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e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 17, Issue 7.Ver. I (July 2015), PP 01-04
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Abstract: The trend analysis of Gross Non Performing Assets of Canara bank (GNPA) shows a declining trend
from the year of 2003-04 to the year of 2007-08 and further it shows an increasing trend from the year of 200809 to the year of 2012-13. The trend analysis of Net Non Performing Assets of Canara bank indicates a
declining trend from the year 2003-04 to the year 2005-06 and it increases in the year 2006-07 and it decreases
in the year 2007-08 year and it further shows an increasing trend from the year of 2008-09 to the year of 201213.The trend analysis of the Non Performing Assets (NPA) in priority sector advances of Canara Bank shows a
declining trend from the year 2003-04 to the year 2007-08 and further it shows an increasing trend from the
year 2008-09 to the year 2012-13. The trend analysis of the Non Performing Assets (NPA) in non priority sector
advances of Canara Bank shows a declining trend from the year 2003-04 to the year 2007-08 and further it
shows a fluctuating trend between the year 2008-09 and 2012-13. The correlation coefficient between NPA in
priority sector, NPA in non priority sector and profitability of Canara bank is negatively and moderately
associated with each other at one per cent level of significance.
Key Words: Gross Non Performing Assets, Priority Sector, Net Non Performing Assets, Non Priority Sector.
I.
Introduction
The banking industry in India is one of the most important industries for economic development and its
crucial roles provide sources of funds for individual, private firms and governments in order to support their
operations. It is expected that the Indian banking and finance system will be globally competitive. For this the
market players will have to be financially strong and operationally efficient. Capital would be a key factor in
building a successful institution. The banking and finance system will improve competitiveness through a
process of consolidation, either through mergers and acquisitions through strategic alliances.
The activities of banks can be broadly categorized in terms of a range of products and services,
including lending services, bank accounts, such as time deposit accounts and internet banking. Competition
among banks and the volatility economy have forced banks at all levels, including branches, to strive to achieve
their goals, from survival to continuous growth. In addition, the focus on resources for operations at the branch
level is a key to success for all banks.
The level of NPAs is recognized as a critical indicator for assessing banks credit risk, asset quality and
efficiency in the allocation of resources to productive sectors. The magnitude of NPAs has a direct impact on the
banks profitability as legally they are not allowed to book income on such account and at the same time, banks
are forced to make provision on such assets as per RBI guidelines. Banks should not recognize interest income
on NPAs until they are actually realized.
An NPA account not only reduces profitability of banks by provisioning in the profit and loss account,
but their carrying cost is also increased which results in excess and avoidable management attention. Apart from
this, a high level of NPA also puts strain on a banks net worth because banks are under pressure to maintain a
desired level of Capital Adequacy and in the absence of comfortable profit level, banks eventually look towards
their internal financial strength to fulfill the norms thereby slowly eroding the net worth. With this back ground,
the present research is made to study the non performance assets of Canara bank.
II.
Methodology
The data on non performing assets of Canara bank for the last 10 years from 2003-2004 to 2012-13
have been collected from the annual reports of Canara bank. In order to study the Gross Non-Performing Assets,
Net Non-Performing Assets, Non Performing Assets in Priority Sector Advances and Non Performing Assets in
Non Priority Sector Advances, the percentage analysis have been carried out. In order to examine the
relationship between non-performing assets in priority and non priority sector advances and profitability of
Canara banks, the correlation analysis has been employed.
DOI: 10.9790/487X-17710104
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Year
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Year
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Year
1
2
3
4
5
6
7
8
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
DOI: 10.9790/487X-17710104
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2011-12
2012-13
39643
58062
98.33
92.75
Year
1
2
3
4
5
6
7
8
9
10
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Profitability
1.00
-0.43**
1.00
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IV.
Conclusion
The trend analysis of Gross Non Performing Assets of Canara bank (GNPA) shows a declining trend
from the year of 2003-04 to the year of 2007-08 and further it shows an increasing trend from the year of 200809 to the year of 2012-13. The trend analysis of Net Non Performing Assets of Canara bank indicates a
declining trend from the year 2003-04 to the year 2005-06 and it increases in the year 2006-07 and it decreases
in the year 2007-08 year and it further shows an increasing trend from the year of 2008-09 to the year of 201213.
The trend analysis of the Non Performing Assets (NPA) in priority sector advances of Canara Bank
shows a declining trend from the year 2003-04 to the year 2007-08 and further it shows an increasing trend from
the year 2008-09 to the year 2012-13. The trend analysis of the Non Performing Assets (NPA) in non priority
sector advances of Canara Bank shows a declining trend from the year 2003-04 to the year 2007-08 and further
it shows a fluctuating trend between the year 2008-09 and 2012-13. The correlation coefficient between NPA in
priority sector, NPA in non priority sector and profitability of Canara bank is negatively and moderately
associated with each other at one per cent level of significance.
The level of NPAs is high with Canara bank currently and the banks would be expected to bring down
their NPA. This can be achieved by good credit appraisal procedures, effective internal control systems along
with their efforts to improve asset quality in their balance sheets. Canara bank should inspect the progress of the
project or the business. Separate monitoring department should be established in large branches for periodical
review of accounts, comparative risk analysis and compliance of terms and conditions of sanction. Equal
emphasis should be given for monitoring of standard assets also.
Canara bank should be equipped with latest credit risk management techniques to protect the bank
funds and minimize insolvency risks. Banks should develop credit derivatives markets to avoid these risks.
There should be regular outflow of senior bank officers from all public sector banks for specialized training in
training institute to equip them with latest procedures and practices. Canara bank employees need to give more
attention on the activities of the NPAs and slow recovery of overdue loans. If the customer intentionally tries to
become NPA then take serious or legal action. If they do this the other NPAs account which are slow in
payment will be recovered fast. Try to deal softly with NPA customers and motivate them to repay the loan.
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DOI: 10.9790/487X-17710104
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