This document is a project report on the study of non-performing assets (NPAs) in Indian commercial banks. It discusses the meaning and types of NPAs, their impact on bank operations, and steps banks are taking to reduce NPAs. The study analyzes data from public and private sector banks over several years to assess NPAs. It finds that there are significant differences in NPA levels between banks, reflecting varied efficiency in NPA management. The high and rising level of NPAs is a cause of concern as it reduces bank profitability and capital adequacy.
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a study on non performing assets of commercial bank of india
Título original
a study on non performing assets of commercial bank of india
This document is a project report on the study of non-performing assets (NPAs) in Indian commercial banks. It discusses the meaning and types of NPAs, their impact on bank operations, and steps banks are taking to reduce NPAs. The study analyzes data from public and private sector banks over several years to assess NPAs. It finds that there are significant differences in NPA levels between banks, reflecting varied efficiency in NPA management. The high and rising level of NPAs is a cause of concern as it reduces bank profitability and capital adequacy.
This document is a project report on the study of non-performing assets (NPAs) in Indian commercial banks. It discusses the meaning and types of NPAs, their impact on bank operations, and steps banks are taking to reduce NPAs. The study analyzes data from public and private sector banks over several years to assess NPAs. It finds that there are significant differences in NPA levels between banks, reflecting varied efficiency in NPA management. The high and rising level of NPAs is a cause of concern as it reduces bank profitability and capital adequacy.
A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL
BANKS A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 1 SUBMITTED BY RAVI JAISWAL (13/154) (213!215) Submitted in fulfillment of the requirement of award of PGDM degree at ICBM ! SC"OOL OF BUSINESS E#CELLENCE "YDERABAD DECLARATION I$ R%&' J%'()%* student of ICBMS!hool of Business E"!ellen!e# $%derabad# hereb% de!lare that the &ro'e!t re&ort entitled +A STUDY OF NON PERFORMING A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 2 ASSETS IN INDIAN COMMERCIAL BANK,S- is the wor( underta(en b% me for +CENTRAL BANK OF INDIA- $ $%derabad during the a!ademi! %ear )*+,)*+- and submitted to ICBMSBE. It is an original and bonafide re!ord of wor( done b% me during the !ourse of summer internshi& &ro'e!t wor( of PGDM &rogram and all !ontents and fa!ts are &re&ared and &resented b% me without an% bias. I also de!lare that it has not &re/iousl% formed the basis for the award to me for an% degree0di&loma asso!iate shi&# fellowshi& or other similar title# of an% institute0so!iet%. P*%./0 ( RAVI JAISWAL ) D%1/ 0
A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 3 CERTIFICATE This is to !ertif% that the &ro'e!t entitled +A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS- with referen!e to C/213%* B%24 56 I27'%$ 852%* B3%2.9$ ":7/3%;%7 being submitted b% R%&' J%'()%*$ a student of ICBM!SBE bearing 1oll 2o 13/154 and was su!!essfull% !ondu!ted at C/213%* B%24 56 I27'%$ 852%* B3%2.9$ ":7/3%;%7 from +) Ma%3+4 to )5 6une3+4 for the &artial fulfillment for the award of Post Graduate Di&loma in Management 7PGDM8. To the best of m% (nowledge this is an original &ie!e of wor(. I wish his all the /er% best in his !areer endea/ors. P356< S< 8ARAR PRINCIP AL
A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 4
A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 5 CERTIFICATE OF T"E GUIDE This is to !ertif% that the wor( in!or&orated in this Pro'e!t entitled + A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS - Submitted b% R%&' J%'()%* his 9riginal wor( and !om&leted under m% su&er/ision. D%1/0 MR< G< KRIS"NA ":7/3%;%7 (A((5.'%1/ P356/((53 F'2%2./ D/=%31>/21 ) A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 6 ACKNOWLEDGEMENT : &ro'e!t re&ort is ne/er su!!essfull% !om&leted without the guidan!e and mentorshi& of a few &eo&le. So# I ta(e this o&&ortunit% to e"&ress m% sin!ere gratitude towards all those# who ha/e hel&ed me in this endea/or. I ta(e the o&&ortunit% to e"&ress m% sin!ere gratitude to P356< R'1? 8%3%3$C9%'3=/3(52 56 ICBM!SBE and P356< S9%>(9?77'2 8%3%3$ P3'2.'=%* 56 ICBM!SBE for his &erse/eran!e and attention e"tended to o/er the !ourse of the PGDM &rogram. I e"&ress m% humble and dee& indebtness to P356< J'1/27/3 G5&'27%2'$ D'3/.153 (A.%7/>'.() ICBM!SBE whose guidan!e and en!ouragement &ro/ed to be a sour!e of ins&iration to do m% best in this &ro'e!t. I am e"tremel% grateful to M3< NVVL N%3%('>9% R%5$S/2'53 M%2%@/3 R/.5&/3: 7/=%31>/21 %1 C/213%* B%24 O6 I27'% $852%* B3%2.9$ $%derabad for &ro/iding an o&&ortunit% to gain /aluable &ra!ti!al e"&erien!e in the !om&an%# b% underta(ing the !urrent stud%. S&e!ial than(s goes to m% mentor A((5< P356< G< K3'(92% and also than(s to P356< P<S%' R%2'$ A((5< P356< F'37%?( K9%2 D/=1< 56 F'2%2./$ ICBM!SBE for &ro/iding me mu!h needed information and gi/ing me dire!tion whi!h &a/ed the wa% for the !om&letion of the &ro'e!t. I am also than(ful to entire fa!ult% and staff of ICBMSBE# $%derabad for dire!tl% or indire!tl% su&&orting m% resear!h wor(. ;ast# but not the least# m% heartfelt a&&re!iation to m% &arents who ha/e instilled in me a strong wor( ethi! and the dri/e to e"!el in all m% goals and endea/ors. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 7
R%& ' J%'( )%*
ABSTRACT0! Indian ban(ing industr% &la%s a &i/otal in the so!io e!onomi! de/elo&ment of the !ountr%. This role is &la%ed b% ban(s b% e"tending !redit to /arious defi!it se!tors for their growth and de/elo&ment. This !redit !reation &ro!ess leads to !redit ris( whi!h will lead non &erforming asset. <hile the &rimar% fun!tion of ban(s is to lend funds as loans to /arious se!tors su!h as agri!ulture# industr%# &ersonal loans# housing loans et!.# in re!ent times the ban(s ha/e be!ome /er% !autious in e"tending loans. The !urrent stud% was underta(en to stud% the non &erforming assets of nationali=ed ban(s. The reason being mounting non&erforming assets 72P:s8# 2P: a!!ount not onl% redu!es &rofitabilit% of ban(s b% &ro/isioning in the &rofit and loss a!!ount# but their !arr%ing !ost is also in!reased whi!h results in e"!ess > a/oidable management attention. :&art from this# a high le/el of 2P: also &uts strain on a ban(s net worth be!ause ban(s are under &ressure to maintain a desired le/el of Ca&ital :dequa!% and in the absen!e of !omfortable to assess the health of /arious !ategories of loan assets in /arious !ategories of ban(s. The data was !olle!ted for a &eriod of si" %ears and anal%=ed b% mean# C:G1 and ran(ing ban(s. The indi/idual ban(s got ran(s as &er their &erforman!e in management of 2P: s. It was also tested# whether there is A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 8 signifi!ant differen!e between non&erforming assets of ban(s# it was found that there is signifi!ant differen!e in the le/el of 2P: s of nationali=ed ban(s whi!h refle!t their /aried effi!ien!% in the management of non&erforming assets. KEY WORDS0 Ca&ital :dequa!%# Growth# 2ationali=ed Ban(s# 2on Performing :ssets# So!io E!onomi! De/elo&ment# A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 9 INDE# C9%=1/3 T'1*/ P%@/ N5< + I2T19DUCTI92 9b'e!ti/es of the stud% S!o&e of the stud% 1esear!h Methodolog% +* ? +@ ) T$E19TIC:; B:CAG19U2D +BMeaning )B:ssets !lassifi!ation ,BT%&es of 2P:3s 4BIm&a!t on Ban(s 9&erations -BSte&s for 1edu!ing 2P:3s @B<h% are 2P:3s In!reasing CB2P:3s Im&a!t on Balan!e sheet 1EDIE< 9E ;ITE1:TU1E +C ? ,4 ,- ? ,F , C9MP:2Y P19EI;E 4* ? 4C 4 D:T: :2:;YSIS > I2TE1P1ET:TI92 45 ? @F - EI2DI2G #1EC9M:2D:TI92 #SUGGESTI92 > C92C;USI92 G;9SS:1Y :22EGU1EB + :22EGU1EB ) C*? C@ A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 10 @ BIB;I9G1:P$Y C@? CF Table No. Title of table Page No. +.+ Publi! se!tor Ban(s )**5)**F 49 50 +.) Pri/ate se!tor Ban(s )**5)**F 50 - 51 +., Publi! se!tor Ban(s )**F)*+* 51 52 +.4 Pri/ate se!tor Ban(s )**F)*+* 52 53 +.- Publi! se!tor Ban(s )*+*)*++ 54 55 +.@ Pri/ate se!tor Ban(s )*+*)*++ 55 56 +.C Publi! se!tor Ban(s )*++)*+) 56 57 +.5 Pri/ate se!tor Ban(s )*++)*+) 57 58 +.F Publi! se!tor Ban(s )*+))*+, 58 59 +.+* Pri/ate se!tor Ban(s )*+))*+, 60 +.++ Publi! se!tor Ban(s )*+,)*+4 61 62 +.+) Pri/ate se!tor Ban(s )*+,)*+4 62 63 ).+ :gri!ulture ;oan of Publi! Se!tor Ban(s 64 65 ).) Medium and small s!ale industries ;oan of Publi! Se!tor Ban(s 65 66 )., 1etails ;oan of Publi! Se!tor Ban(s 67 ,.+ C:G1 68 69 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 11
C"APTER!1 INTRODUCTION A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 12 INTRODUCTION0! The ban(ing s%stem &la%s a signifi!ant and !ommendable role in the growth and de/elo&ment of e!onom% and its !om&onents. The ban(ing s%stem mobili=es the funds from the sur&lus units and distributes them to defi!it se!tors for their &rodu!ti/e and effi!ient utili=ation. The ban(ing se!tor in India !om&rise of &ubli! se!tor ban(# &ri/ate se!tor ban(s and foreign se!tor ban(s. Publi! se!tor ban(s are those in whi!h ma'orit% of equit% holding is with go/ernment and in!ludes SBI grou& 7State ban( and its subsidiaries8 and nationali=ed ban(s. Modern trade and !ommer!e would almost be im&ossible without the a/ailabilit% of suitable ban(ing ser/i!es and it fa!ilitates it in innumerable wa%s. Ban(s &la% an im&ortant role in the mobili=ation# allo!ation of !a&ital# &rogress and de/elo&ment of an e!onom%. The modern ban(ing is not onl% !onfined to traditional business of the a!!e&ting and lending mone% but ha/e di/ersified their a!ti/ities into new fields of o&erations li(e mer!hant ban(ing# leasing# housing finan!e# mutual funds and /enture !a&ital. The% ha/e introdu!ed a number of inno/ati/e s!hemes for mobili=ing de&osits. In addition to the abo/e the% are &ro/iding /aluable ser/i!es to their !ustomers# issuing drafts# tra/eler !heques# gift !heques# a!!e&ting /aluables for safe !ustod% and modern ban(ing fa!ilities. The main business of ban(ing is to a!!e&t de&osits for the &ur&ose of lending# so it mobili=es funds b% issuing !laims against itself and lends this mone% to others in the form of loans whi!h are assets for ban(s. The liabilities and assets of ban(s are in the form of !laims unli(e other forms of business. The mobili=ed mone% is lent in the form of loans whi!h is ma'or and main a!ti/it% of ban(ing and !om&rises the largest asset in the asset &ortfolio of the ban(. The mone% lent are !alled loans or ad/an!es whi!h earn in!ome for the ban( in the A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 13 form of interest# in addition to this ban(s in/ests a &ortion of mone% in se!urities 7both debt and equit%8 and a minor &ortion of total funds is in/ested in real assets li(e land# building for !arr%ing the o&erations of ban(ing. The mone% is ad/an!ed in the form of loans and in/ested in se!urities in e"&e!tation of in!ome and re&a%ment of &rin!i&le at &eriodi! inter/als as &er the !ontra!tual obligations between the lender and borrower. The assets whi!h is &erforming as &er the !ontra!tual obligations i.e. &a%ment of interest and re&a%ment of &rin!i&al as and when it fall due# it is !alled &erforming asset or standard asset. The asset whi!h fails to meet obligation of &a%ment of interest and re&a%ment of &rin!i&al within a s&e!ified date from due date is !alled non &erforming asset or non standard asset. 2on&erforming asset 72P:8 is one of the ma'or !on!ern and &roblem for ban(s in India. 2P:s refle!t the degree of ris( and qualit% of assets of ban( and &rofitabilit% of a ban(. : high le/el of 2P:s suggests high &robabilit% of a large number of !redit defaults that affe!t the &rofitabilit% and networth of ban(s and also erodes the /alue of the asset. The 2P: growth in/ol/es redu!ed in!ome from assets and the ne!essit% of &ro/isions# whi!h redu!es the o/erall &rofits and shareholders /alue . The le/el of non&erforming assets is at the alarming rate in Indian ban(ing !om&arati/el% to other !ountries. This le/el is mu!h higher in !ase of &ubli! se!tor ban(s due to their dire!tional !redit to &riorit% se!tor &ro'e!ts and so!ial de/elo&ment &ro'e!ts. The &ubli! se!tor ban(s &la% an immense role in the de/elo&ment and growth from the /er% in!e&tion. The &ubli! se!tor ban(s whi!h were o&erating on so!ial model b% mobili=ing the huge resour!es and dire!ting them to so!ial and &riorit% se!tors for so!ial and e!onomi! de/elo&ment A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 14 of the !ountr%. Due to their so!io e!onomi! role# there was high le/el of 2P: s s in their asset &ortfolio. :fter the liberali=ation in +FF+# the% fa!ed high le/el !om&etition from &ri/ate and foreign ban(s. Due to this fier!e !om&etition and !hallenge on their sur/i/al# the% were for!ed to im&ro/e the &erforman!e and wea(ness. The biggest wea(ness and &roblem the% fa!ed was huge 2P: S in their &ortfolio. This stud% aims to !he!( what is the &osition and le/el of non&erforming assets of nationali=ed ban(s whi!h is !ore and heart of &ubli! se!tor ban(ing in India and whi!h handles the ma'or &ortion of ban(ing business in India. OBJECTIVES OF T"E STUDY0! P3'>%3: 5;A/.1'&/0 The &rimar% ob'e!ti/e of the ma(ing re&ort isB +BTo Stud% the !hallenges fa!ed b% &ubli! and &ri/ate se!tor ban(s with 2P:3s in India.
)B To anal%=e the 2P: &osition of sele!ted &ubli! and &ri/ate se!tor ban(s in India. S/.527%3: 5;A/.1'&/(0 The se!ondar% ob'e!ti/es of &reå this re&ort areB A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 15 +B To understand what is 2onPerforming :ssets and what are the underl%ing reasons for the emergen!e of the 2P:s. )B To understand the im&a!ts of 2P:s on the o&erations of the Publi! and Pri/ate Se!tor Ban(s. ,B To (now what ste&s are being ta(en b% the Indian ban(ing se!tor to redu!e the 2P:sH SCOPE OF STUDY0!
+0! Con!e&t of 2onPerforming assets )B Guidelines ,B Im&a!t of 2P:3s 4B 1easons for 2P:3s -B Pre/enti/e Measures @B Tools to manage 2P:3s The s!o&e of the stud% is limited to the anal%sis of 2P:s of all the nationali=ed ban(s o/er the &eriod of )**F)*+4. It e"amines trend of Gross 2P:s# Gross 2P:s IJ and assess the qualit% of 2P: management and ran( them as &er mean of last si" %ears. The data has been anal%=ed using &er!entage method# and sele!ted statisti!. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 16 RESEARC" MET"ODOLGY0! The resear!h methodolog% means the wa% in whi!h we would !om&lete our &ros&e!ted tas(. Before underta(ing an% tas( it be!omes /er% essential for an%one to determine the &roblem of stud%. I ha/e ado&ted the following &ro!edure in !om&leting m% re&ort stud%. +. Eormulating the &roblem ). 1esear!h design ,. Determining the data sour!es 4. :nal%=ing the data -. Inter&retation @. Preå resear!h re&ort 7+) F53>?*%1'2@ 19/ =35;*/>BI am interested in the ban(ing se!tor and I want to ma(e m% future in the ban(ing se!tor so de!ided to ma(e m% resear!h stud% on the ban(ing se!tor. I anal%=ed first the fa!tors that are im&ortant for the ban(ing se!tor and I !ame to (now that &ro/iding !redit fa!ilit% to the borrower is one of the im&ortant fa!tors as far as the ban(ing se!tor is !on!erned. 9n the basis of the anal%=ed fa!tor# I felt that the im&ortant issue right now as far as the !redit fa!ilities are &ro/ided b% ban( is non&erforming assets. I started (nowing about the basi!s of the 2P:s and de!ided to stud% on the 2P:s. So# I !hose the to&i! +N52!P/3653>'2@ A((/1( 19/ @3/%1 .9%**/2@/ ;/653/ 19/ P?;*'. %27 P3'&%1/ S/.153 B%24(-< A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 17 7)) R/(/%3.9 D/('@2B The resear!h design tells about the mode with whi!h the entire &ro'e!t is &re&ared. M% resear!h design for this stud% is basi!all% anal%ti!al. Be!ause I ha/e utili=ed the large number of data of the Publi! and Pri/ate Se!tor Ban(s. 7,) D/1/3>'2'2@ 19/ 7%1% (5?3./B The data sour!e !an be &rimar% or se!ondar%. The &rimar% data are those data whi!h are used for the first time in the stud%. $owe/er su!h data ta(e &la!e mu!h time and are also e"&ensi/e. <hereas the se!ondar% data are those data whi!h are alread% a/ailable in the mar(et. These data are eas% to sear!h and are not e"&ensi/e too. for m% stud% I ha/e utili=ed totall% the se!ondar% data. 748 T55*( T9/ A2%*:B'2@ T9/ 7%1%0! I am using C:G1# 1an(ing S%stem Eor anal%=ing the data. 7-8 A2%*:B'2@ 19/ 7%1%BThe &rimar% data would not be useful until and unless the% are well edited and tabulated. <hen the &erson re!ei/es the &rimar% data man% un useful data would also be there. So# I anal%=ed the data and edited them and turned them in the useful tabulations. So# that !an be!ome useful in m% re&ort stud%. 7@) I21/3=3/1%1'52 56 19/ 7%1% W'19 ?(/ 56 %2%*:B/7 7%1%0 I managed to &re&are m% &ro'e!t re&ort. But the anal%=ing of data would not hel& the stud% to rea!h towards its ob'e!ti/es. The inter&retation of the data is required so that the others !an understand the !ru" of the stud% in more sim&le wa% without an% &roblem so I ha/e added the !ha&ter of anal%sis that would e"&lain others to understand m% stud% in sim&ler wa%. 7C8 P35A/.1 )3'1'2@BThis is the last ste& in &reå the &ro'e!t re&ort. The ob'e!ti/e of the re&ort writing was to re&ort the findings of the stud% to the !on!erned authorities. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 18 TIME FRAME0! The time frame has been ta(en 4@ da%s. LIMITATION OF T"E STUDY0! The limitations that I felt in m% stud% areB +BIt was !riti!al for me to gather the finan!ial data of the e/er% ban( of the Publi! and Pri/ate Se!tor Ban(s so the better e/aluations of the &erforman!e of the ban(s are not &ossible. )BSin!e m% stud% is based on the se!ondar% data# the &ra!ti!al o&erations as related to the 2P:s are ado&ted b% the ban(s are not learned.
,BSin!e the Indian ban(ing se!tor is so wide so it was not &ossible for me to !o/er all the ban(s of the Indian ban(ing se!tor. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 19 C"APTER!2 T"EROTICAL BACKGROUND REVIEW OF LITERATURE A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 20 CONCEPTUAL AND T"EORETICAL IDEA OF NPA,( N52!P/3653>'2@ A((/1( (NPAS) C M/%2'2@ :ssets whi!h generate &eriodi!al in!ome are !alled as &erforming assets. :ssets whi!h do not generate &eriodi!al in!ome are !alled as non&erforming assets. :n asset# in!luding a leased asset# be!omes non&erforming when it !eases to generate in!ome for the ban(. : non&erforming asset 72P:8 is a loan or an ad/an!e whereJ i. interest and0 or instalment of &rin!i&al remain o/erdue for a &eriod of more than F* da%s in res&e!t of a term loan# ii. The a!!ount remains Kout of order Kfor more than F* da%s in res&e!t of an 9/erdraft0Cash Credit 79D0CC8# iii. The bill remains o/erdue for a &eriod of more than F* da%s in the !ase of bills &ur!hased and dis!ounted# i/. The instalment of &rin!i&al or interest thereon remains o/erdue for two !ro& seasons for short duration !ro&s# /. The instalment of &rin!i&al or interest thereon remains o/erdue for one !ro& season for ;ong duration !ro&s# /i. The amount of liquidit% fa!ilit% remains outstanding for more than F* da%s# in res&e!t of a se!uriti=ation transa!tion underta(en in terms of guidelines on A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 21 se!uriti=ation dated Eebruar% +# )**@. /ii. in res&e!t of deri/ati/e transa!tions# the o/erdue re!ei/ables re&resenting &ositi/e mar( to mar(et /alue of a deri/ati/e !ontra!t# if these remain un&aid for a &eriod of F* da%s from the s&e!ified due date for &a%ment. Ban(s should# !lassif% an a!!ount as 2P: onl% if the interest due and !harged during an% Luarter is not ser/i!ed full% within F* da%s from the end of the quarter. :n% amount due to the ban( under an% !redit fa!ilit% is Ko/erdue if it is not &aid on the due date fi"ed b% the ban(. C%?(/( 653 C3/%1'52 56 N52!P/3653>'2@ A((/1( ED1/32%* .%?(/(0 2atural !alamities and !limati! !onditions$ 1e!ession# !hanges in Go/ernment &oli!ies !hanges in e!onomi! !onditions# Industr% related &roblems# Im&a!t of liberali=ation on industries# Te!hni!al &roblems I21/32%* .%?(/(0 Internal defaulters$ Ea!ult% &ro'e!ts# Most of the &ro'e!t re&orts are ground realities# &ro&er lin(ages# &rodu!t &ri!ing et!. Some a&&roa!h for the Mhe!(N of starting a /enture# with &oor (nowledge of &rodu!t ris(s# o/er de&ended on &oorl% &aid (illed wor(ers and te!hni!ians# Building u& &ressure for san!tions# Ine&t handling b% ban(er3s la!( of &rofessionalism and a&&raisal standards# 2onobser/an!e of s%stem# &ro!edures and noninsisten!e of !ollaterals et!# ;a!( of &ost san!tion monitoring# un!he!(ed di/ersions. ASSET CLASSIFICATION C%1/@53'/( 56 NPA( A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 22 Ban(s are required to !lassif% non&erforming assets further into the following three Categories based on the &eriod for whi!h the asset has remained non&erforming and the 1eali=e abilit% of the duesB i. Substandard :ssets ii. Doubtful :ssets iii. ;oss :ssets S?;(1%27%37 A((/1( <ith effe!t from ,+ Mar!h )**-# a substandard asset would be one# whi!h has remained 2P: for a &eriod less than or equal to +) months. In su!h !ases# the !urrent net worth of the borrower0 guarantor or the !urrent mar(et /alue of the se!urit% !harged is not enough to ensure re!o/er% of the dues to the ban(s in full. In other words# su!h an asset will ha/e well defined !redit wea(nesses that 'eo&ardi=e the liquidation of the debt and are !hara!teri=ed b% the distin!t &ossibilit% that the ban(s will sustain some loss# if defi!ien!ies are not !orre!ted. D5?;16?* A((/1( <ith effe!t from Mar!h ,+# )**-# an asset would be !lassified as doubtful if it has remained in the substandard !ategor% for a &eriod of +) months. : loan !lassified as doubtful has all the wea(nesses inherent in assets that were !lassified as substandard# with the added !hara!teristi! that the wea(nesses ma(e !olle!tion or liquidation in full# ? on the basis of !urrentl% (nown fa!ts# !onditions and /alues ? highl% questionable and im&robable. L5(( A((/1( : loss asset is one where loss has been identified b% the ban( or internal or e"ternal A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 23 auditors or the 1BI ins&e!tion but the amount has not been written off wholl%. In other words# su!h an asset is !onsidered un!olle!tible and of su!h little /alue that its !ontinuan!e as a ban( able asset is not warranted although there ma% be some sal/age or re!o/er% /alue. T:=/( 56 NPA G35(( NPA Gross 2P:s are the sum total of all loan assets that are !lassified as 2P:s as &er 1BI Guideline as on Balan!e Sheet date. Gross 2P: is ad/an!e whi!h is !onsidered Irre!o/erable# for ban( has made &ro/isions# and whi!h is still held in ban(sO boo(s of a!!ount Gross 2P: refle!ts the qualit% of the loans made b% Ban(s. It !onsists of all the nonstandard assets li(e as substandard# doubtful# and loss assets. It !an be !al!ulated withthe hel& of following ratioB Gross 2P:s 1atio P Gross 2P:s 0 Gross :d/an!es N/1 NPA 2et 2P:s are those t%&e of 2P:s in whi!h the ban( has dedu!ted the &ro/ision regarding 2P:s.2et 2P: shows the a!tual burden of ban(s. Sin!e in India# ban( balan!e sheets !ontain a huge amount of 2P:s and the &ro!ess of re!o/er% and write off of loans is /er% Time !onsuming# the &ro/isions the ban(s ha/e to ma(e against the 2P:s a!!ording to the Central ban( guidelines# are quite signifi!ant. That is wh% the differen!e between gross and net 2P: is quite high. It !an be !al!ulated b% following# 2et 2P:s P Gross 2P:s ? Pro/isions 0 Gross :d/an!es ? Pro/isions A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 24 C%?(/( 653 NPA The fa!tors attributed for the !ause of 2P: !an beB Im&ro&er sele!tion of borrower3s a!ti/ities# <ea( !redit a&&raisal s%stem Industrial &roblem# Ineffi!ien!% in management of borrower# Sla!(ness in !redit management > monitoring# ;a!( of &ro&er follow u& b% ban(# 1e!ession in the mar(et# Due to natural !alamities and other un!ertainties . I>=%.1 56 NPA,( 52 ;%24'2@ 5=/3%1'52( The effi!ien!% of a ban( is not refle!ted onl% b% the si=e of its balan!e sheet but also b% the le/el of return on its assets. The 2P:s do not generate interest in!ome for ban(s. :t the same time# ban(s are required to &ro/ide &ro/isions for 2P:s from their !urrent &rofits. The 2P:s ha/e deleterious im&a!t on the return on assets in the following wa%sB a. The interest in!ome of ban(s will fall and it is to be a!!ounted onl% on re!ei&t basis. b. Ban(s &rofitabilit% is affe!ted ad/ersel% be!ause of the &ro/iding of doubtful debts and Consequent to writing it off as bad debts. !. 1eturn on in/estments 719I8 is redu!ed. d. The !a&ital adequa!% ratio is disturbed as 2P:s enter into its !al!ulation. e. The !ost of !a&ital will go u&. f. :sset and liabilit% mismat!h will widen. g. It limits re!%!ling of the funds C5(1 56 N52=/3653>'2@ %((/1( 2onPerforming :ssets affe!t the &rofitabilit%# liquidit% and !om&etiti/e fun!tioning of ban(s and de/elo&mental finan!ial institutions and finall% the &s%!holog% of the ban(ers in res&e!t of their dis&osition towards !redit deli/er% and !redit e"&ansion. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 25 2onPerforming assets !ause high !ost for the ban(# as these assets do not im&ro/e an% of the followingB +BProfits )BCa&ital adequa!% ,B1edu!tion of other !osts 4BCa&ital mar(et &er!e&tion The impact of NPAs on the profitability of the banks is summarized in the following points:-
+. R/7?./( /%32'2@ .%=%.'1: 56 19/ %((/1(0 2P: s redu!ed the earning !a&a!it% of the assets and as a result of this return on assets get affe!ted. ). B*5.4( .%='1%*0 2P: s !arr% ris( weight of +**I 7to the e"tent it is un!o/ered8. Therefore the% blo!( !a&ital for maintaining Ca&ital adequa!%. :s 2P: s do not earn an% in!ome# the% are ad/ersel% affe!ting MCa&ital :dequa!% 1atioN of the ban(. ,. I2.?33/2./ 56 %77'1'52%* .5(10 Carr%ing of 2P:3s require in!urren!e of #Cost of Ca&ital :dequa!%# Cost of funds in 2P:3s and 9&erating !ost for monitoring and re!o/ering 2P:3s. 4. R/7?./( EVA0 <hile !al!ulating E!onomi! Dalue :dded 7ED: P2et o&erating &rofit after ta" minus !ost of !a&ital8 for measuring &erforman!e towards shareholders /alue !reation# !umulati/e loan loss &ro/isions on 2P:s s !onsidered as !a&ital. $en!e# it in!reases !ost of !a&ital and redu!es ED:. -. L5) :'/*7 52 %7&%2./(0 Due to 2P:s# %ield on ad/an!es shows a lower figure than a!tual %ield on Mstandard :d/an!esN. The reasons that %ield are !al!ulated on wee(l% a/erage total ad/an!es in!luding 2P:s. @. E66/.1 52 R/1?32 52 A((/1(0 2P:s redu!e earning !a&a!it% of the assets and as a result of this# 19: gets affe!ted A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 26 V%3'5?( S1/=( 653 R/7?.'2@ NPA(0! +. Pre&are a loan re!o/er% &oli!% and strategies for redu!ing 2P:s. ). Create s&e!ial re!o/er% !ells as head offi!e0Qonal offi!e0 regional offi!e le/els identif% !riti!al bran!hes for re!o/er% ,. Ei" targets of re!o/er% and draw time bound a!tion &rogrammer 4. Sele!t &ro&er te!hniques for sol/ing the &roblem of ea!h 2P: -. Monitor im&lementing of the time bound a!tion &lan @. Ta(e !orre!ti/e ste&s when e/er found ne!essar% while monitoring the a!tion &lan and ma(e !hanges in the original &lan if ne!essar% W9: %3/ NPA( '2.3/%('2@E Growing 2P:s is the biggest !hallenge for the ban(ing industr%. : slowing e!onom% is bound to see an in!rease in 2P:s. 2otwithstanding the e!onomi! wea(ness# the 2P:s of ban(s ha/e registered in!reases sin!e EY )*+) whi!h is a !ause of !on!ern for us. The 2P: in!reases ha/e been more &ronoun!ed in !ase of the &ubli! se!tor ban(s. There are /arious fa!tors affe!ting the asset qualit% of SCBs ad/ersel%# su!h as the !urrent slowdown global and domesti!# &ersistent &oli!% log'ams# dela%ed !learan!es of /arious &ro'e!ts# aggressi/e e"&ansion b% !or&orate during the high growth &hase et!. $owe/er# it is the short!omings in the !redit a&&raisal# disbursal and re!o/er% me!hanism of the ban(s# besides the e!onomi! slowdown that !an in large &art be held res&onsible for their high le/els of 2P:s. ;a!( of robust /erifi!ation and s!reening of a&&li!ation# absen!e of su&er/ision following !redit disbursal and shortfalls in the re!o/er% me!hanism ha/e led to the deterioration of asset qualit% of these ban(s. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 27 C3/7'1 R%1'2@( %27 A((/1 F?%*'1: ;et us now see the relationshi& between !redit ratings and asset qualit% of the ban(s. Credit ratings are forward loo(ing o&inion e"&ressed b% a !redit rating agen!% on the abilit% and willingness of a borrower to &a% his dues in full and on time. More s&e!ifi!all%# !redit ratings are relati/e ran(ing of borrowers based on the !redit rating agen!%3s assessment of !reditworthiness of the borrowers within a gi/en uni/erse. Credit ratings ma% also indi!ate the !redit ris( asso!iated with a s&e!ifi! !redit fa!ilit% or a s&e!ifi! se!urit%. $ow does a !redit rating differ from !redit s!ores assigned b% !redit information !om&aniesH Both !redit rating and !redit s!ores are a measure of !redit ris( and refle!t the /ar%ing le/el of &robabilit% of default of a gi/en borrower. The differen!e is in the methodolog% used b% them to assess the !redit ris(. <hile !redit ratings are forward loo(ing o&inion about !redit ris(# !redit s!ores assigned b% !redit bureaus are based on !redit histor% of a borrower. Credit ratings ta(e into a!!ount the ris( that a borrower ma% fa!e during a gi/en time hori=on in the future# whereas !redit s!ores are based on the &ast &erforman!e of a borrower with regard to ser/i!ing of debt. The se!ond differen!e is that !redit s!ores are assigned to a &arti!ular borrower while !redit ratings !an be assigned to a s&e!ifi! fa!ilit%. <hile !redit rating generall% denotes a rating assigned b% a !redit rating agen!%# there is also a me!hanism of internal ratings b% ban(s. : me!hanism of internal !redit rating of borrowers was in e"isten!e in ban(s mu!h before e"ternal !redit rating of ban( loans were introdu!ed under Basel II regulations. 1eser/e Ban(3s guidelines on R1is( Management S%stems in Ban(s3 issued in 9!tober +FFF# indi!ated that measurement of !redit ris( through !redit rating0s!oring re!ei/e the to& management3s attention. Eurther# the RGuidan!e 2ote on Credit 1is( Management3 issued in 9!tober )**)# stated thatB R: Creditris( 1ating Eramewor( 7C1E8 is ne!essar% to a/oid the limitations asso!iated with a sim&listi! and broad !lassifi!ation of loans0e"&osures into a MgoodN or a MbadN !ategor%. The C1E de&lo%s a number0 al&habet0 s%mbol as a &rimar% A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 28 summar% indi!ator of ris(s asso!iated with a !redit e"&osure. Su!h a rating framewor( is the basi! module for de/elo&ing a !redit ris( management s%stem and all ad/an!ed models0a&&roa!hes are based on this stru!ture.3 The !redit rating assigned b% a ban( !ould be used for the followingB a. Indi/idual !redit sele!tion ? to de!ide whether to lend or not to a &arti!ular borrower. b. Pri!ing 7!redit s&read8 and s&e!ifi! features of the loan fa!ilit% <hile ris( based &ri!ing is an essential !om&onent of !redit ris( management# a/ailable e/iden!e suggest that !om&etiti/e fa!tors influen!e the &ri!ing of a ban( loan more than the ris( rating. $owe/er# for traded debt instruments# li(e !ommer!ial &a&er# there is still lin( between rating and !redit s&reads. c. Portfoliole/el anal%sis. d. Sur/eillan!e# monitoring and internal MIS. e. :ssessing the aggregate ris( &rofile of ban(0 lender. These would be rele/ant for &ortfoliole/el anal%sis. Eor instan!e# the s&read of !redit e"&osures a!ross /arious C1E !ategories# the mean and the standard de/iation of losses o!!urring in ea!h C1E !ategor% and the o/erall migration of e"&osures would highlight the aggregated !reditris( for the entire &ortfolio of the ban(. In line with 1eser/e Ban(3s guidelines# ban(s in India ha/e &ut in &la!e an internal !redit rating framewor(. Internal rating framewor(s a/ailable with man% of the ban(s are based on solutions de/elo&ed b% e"ternal ser/i!e &ro/iders. $owe/er# the effe!ti/eness and so&histi!ation le/els of internal rating framewor( /ar% from ban( to ban(. <hile differen!e of o&inion is essential to a/oid Rherding3# large /arian!e in ratings b% ban(s using similar models !ould &ut a question mar( o/er the stabilit% of the models or the abilit% of users to use the models a&&ro&riatel%. In addition to the internal !redit rating framewor(# whi!h are generall% used to rate !or&orate !lients# ban(s also use sim&le !redit s!oring models to rate smaller borrowers and retail borrowers. Credit s!oring models for retail !ustomers generall% loo( at the following four grou&s of indi!ators ? demogra&hi! indi!ators# finan!ial A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 29 indi!ators# em&lo%ment indi!ators and beha/ioral indi!ators. Sin!e !redit ratings0s!ores are a measure of !redit ris(# it has a strong lin( with 2P:s. ;oans e"tended b% ban(s are !lassified as 2P:s when the ban( !onsiders that borrower has not ser/i!ed his debt or is unli(el% to ser/i!e his debt as &er the terms and !onditions of the !ontra!t. :s su!h 2P:s are manifestation of !redit ris(. Sin!e !redit ratings are relati/e measure of !redit ris(# the li(elihood of default of a borrower with a higher !redit rating should be lower than a borrower with a lower !redit rating. :s a !orollar%# a higher &ro&ortion of borrowers with good !redit rating in the boo(s of a ban( should translate into lower le/el of 2P:s. <hether that assertion is true or not requires us to e/aluate the !redit ratings assigned b% a !redit rating agen!% b% 'u"ta&osing them against the a!tual default e"&erien!e. :nother im&ortant fa!tor that needs to be (e&t in mind while !omå the ratings b% a C1: with that b% a ban( is what !onstitutes a Rdefault3H Credit rating agen!ies re!ognise default e/en if there is a default of one ru&ee or a dela% of one da% in ser/i!ing the s!heduled debt obligations. :s far as ban(s are !on!erned# an asset is treated as non&erforming asset onl% when a s!heduled &a%ment remains o/erdue for a &eriod of more than F* da%s. The definition of default is different as the &ur&ose of re!ognition of default is different. W9%1 (95?*7 ;%24( ;/ 75'2@E There is growing need for ban(s to strengthen their internal !redit a&&raisal s%stem i.e. on their !redit assessment and ris( management me!hanisms. :t the same time# ban(s should also !onsider using e"ternal !redit a&&raisals in !on'un!tion with their own assessment. This would mean getting the house in order and at least on this s!ore# ban(s would be on stronger ground. Ban(s would still be /ulnerable to other fa!tors su!h as e!onomi! slowdown# or &oli!% !hanges or wilful defaults. But# one area of !on!ern would be &lugged. This is where !redit rating agen!ies !an &la% an im&ortant role gi/en their e"&erien!e as well as stead% tra!( re!ord o/er the %ears. R/@?*%1'52 56 CRA( In the Indian !onte"t# the general su&erintenden!e and regulation of !redit rating A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 30 agen!ies are !arried out b% the SEBI under Se!urities and E"!hange Board of India 7Credit 1ating :gen!ies8 1egulations# +FFF. The regulations issued b% SEBI !o/er /arious as&e!ts /i=.# registration of rating agen!ies# fit and &ro&er !riteria for rating agen!ies# rating &ro!ess and methodolog% and its re!ords# trans&aren!% and dis!losures# a/oidan!e of !onfli!t of interest# !ode of !ondu!t# et!. <hile these regulations were initiall% a&&li!able to rating of debt se!urities b% !redit rating agen!ies# the% ha/e been e"tended to !o/er all rating a!ti/ities in!luding ban( loan ratings. :dditionall%# the a!!reditation for a !redit rating agen!% to qualif% as an eligible E"ternal Credit :ssessment Institution under Basel II framewor( is issued b% the 1eser/e Ban( of India. Su!h a!!reditation b% the 1eser/e Ban( of India is issued after e/aluating a !redit rating agen!%3s abilit% to adhere to the standards &res!ribed under the Basel II framewor(. 1eser/e Ban( of India has so far a!!redited si" !redit rating agen!ies /i=.# Crisil# IC1:# C:1E# India 1atings# Bri!(wor( 1atings and SME1: 1atings. <hile a!!rediting !redit rating agen!ies 1eser/e Ban( has been mindful of the need to ha/e an o&timum le/el of !om&etition in the ratings mar(et. In this regard# !ertain studies on effe!t of !om&etition among !redit rating agen!ies ha/e indi!ated that in!reased le/el of !om&etition ma% lead to Rrating sho&&ing3 and thus affe!t the qualit% of ratings. :nil A Aash%a& and 2atalia Ao/ri'n%(h 7Se&tember )*+,8 ha/e shown that RS!om&etition among C1:s !auses them to redu!e their fees# &ut in less effort# and thus leads to less a!!urate ratings3. $owe/er# in order to a/oid &redator% &ri!ing# 1eser/e Ban( has mandated that !redit rating agen!ies should dis!lose the nature of their !om&ensation arrangements with the rated entities on their websites. The dis!losure should in!lude the minimum fee that a !redit rating agen!% will !harge and fa!tors determining the fee !harged. Credit rating agen!ies3 eligibilit% is assessed against /arious qualitati/e and quantitati/e &arameters. These requirements are grou&ed into the following si" !riteriaB 9b'e!ti/it%# Inde&enden!e# International a!!ess0Trans&aren!%# Dis!losure# 1esour!es# and Credibilit%. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 31 O;A/.1'&'1:0 Basel regulations &res!ribe that the methodolog% for assigning !redit ratings must be rigorous# s%stemati!# and sub'e!t to some form of /alidation 7ba!( testing et!.8 based on histori!al e"&erien!e. Eurther# the ratings should be sub'e!ted to !ontinuous sur/eillan!e. 1eser/e Ban( assesses this !riteria in terms of fa!tors li(e !redit rating agen!%3s definition of default and a!tion ta(en on default# histori!al default rates# !ordialit% of default rates 7i.e.# lower the rating higher the default &robabilit%8# stabilit% of the ratings 7i.e.# &robabilit% that a gi/en rating remain un!hanged during a gi/en &eriod8# &redi!ti/e abilit% of the ratings# im&ro/ement to the rating methodolog% to refle!t !urrent trends et!. 1eser/e Ban( loo(s into the default studies# transition matri!es# Gini Coeffi!ient et!. of !redit rating agen!ies to !ondu!t the abo/e assessment. To ensure standardi=ation of default rates# the 1eser/e Ban( of India has mandated that all rating agen!ies shall use a uniform definition of default as far as the ban( loan ratings are !on!erned. I27/=/27/2./0 Basel norms state that a !redit rating agen!% should be inde&endent and not sub'e!ted to &oliti!al or e!onomi! &ressures while rating. The rating &ro!ess should also be free from !onfli!t of interest that ma% arise due to shareholding &attern or !om&osition of board of dire!tors. To assess whether a rating agen!% is inde&endent# 1eser/e Ban( of India e/aluates the ownershi& and organi=ation stru!ture 7&resen!e of inde&endent dire!tors in the Board > rating !ommittees8# Inde&enden!e of indi/iduals i.e. !onfli!t of interestbetween rating fee and qualit% of ratings# !onfli!t of interest with shareholders# !onfli!t of interest at rating !ommittee le/el# se&aration of business de/elo&ment and rating a!ti/ities# se&aration of rating business from other business a!ti/ities. I21/32%1'52%* A../(( / T3%2(=%3/2.:0 Under this &arameter# 1eser/e Ban( e/aluates whether a !redit rating agen!% ma(es ne!essar% dis!losures with regard to rating methodologies and rating rationales to both domesti! as well as international users without an% differentiation. D'(.*5(?3/0 During the a!!reditation &ro!ess# the 1eser/e Ban( assesses whether a A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 32 !redit rating agen!% ma(es the following dis!losuresB rating methodologies# in!luding the definition of default# the time hori=on# and the meaning of ea!h ratingJ the a!tual default rates e"&erien!ed in ea!h rating !ategor%J and the transitions of the rating. In addition the Se!urities and E"!hange Board of India has also mandated a detailed set of dis!losures b% !redit rating agen!ies. R/(5?3./(0 :!!ess to suffi!ient resour!es is an im&ortant fa!tor in determining a !redit rating agen!ies abilit% to furnish qualit% ratings. 1eser/e Ban( ma(es an assessment as to whether a !redit rating agen!% has suffi!ient !a&abilities in terms of human resour!es i.e.# number of em&lo%ees# their qualifi!ations and e"&erien!e et!. Eurther# 1eser/e Ban( also loo(s into the te!hnologi!al !a&abilities of the !redit rating agen!ies before de!iding u&on their a!!reditation. In addition# 1eser/e Ban( requires !redit rating agen!ies to ha/e a!!ess to /arious sour!es of information on e!onom%# se!tors# !om&anies# et!. C3/7';'*'1:0 Credibilit% of a rating agen!% is assessed based on the degree of a!!e&tabilit% of ratings of a rating agen!% b% inde&endent &arties /i=.# in/estors# insurers# trading &artners et!. 1eser/e Ban( also loo(s into the internal &ro!edures &ut in &la!e b% the !redit rating agen!ies to &re/ent misuse of !onfidential information a!quired b% them during their rating e"er!ise. Credit rating agen!%3s adheren!e to !ode of !ondu!t &res!ribed b% Se!urities and E"!hange Board of India# International 9rgani=ation of Se!urities Commissions 7I9SC98 and :sso!iation of Credit 1ating :gen!ies in :sia 7:C1::8 are also anal%=ed to determine the !redibilit% of a !redit rating agen!%. In addition to a!!rediting !redit rating agen!ies# Basel II framewor( requires that the ratings assigned b% !redit rating agen!ies shall be ma&&ed to a&&ro&riate ris( weights a/ailable under the standardi=ed ris( weighting framewor(. Basel II framewor( requires that national regulators should de!ide whi!h rating !ategories !orres&ond to whi!h ris( weights. The ma&&ing &ro!ess should be ob'e!ti/e and should result in a ris( weight assignment !onsistent with the le/el of !redit ris( refle!ted in the ratings. In India the 1eser/e Ban( has &res!ribed uniform ris( weights for all rating agen!ies. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 33 Su!h uniform ris( weights are &res!ribed due to relati/el% low &enetration of ratings and absen!e of suffi!ient histori!al default data. In addition to the detailed assessment at the time of a!!reditation# the 1eser/e Ban( of India also !ondu!ts an annual re/iew of a!!reditation of !redit rating agen!ies to assess their eligibilit% for !ontinued a!!reditation under Basel II framewor(. During the re/iew e"er!ise# 1eser/e Ban( e/aluates the &ro!esses as well as the out!omes. The !umulati/e default rates of rated &ortfolio of indi/idual rating agen!% is e/aluated in !om&arison with the ben!hmar( !umulati/e default rates &ro&osed under the Basel II framewor(. The !umulati/e default rates of the ban( loan ratings in India are higher than the ben!hmar(s &ro/ided b% Basel II framewor(. "5) 15 >/3@/ ;%24( .3/7'1 %==3%'(%*( %27 CRA(, %((/((>/21(E There are essentiall% four issues here where ban(s and C1:s need to wor( together whi!h will also hel& ban(s to deris( their own &ortfolios as well as monitor their loans more effe!ti/el%. Eirst# Indian ban(s in !onformit% with the Basel II norms ha/e been e"tensi/el% using the !redit assessment o&inion of e"ternal rating agen!ies for !al!ulating ris( based !a&ital requirements. E/en though ban(s do not require !redit rating b% e"ternal rating agen!ies for !al!ulating their !a&ital requirement for all loans 7onl% loans abo/e T +* !rore require !redit rating8# some are seemed to be as(ing !om&anies to get a rating. This e/identl% is being done to enhan!e their !redit assessments. Luite !learl%# there is re!ognition of the /alue brought to the table b% C1:s for ban(s whi!h is being used for &ur&oses be%ond !a&ital adequa!%. $owe/er# ban(s should ta(e into a!!ount the !ost to the !om&anies and balan!e it against the benefits. <e tal( of sharing of !redit information# whi!h is /ital gi/en the frequent o!!urren!e of business !%!les and their !onsequen!es. <e ha/e institutions !alled !redit information !om&anies whi!h &ro/ide su!h information to ban(s on the indi/idual !om&anies. Eurther# a transition stor% of how ratings ha/e been mo/ing o/er time is also a/ailable whi!h the ban(ers should monitor and &i!( u& and regularl% draw a &arallel rating ma& of C1:s whi!h the% should !om&are with their own models and A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 34 rating. This will be one useful !he!( whi!h ban(s !an !reate for their entire &ortfolio. Se!ond# I do see a lot of use in the &rodu!ts offered b% C1:s and there is need to see how we !an further integrate the two models of !redit ris( assessment of ban(s and C1:s. There is a suggestion that ban(s should deris( their own &ortfolio b% as(ing !om&anies loo(ing for long term finan!e to &artl% borrow from the !or&orate debt mar(et. This wa% the >%34/1 '21/**'@/2./ of C1:s whi!h is mandator% for bond mar(et borrowing would be an additional in&ut that would !ome in hand% for ban(s when the% are lending mone% to the entit%. This is e/en more &ertinent toda% be!ause of :;M issues and the demand for funds that would arise on!e the e!onom% &i!(s u& and infrastru!ture starts to boom. Ban(s ma% not be able to full% meet the demand for funds to the borrowers. <e ha/e to start wor(ing out in detail the im&li!ations of su!h a mo/e# but in this forum it is worth germinating su!h a thought !onsidering that we ha/e e"&erts from both ban(s and C1:s &resent here. Thirdl%# one segment whi!h &arti!ularl% be!omes /ulnerable to e!onomi! sho!(s is the SME segment. The% are disad/antaged on a!!ount of their si=e and also are the first ones to get affe!ted when the downturn ta(es &la!e. C1:s ha/e models in &la!e for rating of SMEs and the 2SIC s!heme gi/es a subsid% to SMEs for the rating. It will be a good idea for ban(s to require a rating from these SMEs before gi/ing a loan so that there is a !he!( in &la!e before the loan is disbursed. Gi/en the large number of SMEs in our s&a!e# it ma% not be &ossible for ban(s to do a due diligen!e for one and all. This is where the s%stems organi=ed b% C1:s !an be harnessed b% ban(s so that there is some homewor( alread% done whi!h is useful for ban(s Eourth# as %ou ma% be aware# re!entl% we ha/e gi/en guidelines on ban(s offering !redit enhan!ement on infra bonds issued sub'e!t to !ertain !onditions. This is definitel% one measure that we would li(e to &ursue whi!h will also wor( towards de/elo&ing the bond mar(et. :t the same time# we see an im&ortant role for C1:s here too. This is an e"am&le of a !ase of the bond mar(et# ban(s and C1:s all wor(ing together for an o&timal solution whi!h will finall% benefit the e!onom%. The de/elo&ment of !or&orate bond mar(et is /er% !riti!al for le/eraging the s%nergies A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 35 between ban(s and C1:s whi!h !an address the issue of growing 2P:s in the s%stem. Therefore# I do see C1:s &la%ing a /er% im&ortant role in the o&erations of ban(s that go be%ond 'ust !a&ital adequa!% and Basel II. The final de!ision as well as the !redit a&&raisal has to be done b% the ban( and what the C1: &ro/ides will onl% be additional information that !an be used. Ban(s will also be loo(ing towards the C1:s to sha&e u& their !a&ital requirements under Basel III as the% ha/e to raise tier II bonds for shoring it u&. But that will be more as a mar(et borrower rather than a lender. :lthough the road has been set for Indian ban(s to migrate to an internal rating based a&&roa!h for e/aluating their !redit ris(# the abilit% and &re&aredness of these ban(s to migrate to the internal rating a&&roa!h is e"&e!ted to be !ontingent on ban(s being in a &osition to test data based on the models to be used for this &ur&ose. Ban(s would thus ne!essaril% ha/e to rel% on e"ternal !redit ratings for their !al!ulation of !redit ris( until all the s%stems are in &la!e. A..5?21%;'*'1: 56 CRA( 2ow let us loo( at the issue of a!!ountabilit% and trans&aren!% of !redit rating agen!ies. <h% should there be a!!ountabilit% and trans&aren!% of !redit rating agen!iesH This brings us to the moot &oint of who &a%s for the !redit ratings. There are two !on/entional models. These areB Rin/estor&a%3 model# where the in/estor or ban(er !ommissions the !redit rating and Rissuer&a%3 model# where the issuer of the se!urit% or borrower &a%s for the rating. 9f late# a new model is being &ro&osedB Rso!iet%&a%3 model# where a neutral third &art%# i.e.# Go/ernment# 1egulator et!.# &a%s for the rating of a debt. Ea!h model has its own ad/antages and disad/antages. ;et us anal%ses the Rissuer &a%3 model further as that is the most &re/alent model !urrentl% in our !ountr%. :s said earlier# in the issuer &a% model# the issuer of the debt or the borrower !ommissions the !redit rating either /oluntaril% or to !om&l% with regulator% requirement. In India# as far as &ubli! issue of debt is !on!erned# regulations b% the Se!urities and E"!hange Board of India and 1eser/e Ban( of India ma(e it mandator% for the issuers to obtain A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 36 a !redit rating. :s far as the ban( loans are !on!erned there is no su!h mandator% requirement# e/en though the !a&ital requirements of ban(s with regard to !or&orate loans are de&endent on !redit ratings. Ban(s ma% at their dis!retion require borrowers to obtain !redit ratings. The ad/antages of issuer&a% model is that# ratings on!e assigned and a!!e&ted# are dis!losed &ubli!l% and is a/ailable for users at free of !harge. Small in/estors and indi/iduals who wish to in/est in debt se!urities need not &a% for a!!essing the !redit ratings. :nother ad/antage of this model !ould be that issuers ma% be more forth!oming in sharing information as the% are the ones who ha/e !ommissioned the rating. $owe/er# there is an inherent !onfli!t of interest in this model. Sin!e the in!ome and &rofits of !redit rating agen!ies are de&endent u&on the /olume of ratings the% assign# there ma% be a tenden!% to assign inflated ratings to a!quire and retain !lients. The Einan!ial Crisis Inquir% Commission 7)*++# Page )+)8# whi!h went into the !auses of the finan!ial and e!onomi! !risis in the United States# has !on!luded that RS.the business model under whi!h firms issuing se!urities &aid for their ratings seriousl% undermined the qualit% and integrit% of those ratingsJ the rating agen!ies &la!ed mar(et share and &rofit !onsiderations abo/e the qualit% and integrit% of their ratings3. Su!h !on!lusions on the !ontribution of !redit rating agen!ies to the re!ent finan!ial !risis ha/e led to !alls for tougher regulator% o/ersight on !redit rating agen!ies. To !on!lude# we !an see that among the &roa!ti/e ste&s that a ban( !an ta(e to stem the &roblem of in!reasing le/el of 2P:s and stressed assets# use of !redit ratings is an im&ortant one. Ban(s !an use the e"ternal ratings as third &art%# &rofessional assessment# either as a standalone basis or in !ombination with their own internal ratings. $owe/er# ban(s need to balan!e the use of e"ternal ratings# as the re!ent finan!ial !risis has highlighted the dangers of o/er de&enden!e on ratings. NPA ! I>=%.1 52 B%*%2./ S9//1
A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 37 The &roblem of 2P:s in the Indian ban(ing s%stem is one of the foremost and the most formidable &roblems that had im&a!t the entire ban(ing s%stem. $igher 2P: ratio trembles the !onfiden!e of in/estors# de&ositors# lenders et!. It also !auses &oor re!%!ling of funds# whi!h in turn will ha/e deleterious effe!t on the de&lo%ment of !redit. The nonre!o/er% of loans effe!ts not onl% further a/ailabilit% of !redit but also finan!ial soundness of the ban(s.
P356'1%;'*'1:B 2P:s &ut detrimental im&a!t on the &rofitabilit% as ban(s sto& to earn in!ome on one hand and attra!t higher &ro/isioning !om&ared to standard assets on the other hand. 9n an a/erage# ban(s are &ro/iding around )-I to ,*I additional &ro/ision on in!remental 2P:s whi!h has dire!t bearing on the &rofitabilit% of the ban(s.
A((/1 (C3/7'1) .5213%.1'52B The in!reased 2P:s &ut &ressure on re!%!ling of funds and redu!es the abilit% of ban(s for lending more and thus results in lesser interest in!ome. It !ontra!ts the mone% sto!( whi!h ma% lead to e!onomi! slowdown.
L'%;'*'1: M%2%@/>/210 In the light of high 2P:s# Ban(s tend to lower the interest rates on de&osits on one hand and li(el% to le/% higher interest rates on ad/an!es to sustain 2IM. This ma% be!ome hurdle in smooth finan!ial intermediation &ro!ess and ham&ers ban(s3 business as well as e!onomi! growth. C%='1%* A7/G?%.:B :s &er Basel norms# ban(s are required to maintain adequate !a&ital on ris(weighted assets on an ongoing basis. E/er% in!rease in 2P: le/el adds to ris( weighted assets whi!h warrant the ban(s to shore u& their !a&ital base further. Ca&ital has a &ri!e tag ranging from +)I to +5I sin!e it is a s!ar!e resour!e.
S9%3/95*7/3(, .526'7/2./B 2ormall%# shareholders are interested to enhan!e /alue of their in/estments through higher di/idends and mar(et !a&itali=ation whi!h is &ossible onl% when the ban( &osts signifi!ant &rofits through im&ro/ed business. The in!reased A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 38 2P: le/el is li(el% to ha/e ad/erse im&a!t on the ban( business as well as &rofitabilit% thereb% the shareholders do not re!ei/e a mar(et return on their !a&ital and sometimes it ma% erode their /alue of in/estments. :s &er e"tant guidelines# ban(s whose 2et 2P: le/el is -I > abo/e are required to ta(e &rior &ermission from 1BI to de!lare di/idend and also sti&ulate !a& on di/idend &a%out.
P?;*'. .526'7/2./B Credibilit% of ban(ing s%stem is also affe!ted greatl% due to higher le/el 2P:s be!ause it sha(es the !onfiden!e of general &ubli! in the soundness of the ban(ing s%stem. The in!reased 2P:s ma% &ose liquidit% issues whi!h is li(el% to lead run on ban( b% de&ositors. Thus# the in!reased in!iden!e of 2P:s not onl% affe!ts the &erforman!e of the ban(s but also affe!t the e!onom% as a whole.
In a nutshell# the high in!iden!e of 2P: has !as!ading im&a!t on all im&ortant finan!ial ratios of the ban(s /i=.# 2et Interest Margin# 1eturn on :ssets# Profitabilit%# Di/idend Pa%out# Pro/ision !o/erage ratio# Credit !ontra!tion et!.# whi!h ma% li(el% to erode the /alue of all sta(eholders in!luding Shareholders# De&ositors# Borrowers# Em&lo%ees and &ubli! at large. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 39 REVIEW OF LITERATURE :- This se!tion &ro/ides an o/er/iew of some of the e"isting literature with regard to the 2P:. This literature re/iew hel&s me to better understanding of both resear!h to&i!s and of the e"isting ga&B
10!K9/7/4%3 P55A% S< (212) : strong Ban(ing Se!tor is essential for a flourishing e!onom%. Indian ban(ing se!tor emerged stronger during )*+*++ in the aftermath of global finan!ial meltdown of )**5+* under the wat!hful e%e of its regulator. The le/el of 2P:Os a!t as an indi!ator showing the !redit ris(s > effi!ien!% of allo!ation of resour!e. 2P: in/ol/es the ne!essit% of &ro/isions# an% in!rease in whi!h bring down the o/erall &rofitabilit% of ban(s. :n e"!essi/e rise in interest rates o/er the &ast +5 months has led to a shar& in!rease in non&erforming assets. This not onl% affe!ts the ban(s but also the e!onom% as a whole. This &a&er deals with understanding the !on!e&t of 2P:# the !auses and o/er/iew of different se!tors in India.
20!S/*&%3%A%2 B< %27 V%7'&%*%@%2$ G<(212) 9/er the few %ears Indian ban(ing# attem&ts to integrate with the global ban(ing has been fa!ing lots of hurdles in its wa% due to !ertain inherent wea(ness# des&ite its high sounding !laims and loft% a!hie/ements. In a de/elo&ing !ountr%# ban(ing is seen as an im&ortant instrument of de/elo&ment# while with the demanding 2onPerforming :ssets 72P:s8# ban(s ha/e be!ome burden on the e!onom%. 2onPerforming :ssets are not merel% non remunerati/e# but the% add !ost to the !redit Management. The fear of 2on Performing :ssets &ermeates the &s%!holog% of ban( managers in entertaining new &ro'e!ts for !redit e"&ansion. 2onPerforming :ssets is not a dilemma fa!ing e"!lusi/el% the ban(ersJ it is in fa!t an all &er/asi/e national s!ourge swa%ing the entire Indian e!onom%. 2onPerforming :sset is a sore throat of the Indian e!onom% as a whole. 2onPerforming :ssets ha/e affe!ted the &rofitabilit%# liquidit% and !om&etiti/e fun!tioning of ban(s and de/elo&mental of finan!ial institutions and A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 40 finall% the &s%!holog% of the ban(ers in res&e!t of their dis&osition towards !redit deli/er% and !redit e"&ansion. 2P:s do not generate an% in!ome for the ban(s# but at the same time ban(s are required to ma(e &ro/isions for su!h 2P:s from their !urrent &rofits. :&art from internal and e"ternal !om&le"ities# in!reases in 2P:s dire!tl% affe!ts ban(sO &rofitabilit% sometimes e/en their e"isten!e.
30!M//4/3 L%33: G< %27 G3%: L%?3% (1HIJ) in +F5,# the &ubli! was gi/en its first o&&ortunit% to 3/&'/) ban( asset qualit% in the form of non!&erforming asset information. The &ur&ose of this stud% is to e/aluate that information. : regression anal%sis !omå the non!&erforming asset statisti!s with e"aminer !lassifi!ations of %((/1( suggests that the non!&erforming asset information !an be a useful aid in anal%=ing the asset qualit% of ban(s# &arti!ularl% when the information is timel%.
40!P%?*P?32/27? $ B5(/$S)%=%2 %27 D9%**%$ R'B)%2 S<7211) In this &a&er we attem&t to measure the relati/e effi!ien!% of Indian PSU ban(s on o/erall finan!ial &erforman!es. Sin!e# the finan!ial industr% in a de/elo&ing !ountr% li(e India is undergoing through a /er% d%nami! &a!e of restru!turing# it is im&erati/e for a ban( to !ontinuousl% monitor their effi!ien!% on N52!P/3653>'2@ A((/1($ Ca&ital 1is( <eighted :sset 1atio# Business &er Em&lo%ee# 1eturn on A((/1( and Profit &er Em&lo%ee. $ere# N52!P/3653>'2@ A((/1( is a negati/e finan!ial indi!ator. To &ro/e em&iri!all%# we &ro&ose a framewor( to measure effi!ien!% of Indian &ubli! se!tor ban(s. 50!V//3%4?>%3$ K<(212) The Indian ban(ing se!tor has been fa!ing serious &roblems of raising 2on!Performing :ssets 72P:s8. ;i(e a !an(er worm# 2P:s ha/e been eating the ban(ing industries from within# sin!e nationali=ation of ban(s in +F@F. 2P:s ha/e !ho(ed off quantum of !redit# restri!tion the re!%!ling of funds and leads to assetliabilit% mismat!hes. It also affe!ted &rofitabilit%# liquidit% and sol/en!% &osition of the Indian ban(ing se!tor. 9ne of the ma'or reasons for 2P:s in the A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 41 ban(ing se!tor is the ODire!t ;ending S%stemO b% the 1BI under so!ial ban(ing motto of the Go/ernment# under whi!h s!heduled !ommer!ial ban(s are required to lend 4*I of their total !redit to &riorit% se!tor. The ban(s who ha/e ad/an!ed to the &riorit% se!tor and rea!hed the target suffo!ated on a!!ount of raising 2P:s# sin!e long. The &riorit% se!tor 2P:s ha/e registered higher growth both in &er!entage and in absolute terms %ear after %ear. The &resent &a&er is an attem&t to stud% the &riorit% se!tor ad/an!es b% the &ubli!# &ri/ate and foreign ban( grou&wise# target a!hie/ed b% them and a !om&arati/e stud% on &riorit% and non!&riorit% se!tor 2P:s o/er the &eriod of +* %ears between )**+*) and )*+*++. This &a&er also aims to find out the !ategories of &riorit% se!tor ad/an!es whi!h !ontribute to the growth of total &riorit% se!tor 2P:s during the &eriod under stud%.
K0!M?319:$ K< V< B9%2? G?=1%$ L5&*//2<(212) 9ne of the ma'or reasons !ited for this state of health of ban(ing industr% has been the &ersisten!e of O2on!&erforming :ssetsO 72P:s8. In this stud% the fo!us is on the im&a!t of liberali=ation on the non! &erforming assets of the four ban(ing segments# namel%# &ubli! se!tor# old &ri/ate se!tor# new &ri/ate se!tor and foreign ban(s b% stud%ing the o/erall trends in 2P:s. <e ha/e used the Stru!ture Condu!t Performan!e 7SCP8 a&&roa!h that shows the relationshi& between !om&etition and !ondu!t# !on!entration and growth in 2P:S. 9ur results show that on an a/erage a!ross the ban(ing industr% segments# a/erage non!&erforming assets in the &ast ++ %ears ha/e been de!lining at the rate of +,I &.a. !om&ounded growth rate. The old &ri/ate se!tor ban(sO non&erforming assets ha/e redu!ed at the rate of ++.F5I and that of &ubli! se!tor ban(s ha/e de!lined at the rate of +5I and foreign ban(s at ++.4I. Though new &ri/ate se!tor ban(s and the foreign ban(s seem to be more effi!ient but their !ondu!t does not show !onsisten!% and stabilit% J0!J5(/=9$ M%;&?3/ T/27%' E7(52$ G)%2@)%&%(212) The &ur&ose of the stud% was to find out the !auses of non!&erforming loans in Qimbabwe. ;oans form a greater A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 42 &ortion of the total %((/1( in ban(s. These %((/1( generate huge interest in!ome for ban(s whi!h to a large e"tent determines the finan!ial &erforman!e of ban(s. $owe/er# some of these loans usuall% fall into non!&erforming status and ad/ersel% affe!t the &erforman!e of ban(s. In /iew of the !riti!al role ban(s &la% in an e!onom%# it is essential to identif% &roblems that affe!t the &erforman!e of these institutions. This is be!ause non!&erforming loans !an affe!t the abilit% of ban(s to &la% their role in the de/elo&ment of the e!onom%. : !ase stud% resear!h design of CBQ Ban( ;imited was em&lo%ed. Inter/iews and questionnaires were used to !olle!t data for the stud%. The &a&er re/ealed that e"ternal fa!tors are more &re/alent in !ausing non &erforming loans in CBQ Ban( ;imited. The ma'or fa!tors !ausing non&erforming loans were natural disasters# go/ernment &oli!% and the integrit% of the borrower. I0!T553 N<S< (1HH4) stated that re!o/er% of non&erforming assets through the &ro!ess of !om&romise b% dire!t tal(s rather than b% the length% and !ostl% &ro!edure of litigation. $e suggested that b% !onstant monitoring# it is &ossible to dete!t# the sti!(% a!!ounts# the in!i&ient si!(ness of the earl% stages itself and an attem&t !ould be made to re/iew the unit and &ut it ba!( on the road to re!o/er%
H0!S<N< B'7%2' (22) 2on&erforming :ssets are the smo(ing gun threatening the /er% stabilit% of Indian ban(s. 2P:s wre!( a ban(3s &rofitabilit% both through a loss of interest in!ome and writeoff of the &rin!i&al loan amount itself. This is definiti/e boo( whi!h ta!(les the sub'e!t of managing ban( 2P:s in it3s entirel%# starling right from the stage of their identifi!ation till the re!o/er% of dues in su!h a!!ounts. 10!D/;%3(9 %27 S?4%2:% G5:%* (212) em&hasi=ed on management of non &erforming assets in the &ers&e!ti/e of the &ubli! se!tor ban(s in India under stri!t asset !lassifi!ation norms# use of latest te!hnologi!al &latform based on Core Ban(ing Solution# re!o/er% &ro!edures and other ban( s&e!ifi! indi!ators in the !onte"t of stringent regulator% framewor( of the 1BI. 2on&erforming :sset is an im&ortant A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 43 &arameter in the anal%sis of finan!ial &erforman!e of a ban( as it results in de!reasing margin and higher &ro/isioning requirements for doubtful debts. The redu!tion of non &erforming asset is ne!essar% to im&ro/e &rofitabilit% of ban(s and !om&l% with the !a&ital adequa!% norms as &er the Basel :!!ord., 110!K%&'19%< N (212)$ em&hasi=ed on the assessment of non&erforming assets on &rofitabilit% its magnitude and im&a!t. Credit of total ad/an!es was in the form of doubtful assets in the &ast and has an ad/erse im&a!t on &rofitabilit% of all Publi! Se!tor Ban(s affe!ted at /er% large e"tent when non&erforming assets wor( with other ban(ing and also affe!t &rodu!ti/it% and effi!ien!% of the ban(ing grou&s. The stud% obser/ed that there is in!rease in ad/an!es o/er the &eriod of the stud%. 120! CII ( Confederation of Indian Industry ) 2014 :-For addressing te !ress"re of Non-Perfor#ing $ssets %NP$& on te ealt of te 'ndian ban(ing s)ste#* +'' as s"ggested 5-!oint a,tion !lan to te -inistr) of Finan,e and te ./'. 't 0ill el! in dealing 0it te deterioration in asset 1"alit) and red",ing te stress on te ban(2s balan,e seets. Te 5 !oint a,tion !lan fo,"ses "!on %1& .e3a#!ing te +or!orate 4ebt .estr",t"ring %+4.& #e,anis#* %2& +reating a s!e,ial resol"tion #e,anis# for te infrastr",t"re se,tor* %3& 5etting "! of a National $sset -anage#ent +o#!an)* %4& 6iberali7ing nor#s to 'n,rease ,a!itali7ation of $sset .e,onstr",tion +o#!anies* and %5& '#!ro3ing te e8e,ti3eness of te insol3en,) regi#e and i#!le#entation of legal fra#e0or(. +,B2P: management in Publi! Se!tor ban(s7)*+48 By Pravin Palande/ Forbes India Indian ban(s ha/e brought ;%7 *5%2( down to ).4I o/er +* %ears# but now the% need to be !areful The &ast three months ha/e been tough for Indian ban(ing. $igh '21/3/(1 3%1/( and A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 44 threats of a global re!ession ha/e ta(en their toll on ban( sto!(s. The 2SE ban(ing inde" fell +-I !om&ared with the N'61:,( ++I slide in the &ast three months. Indian ban(s# ironi!all%# ha/e ne/er been in a better state of health in the &ast +* %ears. : re!ent stud% b% B5(152 C52(?*1'2@ G35?= 7BCG8 found that bad loans fell from a &ea( of ++.4I in )**+ to 'ust ).4I in )*+*# showing the effi!ien!% of management of !a&ital. In fa!t# Indian ban(s ha/e been &erforming better in !ontrolling defaults with onl% *.@I of loans handed out last %ear turning sti!(%# !om&ared to +I in the US and China. Indian ban(s also ha/e a !osttoin!ome ratio of 4CI# whi!h is lower than German%# Eran!e and the US. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 45 C"APTER !3 COMPANY PROFILE C/213%* B%24 O6 I27'% Established in +F++# Central Ban( of India was the first Indian !ommer!ial ban( whi!h was wholl% owned and managed b% Indians. The establishment of the Ban( was the ultimate reali=ation of the dream of Sir Sorab'i Po!h(hanawala# founder of the A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 46 Ban(. Sir Phero=esha Mehta was the first Chairman of a trul% OSwadeshi Ban(O. In fa!t# su!h was the e"tent of &ride felt b% Sir Sorab'i Po!h(hanawala that he &ro!laimed Central Ban( of India as the O&ro&ert% of the nation and the !ountr%Os assetO. $e also added that OCentral Ban( of India li/es on &eo&leOs faith and regards itself as the &eo&leOs own ban(O. During the &ast +*) %ears of histor% the Ban( has weathered man% storms and fa!ed man% !hallenges. The Ban( !ould su!!essfull% transform e/er% threat into business o&&ortunit% and e"!elled o/er its &eers in the Ban(ing industr%. : number of inno/ati/e and unique ban(ing a!ti/ities ha/e been laun!hed b% Central Ban( of India and a brief mention of some of its &ioneering ser/i!es are as underB +F)+ Introdu!tion to the $ome Sa/ings Safe De&osit S!heme to build sa/ing0thrift habits in all se!tions of the so!iet%. +F)4 :n E"!lusi/e ;adies De&artment to !ater to the Ban(Os women !lientele. +F)@ Safe De&osit ;o!(er fa!ilit% and 1u&ee Tra/ellers Cheques. +F)F Setting u& of the E"e!utor and Trustee De&artment. +F,) De&osit Insuran!e Benefit S!heme. +F@) 1e!urring De&osit S!heme. Subsequentl%# e/en after the nationali=ation of the Ban( in the %ear +F@F# Central Ban( !ontinued to introdu!e a number of inno/ati/e ban(ing ser/i!es as underB +FC@ The Mer!hant Ban(ing Cell was established. +F5* Central !ard# the !redit !ard of the Ban( was introdu!ed. +F5@ OPlatinum 6ubilee Mone% Ba!( De&osit S!hemeO was laun!hed. +F5F The housing subsidiar% Cent Ban( $ome Einan!e ;td. was started with its headquarters at Bho&al in Madh%a Pradesh. +FF4 Lui!( Cheque Colle!tion Ser/i!e 7LCC8 > E"&ress Ser/i!e was set u& to enable s&eed% !olle!tion of outstation !heques. Eurther in line with the guidelines from 1eser/e Ban( of India as also the Go/ernment of India# Central Ban( has been &la%ing an in!reasingl% a!ti/e role in &romoting the (e% thrust areas of agri!ulture# small s!ale industries as also medium A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 47 and large industries. The Ban( also introdu!ed a number of Self Em&lo%ment S!hemes to &romote em&lo%ment among the edu!ated %outh. :mong the Publi! Se!tor Ban(s# Central Ban( of India !an be trul% des!ribed as an :ll India Ban(# due to distribution of its large networ( in )C out of )F States as also in , out of C Union Territories in India. Central Ban( of India holds a /er% &rominent &la!e among the Publi! Se!tor Ban(s on a!!ount of its networ( of 4,,@ Bran!hes# :sset 1e!o/er% Bran!hes 7:1B8 F#1etail :sset Bran!hes 71:B8 +- and )@ e"tension !ounters along with satelite bran!hes at /arious !entres throughout the length and breadth of the !ountr%. CustomersO !onfiden!e in Central Ban( of IndiaOs wide ranging ser/i!es !an /er% well be 'udged from the list of ma'or !or&orate !lients su!h as ICICI# IDBI# UTI# ;IC# $DEC as also almost all ma'or !or&orate houses in the !ountr%. C53=53%1/ V'('52 To emerge as a strong# /ibrant and &roa!ti/e Ban(0Einan!ial Su&er Mar(et and to &ositi/el% !ontribute to the emerging needs of the e!onom% through !onsistent harmoni=ation of human# finan!ial and te!hnologi!al resour!es and effe!ti/e ris( !ontrol s%stems. C53=53%1/ M'(('52 To transform the !ustomer ban(ing e"&erien!e into a fruitful and en'o%able one. To le/erage te!hnolog% for effi!ient and effe!ti/e deli/er% of all ban(ing ser/i!es. To ha/e bouquet of &rodu!t and ser/i!es tailormade to meet !ustomers as&irations. The &anIndia s&read of bran!hes a!ross all the state of the !ountr% will be utili=ed to further the so!io e!onomi! ob'e!ti/e of the Go/ernment of India with em&hasis on Einan!ial In!lusion. T9/ 5;A/.1'&/( 56 19/ C/213%* B%24 56 I27'% %3/ %( 65**5)(0 To hel& ensure the monetar% stabilit% of the !ountr%. To assist in regulating the finan!ial s%stem of the !ountr%# To formulate# im&lement and monitor the monetar% &oli!%. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 48 To maintain the liquidit% in the !ountr%. To ensure adequate flow of !redits. Pres!ribes &arameters for ban(ing in the !ountr%. Maintain &ubli! !onfiden!e in the s%stem. To manage the foreign e"!hange Management :!t. To fa!ilitate e"ternal trade. Issue and e"!hange !urren!%. Maintain su&&l% of !urren!%. 9wn and o&erate the de&ositor% and e"!hange for go/ernment bonds. Ban(er to the go/ernment
DIRECTORS OF CENTRAL BANK OF INDIA 1- hri! "a#ee$ "ishi (Chairman & Managing Director) ) S93' R%A K?>%3 G5:%* , S93' A2'>/(9 C9%?9%2 E"e!uti/e Dire!tor E"e!uti/e Dire!tor 4 S93' B<K< D'&%4%3% - S93' S%?3%;9 G%3@$ Go/ernment 2ominee Dire!tor E"e!uti/e Dire!tor @ Shri She(har Bhatnagar C S93' G?>%2('2@9 Dire!tor 1BI 2ominee Dire!tor A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 49 5 S93' G?>%2('2@9 F S93' M< P< S953%)%*% Dire!tor Dire!tor
Performance Of central Bank Of India for 3years A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 50 -ar,*2013 -ar, *2012 -ar,*2011 +a!ital 6iabilities Total 5are +a!ital 2661.58 2353.12 2021.14 91"it) 5are +a!ital 1044.58 736.12 404.14 5are $!!li,ation -one) 0 0 2025.68 Pre 5are +a!ital 1617 1617 1617 .eser3es 12651.27 8201.45 4898.15 .e3ol"tion .eser3es 0 1896.96 1928.43 Net :ort 15312.85 12451.53 10873.4 4e!osits 226038.31 196173.33 179356.02 /orro0ings 18305.51 12919.6 12887.98 Total debts 244343.82 209092.93 192244.98 ;ter 6iabilities 8472.87 8255.29 6639.93 Total 6iabilities 268129.54 2229799.75 209757.33 $559T5 +as < /alan,e 0it ./' 13560.17 13114.18 1408199 /alan,e 0it /an(s* -one) at ,all 532.04 1012.42 1200.81 $d3an,es 171935.84 147512.85 129725.41 'n3est#ents 72603.79 59243.24 54504.49 =ross /lo,( 2684.75 3770.8 3559.31 $,,"#"lated 4e!re,iation 0 1296.89 1133.93 Net /lo,( 2684.75 2473.91 2425.38 +a!ital :or( in Progress 0 0 0 ;ter $ssets 6812.95 6443.11 7819.24 Total $ssets 268129.54 229799.74 209757.32 +ontingent 6iabilities 46881.78 50885.06 36569.78 /ills For +olle,tion 18732.82 14183.44 9755.78 /oo( 3al"e 131.11 121.42 131.2 5o"r,e > 4ion =lobal 5ol"tions 6i#ited PERFORMANCE "IG"LIG"TS! FY 213!14 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 51 : %ear of !onsolidation for the Ban(. Growth moderated in tune with the Mar(et situation. Shedding of Unremunerati/e BusinessB $igh Cost Bul( De&osits ;ow Yield 0 $ighl% Pri!e Sensiti/e :d/an!es Eo!us on :gri!ulture# SME > 1etail :d/an!es &aid off 1obust growth witnessed in all the abo/e , &referred Se!tors Mo/ing towards rea!hing the regulator% target of 4*I under Priorit% Se!tor :d/an!es. 2P:s !ontained at Se&tember0De!ember )*+, le/els. Minimi=ation of Costs and Ma"imi=ation of 1e/enue started %ielding desired results Total Business of the Ban( in!reased to 1s. 4#),#,F* !rore from 1s. 4#*)#)C) !rore in Mar!h )*+,# re!ording growth of -.)- I. Total De&osits of the Ban( in!reased to 1s. )#4*#*@F !rore from 1s. )#)@#*,5 !rore in Mar!h )*+,#re!ording growth of @.)+ I. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 52 Total :d/an!es stood at 1s. +#5,#,)+ !rore against 1s. +#C@#),4 !rore in Mar!h )*+,# re!ording growth of 4.*) I. C:S: in!reased to 1s. 5*#*++ !rore from 1s. C,#-5+ !rore in Mar!h )*+,# re!ording growth of 5.C4 I . Share of C:S: in total de&osits stood at ,,.,,I as against ,).--I in Mar!h )*+,. Core De&osits in!reased to 1s. +#5C#+@4 !rore from 1s. +#C*#F-, !rore in Mar!h )*+,# re!ording growth of F.45 I. Total In!ome in!reased to 1s. )@#,-* !rore from 1s. ),#-)5 !rore in Mar!h )*+, re!ording growth of ++.FF I . Pro/ision Co/erage 1atio has im&ro/ed from 4C.C- I to -*.@5 I . C1:1 under B:SE;II is at ++.F@ I with Tier I at 5.+) I whereas C1:1 under B:SE; III is F.5C I with Tier I at C.,C I. 2IM im&ro/ed from ).@-I in EY )*+)+, to ).C,I in EY )*+,+4. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 53 CHAPTER- 4 DATA!ANALYSIS L INTERPRETATION 1<1P?;*'. (/.153 B%24( 2I!2H Table +.+ Bank/ears As on marc! 31"#$$% &ross 'PAs &ross Ad(ances &)'PA * Rank $llaabad /an( 107825 5944340 1.81 11 $ndra /an( 36814 4442760 0.83 2 /an( of /aroda 184293 14484487 1.27 5 /an( of 'ndia 247088 14473156 1.71 9 /an( of -aarastra 79841 3481728 2.29 17 +anara /an( 216797 13903691 1.56 8 Central Bank of India #31+,, -+.4$#. #)+. 1% +or!oration /an( 55922 4892712 1.14 4 4ena /an( 62077 2918536 2.13 15 '4/' /an( 6i#ited 143569 10391507 1.38 6 'ndian /an( 45918 5183064 0.89 3 'ndian ;3erseas /an( 192341 7580954 2.54 18 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 54 ;riental /an( of +o##er,e 105812 6906472 1.53 7 P"n?ab and 5ind /an( 16104 2969810 0.54 1 P"n?ab National /an( 276746 15609845 1.77 10 5)ndi,ate /an( 159454 8249504 1.93 12 @+; /an( 153951 6966905 2.21 16 @nion /an( of 'ndia 192335 9826485 1.96 14 @nited /an( of 'ndia 101956 3572745 2.85 20 Ai?a)a /an( 69882 3587463 1.95 13 A(era/e Total 134$1% ..$3$1$ 1)., I21/3=3/1%1'520 In this table +.+ <hi!h is of EY )**5)**F in that Pun'ab > Sind Ban( 7Total ad/an!es )F@F5+* la(hs in whi!h total gross 2P: is +@+*4 la(hs whi!h is *.-4I 8 1an(ing on + st in !om&arison to all other &ubli! ban( followed b% :ndhra ban( .where Central ban( of India lies on +F th ran( with ).@CI 2P: on Gross ad/an!es 5@C4*)C la(hs. This ga& is be!ause of more ad/an!es gi/en b% ban(s . 1.2 P3'&%1/ (/.153 B%24 2I!2H Table +.) $s on -ar, 31*2009 =ross NP$2s =ross $d3an,es =. NP$2s B .an( $Cis /an( 6td. 89048 8212012 1.08 2 4e3elo!#ent +redit /an( 30555 348005 8.78 9 D4F+ /an( 198392 10023935 1.98 5 '+'+' /an( 964931 22362109 4.32 8 'nd"sland /an( 25502 1584653 1.61 4 Eota( -aindra /an( 73071 1695921 4.31 7 Fes /an( 8493 1244686 0.68 1 'N= A)s)a /an( 20939 1675437 1.25 3 so"t 'ndian /an( 26056 1196516 2.18 6 A(era/e total 1,%++, ,3.14., #)%1 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 55 I21/3=3/1%1'520 In this table +.) whi!h is of )**5)**F of &ri/ate se!tor ban(s .In whi!h is on + st ran( with *.@5I. Performan!e of this ban(s are better than &ubli! ban(s be!ause their Gross ad/an!es are less than &ubli! se!tor ban(s that3s wh% their Gross 2P:3s I are going down Year b% %ear 1<3P?;*'. (/.153 B%24 2H!21 Table +., Bank/ears As on marc! 31"#$1$ &ross 'PAs &ross Ad(ances&)'PA * Rank $llaabad /an( 122085 7150992 1.71 8 $ndra /an( 48787 5650537 0.86 3 /an( of /aroda 219606 13358879 1.64 7 /an( of 'ndia 448121 13519396 3.31 19 /an( of -aarastra 120979 4092615 2.96 17 +anara /an( 250453 16329097 1.53 5 Central Bank of India #4,.-% 1$+1$#+% #)3# 14 +or!oration /an( 65094 6362905 1.02 4 4ena /an( 64199 3572141 1.80 11 '4/' /an( 6i#ited 45859 5996330 0.76 2 'ndian /an( 344166 7302581 4.71 20 'ndian ;3erseas /an( 146875 8418394 1.74 10 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 56 ;riental /an( of +o##er,e 20615 3273867 0.63 1 P"n?ab and 5ind /an( 321441 18830611 1.71 9 P"n?ab National /an( 200459 8255913 2.43 16 5)ndi,ate /an( 166502 7756826 2.15 12 @+; /an( 266387 11827270 2.25 13 @nion /an( of 'ndia 137230 4275590 3.21 18 @nited /an( of 'ndia 99445 4193453 2.37 15 Ai?a)a /an( 212939 13858359 1.54 6 A(era/e Total 1..3,# -.31-$1 #)$3 I21/3=3/1%1'520 In this table +., whi!h is of EY )**F)*+* in whi!h 9riental ban( of !ommer!e7Gross :d/an!es ,)C,5@C la(hs in whi!h Gross 2P:3s is )*@+- la(hs whi!h is *.@,I of Gross :d/an!es8on + st ran(. <here Indian ban( on )* th ran( whi!h &ro/ides Gross ad/an!es 7302581 la(s in 0i, =ross NP$Gs is 344166 la(s 0i, is 4.71B of gross ad3an,es. +entral ban( of 'ndia ran(ed on 14 t 0it gross NP$Gs 2.32B. 'n ,o#!arison of !re3io"s )ear data +entral ban( of 'ndia did better . 1<4P3'&%1/ (/.153 B%24 2H!21 Table +.4 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 57 As on 0arc! 31"#$1$ &ross 'PA1s&ross Ad(ances &)'PA1s *Rank $Cis /an( 6td. 129542 9300534 1.39 5 4e3elo!#ent +redit /an( 31918 367259 8.69 9 D4F+ /an( 180717 12528339 1.44 6 '+'+' /an( 926742 14210056 6.52 8 'nd"sland /an( 25547 2070423 1.23 3 Eota( -aindra /an( 76734 2117788 3.62 7 Fes /an( 6020 2224034 0.27 1 'N= A)s)a /an( 22415 1850951 1.21 2 so"t 'ndian /an( 21100 1597005 1.32 4 A(era/e total 1,.-,% ,14$.1$ #)-+ I21/3=3/1%1'520 In this table +.4 whi!h shows the 2P:3s of &ri/ate ban(s in whi!h Yes ban( on + st
ran( among all &ri/ate ban(. Gross ad/an!es of %es ban( is )))4*,4 in whi!h Gross 2P:3s is @*)* la(hs #Gross 2P:3s *.)CI of Gross ad/an!es. DCB is on F th ran( in &ri/ate ban(s with 5.@FI Gross 2P:3s.. Pri/ate se!tor ban(s &erforman!e are better be!ause the% are gi/en more for agri!ulture. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 58 1<5P?;*'. (/.153 B%24 21!211 Table +.- Bank/ears As on marc! 31"#$11 &ross 'PAs &ross Ad(ances &)'PAs * Rank $llaabad /an( 164698 9158545 1.80 9 $ndra /an( 99564 7215445 1.38 4 /an( of /aroda 278623 17180148 1.62 6 /an( of 'ndia 435660 16514716 2.64 17 /an( of -aarastra 117370 4748742 2.47 14 +anara /an( 298178 20272402 1.47 5 Central Bank of India #3%4,3 1313%$$# 1)-# 1$ +or!oration /an( 79023 8721345 0.91 1 4ena /an( 84224 4516337 1.86 11 '4/' /an( 6i#ited 278473 15599550 1.79 7 'ndian /an( 72002 7258733 0.99 3 'ndian ;3erseas /an( 279342 10308747 2.71 19 ;riental /an( of +o##er,e 192054 9683891 1.98 12 P"n?ab and 5ind /an( 42428 4283262 0.99 2 P"n?ab National /an( 437939 24399878 1.79 8 5)ndi,ate /an( 258912 9753461 2.65 18 @+; /an( 309017 9324624 3.31 20 @nion /an( of 'ndia 362282 15302246 2.37 13 @nited /an( of 'ndia 135578 5393373 2.51 15 Ai?a)a /an( 125919 4922224 2.56 16 A(era/e Total #14,3. 1$--4-34 1)%- A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 59 I21/3=3/1%1'520 I n this table +.- of EY )*+*)*++ of &ubli! ban(s in whi!h !or&oration ban( is on + st
ran( 7 Gross :d/an!es 5C)+,4- la(hs in whi!h Gross 2P:3s is CF*), la(hs whi!h is *.F+I of Gross ad/an!es8.U!o ban( is on )* th ran( 7Gross ad/an!es F,)4@)4 la(hs in whi!h Gross 2P:3s ,*F*+C la(hs whi!h is ,.,+I of Gross ad/an!es. Central ban( of India is on +* th ran( with +.5)I Gross 2P:3s. +entral /an( of 'ndia did #", better tan !re3io"s )ear. 1<KP3'&%1/ (/.153 B%24( 21!211 Table +.@ As on 0arc! 31"#$11 &ross 'PA1s &ross Ad(ances &)'PA1s* Rank $Cis /an( 6td. 158699 12411981 1.28 6 4e3elo!#ent +redit /an( 26357 449467 5.86 9 D4F+ /an( 166032 15670526 1.06 4 '+'+' /an( 981596 16918176 5.80 8 'nd"sland /an( 26589 2635869 1.01 3 Eota( -aindra /an( 60349 2971873 2.03 7 Fes /an( 8053 3443501 0.23 1 'N= A)s)a /an( 15156 2366192 0.64 2 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 60 so"t 'ndian /an( 23034 2065879 1.11 5 A(era/e total 1+#-.4 +,4-1+3 #)11 I21/3=3/1%1'520 In this table +.@ of &ri/ate se!tor ban(s in whi!h Yes ban( is on + st ran( 7Gross ad/an!es ,44,-*+ la(hs in whi!h Gross 2P:3s is 5*-, la(hs whi!h is *.),I of Gross ad/an!es8 DCB is on F th ran( with -.5@I Gross 2P:3s. Main reason behind their &erforman!e is !olle!ting their loan from the !ustomer. 1<J P?;*'. (/.153 B%24( 211!212 Table +.C Bank/ears As on 0arc! 31"#$1# &ross 'PAs &ross Ad(ances &)'PAs *Rank $llaabad /an( 205640 10752720 1.91 6 $ndra /an( 17980 846840 2.12 8 /an( of /aroda 388180 20545360 1.89 5 /an( of 'ndia 516970 17795020 2.91 13 /an( of -aarastra 129700 5697890 2.28 9 +anara /an( 389010 22249440 1.75 4 Central Bank of India .#.3,$ 1,$+4%%$ 4)-3 #$ +or!oration /an( 127420 10082530 1.26 1 4ena /an( 95650 5715920 1.67 3 '4/' /an( 6i#ited 455140 17720920 2.57 10 'ndian /an( 167150 8631040 1.94 7 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 61 'ndian ;3erseas /an( 355370 12741890 2.79 12 ;riental /an( of +o##er,e 358090 11304980 3.17 17 P"n?ab and 5ind /an( 76340 4636860 1.65 2 P"n?ab National /an( 868990 27610770 3.15 15 5)ndi,ate /an( 305070 11095330 2.75 11 @+; /an( 401970 10783990 3.73 19 @nion /an( of 'ndia 542220 17184960 3.16 16 @nited /an( of 'ndia 217640 6387300 3.41 18 Ai?a)a /an( 171850 5867100 2.93 14 A(era/e Total 3#,--. 1#13,.%3 #)+% I21/3=3/1%1'52B In this table +.C whi!h is of EY )*++)*+) of &ubli! se!tors ban( in whi!h Cor&oration Ban( is on + st ran( 7 Gross ad/an!es +**5)-,* la(hs in whi!h Gross 2P: is +)C4)* la(hs whi!h is +.)@ I 9f Gross :d/an!es8. Central ban( of India is on )* th
ran( with 4.5,I.In this %ear ban( gi/en more and more 1<IP3'&%1/ (/.153 ;%24( 211!212 Table +.5 As on 0arc! 31"#$1# &ross 'PA1s &ross ad(ances &)'PA12 * Rank $Cis /an( 6td. 172020 14590490 1.18 6 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 62 4e3elo!#ent +redit /an( 24180 549670 4.40 8 D4F+ /an( 181490 19096890 0.95 3 '+'+' /an( 929260 19233380 4.83 9 'nd"sland /an( 34710 3531640 0.98 5 Eota( -aindra /an( 61420 3945190 1.56 7 Fes /an( 8390 3805500 0.22 1 'N= A)s)a /an( 14950 2883350 0.52 2 so"t 'ndian /an( 26720 2747320 0.97 4 A(era/e total 1+14+$ .-#$3-1 1).3 I21/3=3/1%1'52B In this table +.5 whi!h is of EY )*++)*+) of &ri/ate se!tors ban( in whi!h Yes Ban( is on + st ran( 7 Gross ad/an!es ,5*--** la(hs in whi!h Gross 2P: is 5,F* la(hs whi!h is *.)) I 9f Gross :d/an!es8. ICICI Ban( is on F th ran( with 4.5,I 2P:< The% mostl% fo!used on industries from where the% are easil% getting ba!( loan amounts < 1<HP?;*'. (/.153 B%24( 212!213 Table +.F Bank/ears As on 0arc! 31"#$13 &ross 'PAs &ross Ad(ances &)'PAs *Rank A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 63 $llaabad /an( 513700 13093630 3.92 15 $ndra /an( 371450 10013780 3.71 14 /an( of /aroda 798260 33281130 2.40 6 /an( of 'ndia 876530 29296790 2.99 10 /an( of -aarastra 113760 7639720 1.49 2 +anara /an( 626020 24393580 2.57 7 +entral /an( of 'ndia 845620 17623370 4.80 18 +or!oration /an( 204820 1193540 17.16 20 4ena /an( 145250 6645690 2.19 5 '4/' /an( 6i#ited 645000 20013470 3.22 12 'ndian /an( 356550 10715590 3.33 13 'ndian ;3erseas /an( 660800 16436650 4.02 16 ;riental /an( of +o##er,e 418400 13018620 3.21 11 P"n?ab and 5ind /an( 153690 5184340 2.96 8 P"n?ab National /an( 1346580 31524400 4.27 17 5)ndi,ate /an( 297850 14942270 1.99 3 @+; /an( 713010 13156910 5.42 19 @nion /an( of 'ndia 631380 21191110 2.98 9 @nited /an( of 'ndia 2963.8 6970810 0.04 1 Ai?a)a /an( 153290 7051350 2.17 4 A(era/e Total 4%3.4+ 1,1+%33- 3).4 I21/3=3/1%1'52 0 In this table +.F whi!h is of EY )*+))*+, of &ubli! se!tors ban( in whi!h United Ban( of India is on + st ran( 7 Gross ad/an!es @FC*5+* la(hs in whi!h Gross 2P: is )F@,.5 la(hs whi!h is *.*4 I 9f Gross :d/an!es8.!or&oration ban( is on )* th ran( A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 64 with +C.+@I Gross 2P:3s# Central ban( of India is on +5 th ran( with 4.5*I. 2P:. 1<1P3'&%1/ (/.153 B%24(212!213 Table +.+* Bank/year As on marc! 31"#$13 &ross 'PA1s &ross Ad(ances &)'PA1s * Rank $Cis /an( 6td. 237140 19890070 1.19 7 4e3elo!#ent +redit /an( 21500 675300 3.18 9 D4F+ /an( 204810 24130610 0.85 5 '+'+' /an( 960780 298416400 0.32 3 'nd"sland /an( 45780 4464160 1.03 6 Eota( -aindra /an( 75810 4891860 1.55 8 Fes /an( 9430 4708680 0.20 2 'N= A)s)a /an( 12140 3189160 0.38 4 so"t 'ndian /an( 4330 3201400 0.14 1 A(era/e total 1.4+3+ 4$3%+4$4 $)%- I21/3=3/1%1'520 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 65 'n tis table 1.10 0i, is of FF 2012-2013 of !ri3ate se,tors ban( in 0i, so"t 'ndian /an( is on 1 st ran( % =ross ad3an,es 3201400 la(s in 0i, =ross NP$ is 4330 la(s 0i, is 0.14 B ;f =ross $d3an,es&. 4e3elo!#ent +redit /an( is on 9 t ran( 0it 3.18B NP$. 1<11P?;*'. (/.153 B%24( 213!214 Table +.++ Bank/ears As on marc! 31"#$14 &ross 'PA1s &ross Ad(ances &)'PA1s *Rank $llaabad /an( 806800 14080279 5.73 18 $ndra /an( 585800 11073724 5.29 17 /an( of /aroda 1167198 39700600 2.94 4 /an( of 'ndia 1185118 37622800 3.15 5 /an( of -aarastra 285864 9036867 3.16 6 +anara /an( 757000 30401606 2.49 2 Central Bank of India 11,$$$ 1-33#1$ +)#. 1% +or!oration /an( 423679 12388275 3.42 8 4ena /an( 261603 7855946 3.33 7 '4/' /an( 6i#ited 996016 20326857 4.9 14 'ndian /an( 456220 12435865 3.67 9 'ndian ;3erseas /an( 902000 18108100 4.98 15 ;riental /an( of +o##er,e 561786 14079850 3.99 10 P"n?ab and 5ind /an( 255352 5790295 4.41 13 P"n?ab National /an( 1888000 35964600 5.25 16 5)ndi,ate /an( 461100 17599237 2.62 3 @+; /an( 662137 15327245 4.32 12 @nion /an( of 'ndia 956400 23441176 4.08 11 @nited /an( of 'ndia 711801 6798481 10.47 20 Ai?a)a /an( 198600 8240664 2.41 1 A(era/e Total +-1-.3. 1.1$,#-4 4)34 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 66 I21/3=3/1%1'520 In this table +.++ whi!h is of EY )*+,)*+4 of &ubli! se!tors ban( in whi!h Di'a%a Ban( is on + st ran( 7 Gross ad/an!es 5)4*@@4 la(hs in whi!h Gross 2P: is +F5@** la(hs whi!h is ).4+ I 9f Gross :d/an!es8. United ban( of India is on )* th ran( with +*.4CI of Gross :d/an!es Central ban( of India is on +F th ran( with @.)CI. 2P:. 1<12P3'&%1/ (/.153 B%24( 213!214 Table +.+) PRI3ATE BA'452 As on year31"#$14 &ross 'PA1s &ross Ad(ances &)'PA1s * Rank $Cis ban( 6td. 283911 23271382 1.22 5 4e3elo!#ent +redit ban( 6td. 13845 819230 1.69 6 D4F+ /an( 6td. 298928 29892800 1 2 '+'+' /an( 6T4 1055400 40370800 2.61 9 'nd"slnd /an( 6T4 62100 5132231 1.21 4 Eota( -aindra /an( 6T4 105944 53020763 1.99 8 Fes /an( 6T4 17490 5641935 0.31 1 'N= A)s)a /an( 6T4 64421 3639605 1.77 7 so"t 'ndian /an( 6T4 43476 3622985 1.2 3 A(era/e total 216168 18379081 1.44 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 67 I21/3=3/1%1'520 In this table +.+) whi!h is of EY )*+,)*+4 of &ri/ate se!tors ban( in whi!h Yes Ban( ;TD is on + st ran( 7 Gross ad/an!es -@4+F,- la(hs in whi!h Gross 2P: is +C4F* la(hs whi!h is *.,+ I 9f Gross :d/an!es8. ICICI Ban( ;TD is on F th ran( with ).@+I 2P:. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 68 2<1 A@3'.?*1?3/ L5%2 56 P?;*'. S/.153 B%24( Table ).+ Rs)in crore Bank/ loan A&RIC67T6RE 7OA' 0ar-13 0ar-14 $llaabad /an( 17688 20847 $ndra /an( 16451 20267 /an( of /aroda 27663 26310 /an( of 'ndia 27041 36071 /an( of -aarastra 7972 10276 +anara /an( 40786 48797 Central Bank of India #4+,- 3$3%$ +or!oration /an( 9644 13144 4ena /an( 6719 8016 '4/' /an( 6i#ited 14390 14379 'ndian /an( 17001 19047 'ndian ;3erseas /an( 23393 26254 ;riental /an( of +o##er,e 13866 15097 P"n?ab and 5ind /an( 5228 5757 P"n?ab National /an( 38055 53053 5)ndi,ate /an( 20156 22071 @+; /an( 12625 16642 @nion /an( of 'ndia 20224 25621 @nited /an( of 'ndia 9571 9725 Ai?a)a /an( 7099 7563 $3erage total 18011 21466 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 69 I21/3=3/1%1'520 In this table ).+ whi!h shows the &riorit% whi!h are gi/en b% ban(s as agri!ulture loan from their total Gross ad/an!es. Eigures of two !onsequen!e %ear whi!h shows the growth in their loans .In this Central ban( of India gi/en in )*+))*+, #)4@-5 !r. and in )*+,)*+4#,*,F* !r. whi!h is ),.)4I of )*+))*+,.This table shows the growth rate of loan %ear b% %ear . #)# M/7'?> %27 (>%** (.%*/ '27?(13'/( L5%2 56 P?;*'. S/.153 B%24 T:B;E ).) .s.in ,rore /an(H6oan 02E 7OA' 0ar-13 0ar-14 $llaabad /an( 16570 19520 $ndra /an( 16863 13917 /an( of /aroda 46722 54396 /an( of 'ndia 28913 35504 /an( of -aarastra 11289 15098 +anara /an( 26612 36703 Central Bank of India 1.3$$ #14%1 +or!oration /an( 18555 23816 4ena /an( 9100 12110 '4/' /an( 6i#ited 6925 6467 'ndian /an( 11020 13322 'ndian ;3erseas /an( 19974 24575 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 70 ;riental /an( of +o##er,e 20945 26172 P"n?ab and 5ind /an( 10115 13708 P"n?ab National /an( 37593 46499 5)ndi,ate /an( 15074 18697 @+; /an( 16421 26389 @nion /an( of 'ndia 34699 45418 @nited /an( of 'ndia 11072 11228 Ai?a)a /an( 10594 12953 $3erage total 19318 23899 I21/3=3/1%1'52 0 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 71 In this table ).) whi!h shows the &riorit% whi!h are gi/en b% ban(s as loan medium and small industries their total Gross ad/an!es. Eigures of two !onsequen!e %ear whi!h shows the growth in their loans .In this Central ban( of India gi/en in )*+) )*+, #+C,** !r. and in )*+,)*+4#)+4F+!r. whi!h is )4.))I of )*+))*+,.This table shows the growth rate of loan %ear b% %ear. 2<3 R/1%'* L5%2 56 P?;*'. S/.153 B%24( Table )., .s. 'n ,rore /an(H6oan RETAI72 7OA' 0ar-13 0ar-14 $llaabad /an( 14773 16976 $ndra /an( 14326 16515 /an( of /aroda 38046 42777 /an( of 'ndia 9119 10114 /an( of -aarastra 8102 10769 +anara /an( 23084 33529 Central Bank of India #13,# #.,11 +or!oration /an( 25148 29026 4ena /an( 7724 9706 '4/' /an( 6i#ited 2562 2929 'ndian /an( 15439 17068 'ndian ;3erseas /an( 15060 17040 ;riental /an( of +o##er,e 14530 16128 P"n?ab and 5ind /an( 3632 3998 A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 72 P"n?ab National /an( 31721 38864 5)ndi,ate /an( 19620 20926 @+; /an( 9434 16545 @nion /an( of 'ndia 19560 24922 @nited /an( of 'ndia 10049 10357 Ai?a)a /an( 13447 15617 $3erage total 15836 19066 I21/3=3/1%1'52 0 In this table )., whi!h shows the &riorit% whi!h are gi/en b% ban(s as 1etails loan from their total Gross ad/an!es. Eigures of two !onsequen!e %ear whi!h shows the growth in their loans .In this Central ban( of India gi/en in )*+))*+, #)+,-, !r. and in )*+,)*+4#)C-++ !r. whi!h is )5.5,I of )*+))*+,.This table shows the growth rate of loan %ear b% %ear. 3<1 COMPOUND ANNUAL GROWT" RATE Table ,.+ /an(HFear 2009 2010 2011 2012 2013 2014 T;T$6 -9$N 54 +$=. 12 +$=. 13 +$=. 14 5 Fear +$=. %2009- 2014& $llaabad /an( 1.81 1.71 1.8 1.91 3.92 5.73 16.88 2.81 1.66 2B 32B 47B 26B $ndra /an( 0.83 0.86 1.38 2.12 3.71 5.29 14.19 2.37 1.79 37B 63B 57B 45B /an( of 1.27 1.64 1.62 1.81 2.4 2.94 11.68 1.95 0.61 13B 14B 22B 18B A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 73 /aroda /an( of 'ndia 1.71 3.31 2.64 2.91 2.99 3.15 16.71 2.79 0.57 19B -3B 6B 13B /an( of -aarastr a 1.29 2.96 2.47 2.28 1.49 3.16 13.65 2.28 0.76 21B -20B 9B 20B +anara /an( 1.56 1.53 1.47 1.75 2.57 2.49 11.37 1.90 0.50 4B 19B 19B 10B +entral /an( of 'ndia 2.67 2.32 1.82 4.83 4.8 6.27 22.71 3.79 1.76 22B 27B 51B 19B +or!oration /an( 1.14 1.02 0.91 1.26 17.2 3.42 24.91 4.15 6.44 3B 156B 55B 25B 4ena /an( 2.13 1.8 1.86 1.67 2.19 3.33 12.98 2.16 0.61 -8B 7B 21B 9B '4/' /an( 6i#ited 1.38 0.76 1.79 2.57 3.22 4.9 14.62 2.44 1.49 23B 62B 40B 29B 'ndian /an( 0.89 4.71 0.99 1.94 3.33 3.67 15.53 2.59 1.55 30B -11B 55B 33B 'ndian ;3erseas /an( 2.54 1.74 2.71 2.79 4.02 4.98 18.78 3.13 1.17 3B 32B 22B 14B ;riental /an( of +o##er,e 1.53 0.63 1.98 3.17 3.21 3.99 14.51 2.42 1.25 27B 72B 26B 21B P"n?ab and 5ind /an( 0.54 1.71 0.99 1.65 2.96 4.41 12.26 2.04 1.42 45B 20B 65B 52B PN/ 1.77 2.43 1.79 3.15 4.27 5.25 18.66 3.11 1.41 21B 21B 43B 24B 5)ndi,ate 1.93 2.15 2.65 2.75 1.99 2.62 14.09 2.35 0.37 13B -3B 0B 6B @+; /an( 2.21 2.25 3.31 3.73 5.42 4.32 21.24 3.54 1.24 19B 34B 9B 14B @nion /an( of 'ndia 1.96 3.21 2.37 3.16 2.98 4.08 17.76 2.96 0.74 17B -2B 20B 16B @/' 2.85 2.37 2.51 3.41 0.04 10.5 21.65 3.61 3.55 6B -74B 61B 30B Ai?a)a /an( 1.95 1.54 2.56 2.93 2.17 2.41 13.56 2.26 0.49 15B 12B -2B 4B A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 74 INTERPRITATION0! In the abo/e table ,.+in whi!h the &erforman!e of all !ommer!ial ban( of EY )**F)*+* to )*+,)*+4 are gi/en .Erom that it is showing the C9MP9U2D :22U:; G19<T$ 1:TE b% the hel& of mean and standard de/iation.in that Central ban( of India ha/ing +FI growth in their 2P: during This %ears . 2P: of all ban(s shows that the loss of their assets b% 292PE1E91MI2G :SSETS has been in!reased. C:G1 !al!ulated for Three %ears as base using the formula 77ED0PD8U7+0,88+ A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 75 C"APTER 5 FINDING SUGGESTION RECOMMENDATIONS CONCLUSION A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 76 FINDING 0! Eindings from the stud% !an be !lassified into two &arts. In first &art the findings were made with referen!e to the data re!orded from :sset de&artment and in the se!ond &art the general reasons for non &erforming of assets were highlighted. +BIt is found that the ban( is effi!ient in a!hie/ing the budgeted target and mobili=ing the funds from !ustomers.
)BIt is found that the amount of loan outstanding is graduall% in!reasing %ear after# it shows that ban( is ineffi!ient in &ro&er a&&raisals and !ontrol s%stem. ,0! 2P:3s In!reasing %ear b% %ear of all !ommer!ial ban(s in India be!ause of their in!rease in :d/an!es. 4B 2on&erforming asset is one whi!h does not generated in!ome for the ban(. In other words# an ad/an!e a!!ount whi!h !eases to %ield in!ome is a non &erforming asset. SUGGESTION AND RECOMMENDATIONS0! +B Se!uriti=ation is another wa% whi!h transforms non &erforming assets to &erforming. So the ban( shall go for se!uriti=ation of assets. )BBan( em&lo%ees need to gi/e more attention on the a!ti/ities of the 2P:3s and slow re!o/er% of o/erdue loans. ,BIf the !ustomer intentionall% tries to be!ome 2P: then ta(e serious or legal a!tion. If the% do this the other 2P:3s a!!ount whi!h are slow in &a%ment will be re!o/ered fast. 4BBan( should &ro&erl% e/aluate all loan a&&li!ations and anal%=e &ro'e!t feasibilit%. Ban( staff should be &ro&erl% trained in this regard. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 77 -BTr% to deal soft% with 2P: !ustomer and moti/ate them to re&a% the loan. CONCLUSION 0! 2P: is not 'ust a &roblem for ban(# but also bad for the e!onom% of the !ountr%. The mone% whi!h is lo!(ed in 2P: is not a/ailable for &rodu!ti/e a!ti/ities. It ad/ersel% affe!ts the &rofit of the ban( and result in higher rate of their diligent !redit !ustomer. Ste& should be ta(en a&&ro&riatel% on the time to a/oid 2P:s. Lualitati/e a&&raisal# Su&er/ision and follow u&s should be ta(en for the &resent ad/an!ed to a/oid the further 2:Ps. It is essential to restru!ture the strategies for re!o/er% &ro!essJ this will im&ro/e ban( general !a&abilities and meets the &rudential requirements. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 78 GLOSSARY0! C52(?>/3 R/=531'2@ A@/2.:0 :n agen!% that regularl% !olle!ts or e/aluates indi/idual !onsumer !redit information or other information about !onsumers and sells !onsumer re&orts for a fee to !reditors or others. T%&i!al !lients in!lude ban(s# mortgage lenders# !redit !ard !om&anies# and other finan!ing !om&anies. D/;'10 : debit ma% be an a!!ount entr% re&resenting mone% %ou owe a lender or mone% that has been ta(en from %our de&osit a!!ount. D/;1 C5**/.1530 :n% &erson who regularl% !olle!ts debts owed to others. P%:5660 The !om&lete re&a%ment of a loan# in!luding &rin!i&al# interest# and an% other amounts due. Pa%off o!!urs either o/er the full term of the loan or through &re&a%ments. T'/3 I C%='1%*0 : term used to refer to one of the !om&onents of regulator% !a&ital. It !onsists mainl% of share !a&ital and dis!losed reser/es 7minus goodwill# if an%8. Tier I items are deemed to be of the highest qualit% be!ause the% are full% a/ailable to !o/er losses $en!e it is also termed as !ore !a&ital. T'/3 II C%='1%*0 1efers to one of the !om&onents of regulator% !a&ital. :lso (nown as su&&lementar% !a&ital# it !onsists of !ertain reser/es and !ertain t%&es of subordinated debt. Tier II A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 79 items qualif% as regulator% !a&ital to the e"tent that the% !an be used to absorb losses arising from a ban(Os a!ti/ities. Tier IIOs !a&ital loss absor&tion !a&a!it% is lower than that of Tier I !a&ital. B:SE; Committee on Ban(ing Su&er/ision The B:SE; Committee is a !ommittee of ban( su&er/isors !onsisting of members from ea!h of the G+* !ountries. The Committee is a forum for dis!ussion on the handling of s&e!ifi! su&er/isor% &roblems. It !oordinates the sharing of su&er/isor% res&onsibilities among national authorities in res&e!t of ban(sO foreign establishments with the aim of ensuring effe!ti/e su&er/ision of ban(sO a!ti/ities worldwide. BASEL C%='1%* %..5370 The B:SE; Ca&ital :!!ord is an :greement !on!luded among !ountr% re&resentati/es in +F55 to de/elo& standardi=ed ris(based !a&ital requirements for ban(s a!ross !ountries. The :!!ord was re&la!ed with a new !a&ital adequa!% framewor( 7B:SE; II8# &ublished in 6une )**4. B:SE; II is based on three mutuall% reinfor!ing &illars hat allow ban(s and su&er/isors to e/aluate &ro&erl% the /arious ris(s that ban(s fa!e. These three &illars areB Minimum !a&ital requirements# whi!h see( to refine the &resent measurement framewor( su&er/isor% re/iew of an institutionOs !a&ital adequa!% and internal assessment &ro!essJ mar(et dis!i&line through effe!ti/e dis!losure to en!ourage safe and sound ban(ing &ra!ti!es N52 P/3653>'2@ A((/1( (NPA)0 :n asset# in!luding a leased asset# be!omes non &erforming when it !eases to generate in!ome for the ban(. N/1 NPA Gross 2P: ? 7Balan!e in Interest Sus&ense a!!ount V DICGC0ECGC !laims re!ei/ed and held &ending ad'ustment V Part &a%ment re!ei/ed and (e&t in sus&ense a!!ount V Total &ro/isions held8. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 80 ANN%&'"% ( REPORTING FORMAT FOR NPA! GROSS AND NET NAME OF T"E BANK POSITION AS ON !!!!!!!!! P$.T'+@6$.5 1& =ross $d3an,ed 2&=ross NP$I 3&=ross NP$ as B of =ross $d3an,es 4& Total ded",tion %aJbJ,Jd& %a& /alan,e in interest s"s!ense aH,II %b& 4'+=+H9+=+ ,lai#s re,ei3ed and eld !ending ad?"st#ent % , &!art !a)#ent re,ei3ed and (e!t in s"s!ense aH, %d& Total !ro3ision eld III 5& Net ad3an,ed %1-4& 6& Net NP$ %2-4& 7& Net NP$ as a B of Net $d3an,es
IeC,l"ding te,ni,al 0rite-o8 of rs KKKKKK,rore. II/an(s 0i, do not #aintain an interest s"s!ense aH, to !ar( te a,,"red interest on NP$s #a) f"rnis te a#o"nt of interest re,ei3able on NP$s. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 81 ANN%&'"%:- )
A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 82 C"APTER ! K BIBILIOGRAP"Y BIBILOGRAP"Y +. :nantharam I%er.T.2# 7+FFF8# MBan( su&er/ision and the management of 2on Performing :d/an!esN# The 6ournal of the Indian Institute of Ban(ers# &.CF ). Mittal. D.M. 7)**58# KMone%# Ban(ing# International Trade and Publi! Einan!e K7Ele/enth Edition8# $imala%a Publishing $ouse. ,. Meena(shi 1a'ee/ and $ P Mahesh 7)*+)8 ban(ing se!tor reforms and 2P:B a stud% of Indian !ommer!ial ban(s# wor(ing &a&er )-)#institute for so!ial !hange and e!onomi! !hange# Bangalore# ISB2 FC55+CCF++*54 4. 1a'araman# I.#S.Bhaumi(# and 2. Bhatia 7+FFF8# M 2P: Dariations :!ross Indian Commer!ial Ban(sB Some Eindings# E!onomi! and Politi!al <ee(l%# Dol.,C# 2o. , and 4# &&. +@),. -. 1a'araman I > Dashishta G 7)**)8. M2on&erforming ;oans of Indian Publi! Se!tor Ban(s Some Panel 1esultsN# E!onomi! and Politi!al <ee(l%. A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 83 @. 1a'ni Salu'a and 1oshan ;al 7)*+*8# MCom&arati/e :nal%sis on 2onLPerforming :ssets 72P:s8 of Publi! Se!tor# Pri/ate Se!tor and Eoreign Ban(s in IndiaN# International 6ournal of 1esear!h in Commer!e > Management 7I61CM8# /ol +# issue no. C 72o/ember8 ISS2 *FC@)+5,. C. 1a'u D.2.M.# 7)**F8# ME/aluation of the Performan!e of State Ban( of India with s&e!ial referen!e to 2onPerforming :ssets 72P:s8N# Einan!e India# Indian Institute of Einan!e# Dol. GGIII# 2o.,# Pages F5-F5F. 5. 1amesh.A.D# Sudha(ar.:# M2P: Management in Publi! Se!tor Ban(sB : Stud% of Canara Ban( and State Ban( of IndiaN# International 6ournal of 1esear!h in Commer!e > Management# Dol. ,7++8# )*+)# && 444F# ISS2 *FC@)+5, F. Sandee& :ggarwal# Parul Mittal 7)*+)8 M2on Performing :ssestB Com&arati/e Position of Publi! and Pri/ate Se!tor Ban(s in IndiaN# International 6ournal of Business and Management Tomorrow Dol. ) 2o.+#&& +C. +*. Sharma# Meena# 7)**)8# MManaging 2onPerforming :ssets through :sset 1e!onstru!tion Com&aniesN# Ed.Boo(# E!onomi! 1eforms in India# from Eirst to Se!ond Generation and be%ond# Dee& and Dee& Publi!ations# 2ew Delhi ++. Dibha 6ain 7)**C8# M2on Performing :ssets in Commer!ial ban(sN# 1egal Publi!ations# 2ew Delhi +). Di/e( Sri/asta/a+ Dee&a( Bansal 7)*+)8 M : Stud% of trends of 2onPerforming :ssets in Pri/ate Ban(s in IndiaN S$ID S$:ATI International 6ournal in Multidis!i&linar% and :!ademi! 1esear!h 7SSI6M:18 Dol. )# 2o. )# Mar!h:&ril 7ISS2 ))C5 ? -FC,8 +,. www.rbi.org.in +4. Google +-. :ll Ban( <ebsites A STUDY OF NON PERFORMING ASSETS IN INDIAN COMMERCIAL BANKS Page 84 +@. www.mone%!ontrol.!om
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