co. set up three banks. The first joint stock bank was established in 1786 in the name of general bank of india. Later the bank of Hindustan could continue only up to 1806 while the other two banks had failed earlier. they came the era of presidency banks with the sanction of the British parliament. The bank of Bengal was established in 1809 as the first presidency bank 1st july 1935 RBI was setup. This is true not only in the case of india but also of other countries.

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Indian banking structure

Indian financial system

Banking and financial department

Reserve bank of India

Organizing banking activities

unorganized banking activities

Commercial banking 1. Nationalized banks 2. Private Banks 3. Foreign bank

development banking

co-operative banking NABARD (controller)

other banking =postal saving banks =national housinalbanks(HNB

A. national level =LIC, GID, ICICI B. state level and Regional level = SFCS, SIIC, SIDCP

A.national level -NCDC, NCVI -NFSCD, NVCBF

B. state level

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TYPES OF BANK

Regional rural bank

Nationalize bank

State bank group

Co-operative bank

Private bank

Foreign bank

Regional Rural Banks (RRB)

Regional rural banks are added in Indian banking since October 1975 the government of India in term of the provision of the regional banks Act 1976 has established these banks. The distinctive feature of regional rural banks is that thought it is a separate body.

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Co-Operative bank

State co-operative banks State co-operative means the principal co-operative society in a district. The

primary objective of which is financing of other co-operative societies in the state.

Central/District co-operative banks A central/District co-operative bank means principal co-operative society In a

district. The primary objective of which is the financing of other co-operative in that particular district.

Primary/urban co-operative banks

Private bank
Primary objective of principal business of which the transaction is of Banking business of which the transaction is of banking business and paid up share capital and reserve of which are not less than rupees 1,00,000 and bye-laws of which do not permit admission of any other co-operative society as a member.

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DEFINITION OF CO-OPERATION

The definitions of co-operative bank as per various experts are as under.

H.calvert define co-operation

As a from organization where in persons voluntarily associate together as human beings, on a basis of equality for the promotion of the economic interest of the selves.

According to C.R.Fay,1904

A co=operative society is an association for the purpose of joint trading, originating among the weak, and conducted always an unselfish spirit on such terms that all who are prepared to assume the duties of membership may share in its rewards in proportion to the degree in which the make use of their association. The co-operative banks have a history of almost 100 years. The co-operative banks are an important constituent of the Indian financial system, judging by the role assigned to them, the expectations they are supposed to fulfil, their number, and the of offices they operate. The co-operative movement originated in the west, but the importance that such banks have assumed in India is rarely paralleled anywhere else in the world. Their role in financing continues to be important even today, and their business in the urban areas also has increased phenomenally in recent years mainly due to the increase in the number of primary co-operative banks.

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While the co-operative banks in rural mainly finance agricultural based activities including farming, cattle, milk, hatchery, personal finance etc. along with some small scale industries and self-employment driven activities, the co-operative banks in urban areas mainly finance various categories of people for self-employment, industries, small scale units, home finance, consumer finance, personal finance, etc. some of the cooperative banks are quite forward looking and developed sufficient core competencies to challenge state and private sector banks.

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ORGANIZATIONAL STRUCTURE OF CO-OPERATIVE BANKS

The co-operative banks have been established under the co-operative societies Acts of different states. Hence the state governments regulate these banks. Only the state co-operative banks have assessed to the reserve bank of India.

The co-operative banks have a three-tier set up. The state co-operative banks is the apex institution in a state, while central district co-operative banks function at district level and primary credit societies work at the village level. Co-operative banks function with in a given area. Their operation is restricted to a particular state in case of a state apex bank, a particular district in case of a co-operative bank and to a local area incase of a society. It proceeds on the principals of co-operation.

Organizational structure of co-operative banks

(1) Primary co-operative banks

(2) State co-operative banks

(3) District co-operative banks

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7- PRINCIPAES OF CO-OPERATIVE SOCIETY

Voluntary association open membership Democratic control

Members economic participation Autonomy and independence Co-operative education, training and information Mutuality or co-operative among co-operatives Concern of community

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BDC BANK PROFILE

SR. NO. PARTICULAR PAGE NO.

HISTORY & DEVELOPMENT OF RDCB

20

PROGRESS OF RDCB

21

ORGANIZATION STRUCTURE

22

OBJECTIVE OF RDCB

23

MISSON OF RDCB

24

GROWTH & DEVELOPMENTOF RDCB

25

SWAT ANALYSIS OF RDCB

30

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HISTORY AND DEVLOPMENT OF BDC BANK

Shree Bhavnagar district co-operative bank ltd. Established on 1st October 1959. Then after it always get more achievements today. There are total 791 officers 129 branches including main branch also among them. More the 180 officers are being trained at pune. Banlore and lakhnow. They are sent for training according to the rotation of activity. This bank getting license in 14 th September, 1994 for banking business from the reserve bank. From the last 9 years they are getting first number for recovery get in all over state. According to the rural of the government they are paying maximum dividend from last 10 years. There are their own buildings in 50 branches and locker facility is available in 57 branches. Among total loans 82% loans are from priority is sector. For the plant of providing the credit card of the government; this bank is providing the loan of 1.52 lacks for production to user of kisan credit card. From among the total deposit lowest deposit is 36%. Management cost remains always 2% and in this year it is only 1.88% and financially margin is 3.23% and N.P.A. is 3.76%. For providing the insurance of rs.1lac to all the loan takers; the loan takers parse all the express for the areas. For the best activity in all banks would get best performance Award. Merit certificate and price of rs.5 lacks; NPA is 0 from last 3 years. Farmers are need to many for increasing their production at different like seed; fertilizers and new technology. That all the loans are provided by district cooperative banks, commercial and citizen banks. This bank is getting A class of audit and bank is paying maximum dividend of 15% to its member societies. Progress of the bank is show in following tables at last six years.

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PROGRESS OF BDC BANK (RS.in lacks)

particulars 2003 2004 2005 1268 6332 2006 1518 7097 2007 1852 7498 2008 1903 7896 2009 2135 8548

1.share 1016 1200 capital 2.reserves 5081 5467 and other fund 3.total deposit 51522 54606 4.total advances 5.total investment &bank balance 6. net profit 7.no of branches 8..audit class 9..no. of employees 24481 41379 31502 25213

57651 42105 27831

62655 49030 30292

66150 51854 32239

67546 56681 26547

67768 67397 20670

665 114 A 672

665 114 A 681

800 127 A 750

850 127 A 769

1000 127 A 786

950 127 A 786

1065 127 A 780

The above table expresses the progress of the BDC bank ltd. There is increasing trend in share capital at 2009-2010 is at 2003-2004 year. Reserve and other funds are also increased by 78.78%. total deposit and total investmentare also increased 31.11% and 131.24% respectively during the same period. There is mix trend in total investment. The bank continuously earning profit from the first year of its inception for the year 2008-2009. It is earn a profit of rs.1065 lacks. The bank is paying maximum permissible dividend(15%) and receiving
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ORGANISATION STRUCTURE Board of director

Chairman

General Manager

Loan Manager

finance manager

administrator

personal manager

account manager

Deputy Manager Loans

deputy Manager branch

DM insurance

DM finance

deputy manager

audit man.

Senior officer

senior officer

Junior officer

junior officer

Clark

Clark

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Objective of BDCB

The Bhavnagar district co-operative bank is agricultural bank and it is also based on the development of farmers and agricultural development. And also our economy is also based on development of village. And the developments of village are connected with the development of farming.

So, the BDCBS main objective is to develop the farming nation and development of families which are living. For the speed of development, BDCB may try to increase the development at farming field.

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MISSION OF THE BDCB To provide agriculture loans the societies to farmer.

To provide short term loans to farmer for business, housing loan, and for purchasing of consumer durable goods and machinery.

Providing loan on GOLD, NSC, KVP, LIC policy.

Train staff to become more effective.

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GROWTH & DEVELOPMENT OF BDCB

The position of growth & development of BDCB is presented in the following graphs.

Advance :- (in corors)

119 118 117 116 115 114 113 112 111 110 2004-05 2005-06 2006-07 2007-08 2008-09

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DIPOSITES
800 700 600 500 400 300 200 100 0 2004-05 2005-06 2006-07 2007-08

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INVESTMENT(IN CROCRE)

400 350 300 250 200 150 100 50 0 2005-06 2006-07 2007-08 2008-09

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WORKING CAPITAL(IN CORORE)

1200 1000 800 600 400 200 0 2004-05 2005-06 2006-07 2007-08

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PROFIT(IN COROCRE)
20 18 16 14 12 10 8 6 4 2 0 2004-05 2005-06 2006-07 2007-08

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SWAT ANALYSIS OF BDC BANK

STRENGTH Good infrastructure Last 32 years bank is obtaining audit class A 12 years bank receive 1st price from the GSCB for best recovery performance. Receive 5 times, BEST PERFORMANCE AWARD from NABARD.

Weakness Problem regarding low Decreasing interest rate Communication gap Lack of professional management Different co-operative act OPPORTUNITY
INCREASING INTEREST RATE ON SECURED LOAN STRONG DEPOSIT MAXIMUM USE OF COMPUTERIZATION NON-BANKING BUSINESS INCREASING

THREATS

Risk on investment Transaction risk Only make profit in some period Government investment not provide security

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FRAMEWORK OF NPA
SR.NO. PARTICULAR PAGE NO.

INTRODUCTIN OF NPA

33

DEFINITION OF NPA

34

OBJECTIVE OF THE STUDY

34

NORMS FOR ASSET CLASSIFICATION

35

PROVISIONING NORMS OF THE BASIC OF ASSET CLASSIFICATION

37

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INTRODUCTION In
with the international practices and as per the per recommendation made by the

committee on financial system (chairman shri M.Narsimham). the reserve bank of India has introduced in a phased manner, prudential norms for income recognition,Assets classification and provisioning for the advances portfolio of the banks so as to more towards greater consistency and transparency in the published accounts.

The policy of income recognition should be objective and based on record of recovery rather than on any subjective consideration. Like wise the classification of Assets of bank has to be done on the basis of objective criteria which would ensure a uniform and consistent application of norms. Also, the provisioning should be made on the basis of classification of Assets based on the period for which the Assets has remained non-performing as also available of security and realizable value.

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DEFINATION OF NON-PERFORMING ASSETS(NPA)

As Assets become non-performing when it ceases to generate income for the bank. A non performing Assets(NPA) is define generally as a credit policy in respect of which interest or installment of principal has remaine3d past due for two garters or more. An amount due under any credit facility is treated as past due when it has not been paid within 30 days from the due date. It was however, decided to dispense with past due concept with effect from 31 st march, 2001. Accordingly as from that date a NPA shall be an advance where 1. Interest and installments of principal remain overdue for more than 180 days in respect of a term-loan. 2. The account remains out of order for more than 180 days in respect of overdraft cash credit. 3. The bill remains overdue for more than 180 days in the case of bill purchased and discounted. 4. Any amount to be received remains overdue for more than 90 days in respect of other account.

OBJECTIVE OF THE STUDY

This study is conducted with the following objectives. To study the recovery performance of BDC bank. To study the existing practice of decreasing NPA in BDC bank. To examine the existing follow up and inspection climate in BDC bank. To suggest way and means for decreasing NPA in BDC bank. To find out the reasons behind increasing or decreasing NPA in BDC bank. To know the effect of NPA on profitability. To study different remains used for NPA recovery in BDC bank.

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NORMS FOR ASSETS CLASSIFICATION

Criteria for classification of Assets;Classification of agricultural and non-agricultural loans is required to be done into four categories, on the basis of age of overdue, as under. Standard Assets;Standard asset is one which does not disclose any problem and which does not carry more than normal risk attached to business. Thus, in general, all current loans, agricultural and non-agricultural loans which have not been become NPA may be treated as standard asset.

Sub-standard Assets;A non-performing asset may be classified as sub-standard on the basis of the following criteria.

a.

An asset which has remained over due for a period not exceeding 3 year, in respect of both agricultural and non agricultural loans should be treated as substandard.

b.

In case of all types of loans, where installments are overdue for a period not exceeding 3 years, the entire outstanding in term loan should be treated as sub-standard.

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c.

An asset, where the term and conditions of loans regarding payment of interest and repayment of principal have been renegotiated or rescheduled, after commencement or production, should be classified as sub-standard and should remain so in such category for at least one year of rescheduled terms. In other word, the classification of an asset should not be upgraded merely as a result of rescheduling unless there is satisfactory compliance of the above condition.

Double asset A non performing asset may be classified as doubtful on the basis of following criteria;- as asset which has remained overdue for a period exceeding 3 years in respect of both agricultural and non agricultural loans should be treated as doubtful. In case of all types of term loan, where installments are overdue for more than 3 years, the entire out-standing Assets rescheduling does not entitle a bank to upgrade the quality of advance automatically.

Loss asset;Loss Assets are those where loss is identified by the bank/auditor/RBI/NABARD inspectors but the amount has not been written off wholly or partly. In other words, an asset which is considered unrealizable and or of such little value that its continuance as a doubtful asset is not worth while should be a loss asset. Such loss Assets will include over loans in cases. Where decrease or execution petitions have been time barred or documents are lost or no other legal proof is available to claim the debt. a. Where the members and their sureties are declared insolvent or have died leaving on tangible Assets.

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b. Where the members have left the area of operation of the society leaving on property and their sureties of have also no means to pay the dues. c. Where the loan is fictitious or when gross mystification is noticed and d. Amounts which cannot be recovered in case of liquidated societies.

PROVISIONING NORMS ON BASIC OF ASSET CLASSIFICATION

Need for provisioning;Provisioning is necessary considering the erosion in the value of security charged to the bank over a period of time. Therefore, after the Assets of CCBs/SCBs are classified into the various categories (viz., standard sub standard, doubtful and loss Assets) necessary. Provision has to be made for the same. The details of provisioning requirements in respect of various categories of Assets are mentioned below. Standard Assets;When the IRAC norms were introduced in the year 1996-97, no provisioning was required in respect of standard Assets. From the year ended 31st march, 2000, banks are required to make provision on standard Assets at a minimum of 0.25% of the total outstanding in this category. The provision made on standard Assets may not be reckoned as erosion in the value of Assets and will from part of owned funds of the bank. The advances granted against term deposits. National savings certificate (NSC) eligible for surrender kisan vikas patra (KVP), indira vikas patra (IVP) life policies, staff loans would attract provision of 0.25% prescribed for standard Assets. The provision towards towards standard Assets. The provision towards standard Assets need not be need from gross advances and should be shown separately as contingent provision against standard Assets under other liability and provision-others

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Criteria
OVERDUE ABOVE 3 YEARS AND UPTO 4 YEARS OVERDUE ABOVE 4 YEARS BUT NOT EXCEEDING YEARS OVERDUE EXCEEDING 6 YEARS

%PROVISION
20 30 50

Sub standard asset;A general provision of 10% of total outstanding in this category may be made. Doubtful Assets:100% is to be made to the extent to which the advance is not covered by realizable value of securities to which the banks has a valid recourse and the realizable value is estimated on a realistic basis. Over and above item (a) provision is to be made depending upon the period for which an asset has remained overdue 20% to 50% of the secured portion. Loss Assets:The entre loss Assets should be written off. If the Assets are permitted to be retained in the books for any reasons, 100% of outstanding thereof should be fully provided for. Relaxation in provision norms:In order to give adequate time to co-operative bank to adjust themselves to the new system, phasing of provision was permitted as indicated below: First year of introduction of prudential norms 1991-2000 100% in respect of loss Assets and not less than 30% of the provisioning needed in respect of sub standard and doubtful Assets. Second year (2000-01) 100% in respect of loss Assets and 20% of residual amount of sub-standard/doubtful together with current
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provision needed in respect of such Assets classificated in the second year. Third year (2001-02)100% in respected of loss Assets and 20% of residual amount of sub standard/doubtful together with current provision needed in respect of such Assets classified in the third year.

Fourth year (2002-03) 100% in respect of loss Assets and 30% of residual amount of sub-standard/doubtful Assets together with current provision needed in respect of such Assets classified in the 4th year. In other words, all doubtful and sub standard Assets have to be provided fully from the 4th year on wards addition to 100% for loss Assets.

Current scenario of Bhavnagar district co-operative bank At the end of 2008-09 N.P.A. is RS.15.66 crore in which gross N.P.A. is 2.07% of total advances and so net N.P.A. is zero.

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RESERCH METHODOLOGY
SR. NO. PARTICULRS PAGE NO.

INTRODUCTION

42

UNIVERSE OF THE RESEARCH STUDY

42

SAMPLING

43

SOURCES OF DATA COLLECTION

44

RESEARCH TECHNIQUES

45

LIMITATION OF THE STUDY

46

APPLICATION OF THE CHAI-SQUARE TEST

47

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INTRODUCTION
This research has been conducted to find out the awareness of various types of agricultural schemes. In the past customers had no option but to contract their agents to get real time access to market data. But now with the concept of agricultural schemes, it is possible to get real time data in records. In agricultural schemes, the software is directly made available to the end user and he/she can assess real time data immediately.

In research methodology, there are many methods, which are well known today for research, out which one the researcher has chosen is sampling method which is really easier still producing accurate results. Sampling in laymens language is nothing but selecting pockets or samples representing the whole group and analysis of these samples gives the idea about the respective groups. On the basis of this, prediction is done and full information about the group is integrated. Though is not a firsthand method, it gives sufficiently good outcomes if used carefully by experts. It saves the time and energy. The only care should be taken, in order to have great accuracy, is selection of sample should be such that it should represent the whole group and information we get from should be sent percent reliable.

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UNIVERSE OF THE RESEARCH STUDY

All the banks registered in India and working as public sector, private sector, co0operative sector, foreign sector banks have been taken as universe of the research study.

SAMOLING
As a part of the research study, the researcher has selected co-operative banking sector from of co-operative banks like rural, state, district co-operative banks and district central co-operative agricultural and rural development bank, etc.

Because, the researcher has capable to analyze the financial detail of all over co-operative banks. So the researcher has selected one co-operative unit for the purpose of perfect and sound research work in analysis of NPA.

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SOURCES OF DATA COLLECTION

The sources of data collection have two types. The source to be collected through two ways 1) Primary sources 2) Secondary sources

1) Primary sources Primary data have been collected through discussions with executives and staff in the bank. 2) Secondary sources Secondary data are taken annual balance sheets, profit and loss account and internal circulated matters from RBI and from websites. The researcher has taken secondary sources for the analysis of NPA. The secondary data is to be analyst from statement of NPAs and details of NPAs during 4 years (2004-05 to 2008-09).

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RESEARCH TECHNIQS
The research techniques have two types 1. Accounting technique 2. Statistical technique 1. Accounting technique It includes the ratio analysis. The requirement and also on the basis of data availability which is used for the analysis of financial statement of selected units. Comparative statement analysis Commercial statement analysis Common size statement analysis Fund flow statement analysis Ratio statement analysis RATIO STATEMENT ANALYSIS HAS BEEN USED TO ACCOUNTING TECHNIQUES. 2. Statistical technique In any type of analysis statistical tool which are used for financial analysis areas. The researcher has adopted the statistical tool technique. And to analyze the details and statement of NPA of last 4 years. By the graphical presentation of data. To interpret the data as per preparing graphs of ratios of NPAs for last 4 years. Co-relation, regression, annova test, t-test, z-test, graphical presentation, chi-square test CHAI-SQUARE TEST HAS BEEN USED TO STASTICAL TECHNIQUES.
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LIMITATION OF THE STUDY

In spite of all sincere efforts in preparing these reports, there are certain limitations which cannot be ignored.
A. The researchers whole study has mainly on secondary data so it may affect

the result of the analysis. B. The researchers sample for analysis includes only some years annual data so it may affect the result of the analysis.

C. Non-performing Assets is a long process including the numbers of factors. Because of time limit researcher taken the NPA process of limited sector only.

D. The unit under study is co-operative sector and it processes the limitation of co-operative sectors.

E. The measurements profitability confronts many practical difficulties.

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APPLICATION OF THE CHI-SQUARE TEST

The chi-square test is an important test among the several tests of significance developed by statisticians. Chi-square, symbolically written as X (pronounced as chi-square), is a statistical measure used in the context of sampling analysis for comparing a variance to a theoretical variance. it can also be used to make comparisons between theoretical population and actual data when categories are used. Thus, chi-square test is applicable in large number of problems. The test is, in fact, techniques through the use of which it is possible of all researchers to (I) test the goodness of fit; (II) test the significance of association between two attributes, and (III) test the homogeneity or the significance of population variance.

The formula for the chi-square is;-

*(n-1)

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ANALYSIS OF NPA DATA AND INERPRETATON SR NO

PARTICULARS PAGE NO

1 2 3 4 5

GROSS NPA RATIO

50 53 55 57 59

NET NPA RATIO

SUB STANDARD RATIO

DOUBTFUL ASSET RATIO

LOSS ASSET RATIO

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ANALYISIS OF DATA (HYPOTHESIS TESTING through CHI-SQUARE TEST) On the basis of details and information of NPAs the research has to be analyzing the data and graphs of ratios of NPAs. There are as under. (A) Gross NPA ratio:Gross NPA ratio is the sum of are loan Assets that are classified as NPA as per the income become recognition and Assets classification (IRAC) norms suggested by RBI guidelines as on balance sheet data. Gross NPA ratio is the ratio of gross NPA to gross advance of the bank.

Gross NPAs Gross NPA ration= ---------------------------------- X 100 Gross advances

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Table and graph show the last four years gross NPA ratio of the Bhavnagar district co-operative bank.

Year
2005-06 2006-07 2007-08 2008-09
3.5 3 2.5 2 1.5 1 0.5 0 2004-05 2005-06 2006-07

Gross NPA ratio(%) 3.14 2.79 2.48 2.07

2008-09

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Analysis Above table and chart indicates quality of credit port folio of the bank. High gross NPA ratio indicates low quality credit portfolio of the bank and vice-versa. The graph shows that gross NPA ratio is high in 2004-05 indicating low quality advance portfolio but it has been reduced in 2005-06 and further reduced constantly which reflects the improving Assets quality of the bank. Result The hypothesis is rejected as there is a change in gross NPA ratio, so the bank has good position of gross NPA. Ho; there is no significant difference in gross NPA to gross advances of BDC bank. Ha; there is significant difference in gross NPA to gross advances of BDC bank.

year 2005-06 2006-07 2007-08 2008-09 Total 3.14 2.79 2.48 2.48 10.48

(X-X) X=2.62 0.25 0.17 -0.14 -0.55 0.00

(X-X) 0.2704 0.0289 0.0196 0.3025 0.6214

= =0.207
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=estimated population is 3

=0.21
Degree of freedom; =(n-1) =(4-1) Level of significance =5% =3

Critical value; at level of 5% significance critical value is 7.815 Result; critical value <calculated value. Here the calculated value of chi-square is 0.21 and the critical value at 5% level of significance is 7.815. Hence taken sample fall in rejected region so null hypothesis is accepted.

(B)

Net NPA ratio;Net NPA is the sum of all loan Assets that are classified as NPA net of provision made as per the RBI guidelines as on balance sheet data net NPA ratio is the ratio of net NPA to gross advances of the bank.

Net advances=gross advances-gross NPA analysis Above table and graph indicate quality of credit port folio of the bank. High net NPA ratio indicates low quality credit portfolio of the bank and vice-versa. The chart shows that net NPA ratio is over all very good.

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Year 2005-06 2006-07 2007-08 2008-09

Net NPA ratio (%) 0.56 0.53 0.39 0. 20

There is no significant difference in net

0.6 0.5 0.4 0.3 0.2 0.1 0 2005-06 2006-07 2007-08 2008-09

Result The hypothesis is rejected s there is a change in net NPA, so the bank have good position of net NPA. H0 there is no significant difference in net NPA to net advances of BDC bank Ha there is significant difference in net NPA to net advances of BDC bank

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Year 2005-06 2006-07 2007-08 2008-09 Total

X 0.56 0.53 0.39 0.02 1.5

(X-X) X=0.375 0.18 0.16 0.02 -0.36 0.00

(X-X) 0.0324 0.0256 0.0004 0.1225 0.1809

=0.060

Estimated population is 4

= = 0.45 Degree of freedom; =3 Level of significance; 5% Critical value; at level of 5% significance critical value is 7.815 Result; critical value <calculated value. Here the calculated value of chi-square is 0.45and the critical value at 5% level of significance is 7.815. Hence taken sample fall in rejected region so null hypothesis is accepted.

(C) Sub-standard ratio;It is the ratio of total sub standard Assets to gross NPA of the bank.

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Year 2005-06 2006-07 2007-08 2008-09

40 35 30 25 20 15 10 5 0 2005-06 2006-07

Sub standard Assets ratio (%) 30.45 19.17 21.69 34.51

2007-08

2008-09

Result The hypothesis is accepted, as there are fluctuations in sub standard Assets ratio. So, the banks have not good position of sub standard Assets ratio. H0 there is no significant difference in net NPA to net advances of BDC bank Ha there is significant difference in net NPA to net advances of BDC bank

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Year 2005-06 2006-07 2007-08 2008-09 Total

X 30.45 19.17 21.69 34.51 105.82

(X-X) X=26.455 4 -7.28 -4.76 8.06 0.00

(X-X) 16 52.99 22.66 64.96 156.61

=52.20

=estimated population is 26

*3 =6 Degree of freedom; =3 Level of significance; 5% Critical value; at level of 5% significance critical value is 7.815

Result; critical value <calculated value. Here the calculated value of chi-square is 0.45and the critical value at 5% level of significance is 7.815. Hence taken sample fall in rejected region so null hypothesis is accepted.
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(D) Doubtful Assets ratio;It is the ratio of total Doubtful Assets to gross NPA of the bank.

Year 2005-06 2006-07 2007-08 2008-09

45 40 35 30 25 20 15 10 5 0 2005-06 2006-07

Assets ratio (%) 41.68 40.75 20.61 19.40

2007-08

2008-09

Analysis It indicates huge scope compromise for NPA reduction. It has reduce in 2006-07 and again it decrease in 2007-08 and it shows huge
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decrease in the ratio that is 20.61% which indicates the recovery of NPA. Result The hypothesis is accepted, as there are fluctuations in sub standard Assets ratio. So, the banks have not good position of doubtful Assets ratio. H0 there is no significant difference in net NPA to net advances of BDC bank Ha there is significant difference in net NPA to net advances of BDC bank Year 2005-06 2006-07 2007-08 2008-09 Total X 41.68 40.75 20.61 19.40 122.44 (X-X) X=30 11.07 10.14 -10 -11.21 0.00 (X-X) 122.54 102.82 100 125.66 451.02

=150.34

=estimated population is 30

*3 =6 Degree of freedom; =3
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Level of significance; 5% Critical value; at level of 5% significance critical value is 7.815 Result; critical value <calculated value. Here the calculated value of chi-square is 15.03and the critical value at 5% level of significance is 7.815. Hence taken sample fall in rejected region so null hypothesis is accepted.

(E) Loss asset ratio;It is the ratio of total Loss Assets to gross NPA of the bank.

Year 2005-06 2006-07 2007-08 2008-09

70 60 50 40 30 20 10 0 2005-06 2006-07

Loss Assets ratio (%)

25.45 40.08 57.37 42.99

2007-08

2008-09

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Analysis Loss Assets means there is least chance of recovery by the bank. Loss Assets were fluctuating in all the year. So, this indicates that are chances of recovery and it also affected to the profitability of the bank. Result The hypothesis is accepted, as there is fluctuation in sub standard Assets ratio. So, the bank has not good position of loss Assets ratio. H0 there is no significant difference in total loss Assets to gross NPA of BDC bank Ha there is significant difference in total loss Assets to gross NPA of BDC bank Year 2005-06 2006-07 2007-08 2008-09 total X 25.45 40.08 57.37 42.99 165.89 (X-X) X=41 -16.02 -1.39 15.9 1.52 0.00 (X-X) 256.64 1.93 252.81 2.31 513.69

=171.23

=estimated population is 41

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*3 =12.53 Degree of freedom; =3 Level of significance; 5% Critical value; at level of 5% significance critical value is 7.815

Result; critical value <calculated value. Here the calculated value of chi-square is 12.53and the critical value at 5% level of significance is 7.815. Hence taken sample fall in rejected region so null hypothesis is rejected.

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CONCLUSION &FINDINGS
THE above analysis of graphs presented by the method as per the data of last 4 years. The current position of NPA of BDCB is ZERO And also over all analysis of NPA have good position in last two years. And thus, the bank tries to maintain the level of zero NPA. The bank will try to get 100% recovery of non-performing assets.

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ABBREVIATIONS

BDC NABARD

-Shri Bhavnagar district co-operative bank -National Bank for Agriculture and Rural

Developement

GSCB RBI GOI PACS SCB DLTC SLTC RKRY VVV SAO

-The Gujrat State Co-operative Bank -Reserve Bank of India -Government of India -Primary Agricultural Credit Societies -State Co-operative Banks -District Level Technical committee -State Level Technical committee -Rashtriya Krishi Bima Yojana -Vikas Volunteer Vhiniclubs -Seasonal Agricultural Operation

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BIBLIOGRAPHY
Dr. s. o.junare, management and NPAsjuly,2003 The Bhavnagar district co-operative bank, annual report from 2004-05 to 2007-08 The Bhavnager district co-operative banks NPA statement of the year 2004-05 to 2007-08.

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