Académique Documents
Professionnel Documents
Culture Documents
SYNOPSIS ON
ENROLLMENT NO : 130413457
The
institutions have to take the initiative to reduce NPAs in a time bound strategic approach.
Public sector banks figure prominently in the debate not only because they
dominate the banking industries, but also since they have much larger NPAs compared
with the private sector banks. This raises a concern in the industry and academia because
it is generally felt that NPAs reduce the profitability of a banks, weaken its financial health
and erode its solvency.
For the recovery of NPAs a broad framework has evolved for the
management of NPAs under which several options are provided for debt recovery and
restructuring. Banks and FIs have the freedom to design and implement their own policies
for recovery and write-off incorporating compromise and negotiated settlements.
The accumulation of huge non-performing assets in banks has assumed great importance.
The depth of the problem of bad debts was first realized only in
early 1990s. The magnitude of NPAs in banks and financial institutions is over Rs.1,
50,000 crores. While gross NPA reflects the quality of the loans made by banks, net NPA
shows the actual burden of banks. Now it is increasingly evident that the major defaulters
are the big borrowers coming from the non-priority sector. The banks and financial
institutions have to take the initiative to reduce NPAs in a time bound strategic approach.
Public sector banks figure prominently in the debate not only because they dominate the
banking industries, but also since they have much larger NPAs compared with the private
sector banks. This raises a concern in the industry and academia because it is generally
felt that NPAs reduce the profitability of banks, weaken its financial health and erode its
solvency. For the recovery of NPAs a broad framework has evolved for the management of
NPAs under which several options are provided for debt recovery and restructuring. Banks
and FIs have the freedom to design and implement their own policies for recovery and
write-off incorporating compromise and negotiated settlements.
TYPES OF BANKS:
PUBLIC SECTOR BANKS:
Public sector banks are the ones in which the government has a major holding. Public
Sector Banks dominate 75% of deposits and 71% of advances in the banking industry.
Public Sector Banks control commercial banking India, these can be further classified into:
1) Nationalized banks
2) State Bank of India and its associates
3) Regional Rural Banks
PRIVATE SECTOR BANKS:
Private sector banks came into existence to supplement the performance of public sector
banks and serve the needs of the economy better. As the public sector banks were merely
in the hands of the government, banks had no incentive to make profits and improve their
financial capability.
The main difference between public and private sector banks is only that public sector
banks follow the RBI interest rules strictly but private banks can make some changes in
them but only after the approval from the RBI. Private sector banks are the banks which
are controlled by the private lenders with the approval from the RBI. Their interest rates
are slightly costly as compared to public sector banks.
paid within 30 days from the due date. Due to the improvement in the payment and
settlement system, recovery climate, up gradation of technology in the banking system
etc, it was decided to dispense with past due concept, with effect from March 31, 2001.
Accordingly as from that date, a Non performing asset shell be an advance where
i.
Interest and/or installment of principal remain overdue for a period of more than
ii.
The account remains out of order for a period of more than 180 days ,in respect
The bill remains overdue for a period of more than 180 days in case of bill
purchased or discounted.
iv.
Interest and/or principal remains overdue for two harvest season but for a period
not exceeding two half years in case of an advance granted for agricultural purpose ,and
Any amount to be received remains overdue for a period of more than 180 days in
v.
RESEARCH PROBLEM:
Indian banking industry, which was in glory phase once upon a time, has been facing a
lots of challenges on non performing assets at present scenario. Many banks have kept
their NPAs under the control but some banks are not able to control their NPA levels.
They are facing lots of problems. There can be various reasons behind this NPA. Nonperforming assets has been hitting the profitability of the banks or it can be said that due
to NPA, the profitability of the banks are going down day by day. The subsidiary for this is
the functioning of Debt Recovery Tribunal (DRT) which is a judiciary for the bank for
recovery amount from the default customers. These can be considered as a research
problem based on which the information is collected, the object is measured and the data
is analyzed and interpreted.
OBJECTIVES OF THE STUDY
The basic idea behind undertaking the Grand Project on NPA was to:
To find out the effectiveness of recovery mechanism adopted by banks for NPA.
RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. Research
methodology constitutes of research methods, selection criterion of research methods,
used in context of research study and explanation of using of a particular method or
technique so that research results are capable of being evaluated either by researcher
himself or by others.
TITLE:
PROCEDURE TO REDUCE NON-PERFORMING ASSETS IN BANKS .
RESEARCH DESIGN
NON-PROBABILITY
EXPLORATORY &DISCRIPTIVE EXPERIMENTAL RESEARCH
STATISTICAL TOOLS:
The analyses of primary data were conducted through descriptive statistics, factor
analysis, Pearson correlation and one-sample t-test. The secondary data was analyzed
through column charts, line charts, bar charts and percentages.
As no study could be successfully completed without proper tools and techniques, same
with my project. For the better presentation and right explanation I used tools of statistics
and computer very frequently. And I am very thankful to all those tools for helping me a lot.
Basic tools which I used for project from statistics are- Bar Charts
- Pie charts
- Tables
bar charts and pie charts are really useful tools for every research to show the result in a
well clear, ease and simple way. Because I used bar charts and pie charts in project for
showing data in a systematic way, so it need not necessary for any observer to read all the
theoretical detail, simple on seeing the charts any body could know that what is being said.
Technological Tools
Ms-Access
Ms-Word
Above application software of Microsoft helped me a lot in making project more interactive
and productive.
www.rbi.org.in.
The research is primarily both exploratory as well as descriptive in nature. The sources of
information are both primary & secondary.
Primary Data:
Primary data is basically the live data which I collected on field while doing cold calls with
the Distributor and shopkeeper, customers, I shown them list of question for which I had
required their responses. In some cases I got no response form their side and than on the
basis of my previous experiences I filled those fields.
Source: Main source for the primary data for the project was questionnaires which I got
filled by the customers or some times filled myself on the basis of discussion with the
customers.
Secondary Data:
1
Internet ,
Books
Journals ,
Newspaper,
Annual report,
reasons are the crucial for any bank at present. One has to realize these matters and has
to take corrective action against NPA reasons, as for as possible one has to convert all the
NPA accounts into PA accounts. As far as the importance of the study is concern, without
the study, one cant identify the whole gamut of the NPA. To know, how the account is
becoming NPA is must necessary.
After identifying the reason behind the particular NPA account, one can go for a step
ahead. That means for the step of how to convert into PA and how to prevent other
account from becoming NPA. As for as possible, one has to eradicate the reasons of
NPAs. Thus, it is highly importance to study NPA in detail.
SCOPE OF THE STUDY
Being a project scope will be based on the day-to-day teamwork operations. The data will
becollected
from various aspects of loans and advances in various private banks of
be
Ludhiana (Punjab).
Concept of Non Performing Asset
Guidelines
Impact of NPAs
Reasons for NPAs
Preventive Measures
Tools to manage NPAs
To understand the concept of NPA in Indian Private Banking industry.
To analyze the past trends of NPA of Private banks.
LIMITATIONS:
1. The present study is confined to Ludhiana area only.
2. The conclusions of the study are based on the responses of the banks and secondary
information. Thus, some amount of subjectivity might remain.
CONCLUSION:
Growing NPAs is one of the biggest problems that the private Indian banks are facing
today. If proper management of the NPAs is not undertaken it would hamper the efficiency
of the banks. If the concept of NPAs is taken very lightly it would be dangerous for the
banking sector. The NPAs destroy the current profit and interest income and affect the
smooth functioning of the recycling of the funds. Banks also redistribute losses to other
borrowers by charging higher interest rates. Lower deposit rates and higher lending rates
repress savings and financial markets,which in turn hampers the economic growth of the
country. Thus, it is highly essential for the banks to focus their attention on growth of NPAs
Periodical:
Business Word
Research Methodology:
Website Address:
http://www.mbaknol.com
http://www.chillibreeze.com
www.scribed.com
www.googlesearch.com
www.rbi.org.in.
http://en.wikipedia.org/wiki/Banking_in_India
http://www.bankingindiaupdate.com/general.html