ASSIGNMENT OF FIS

ON TOPIC : COMPARATIVE ANALYSIS OF ONE PUBLIC SECTORE AND ONE PRIVETE FINANCIAL INSTITUATION IN LAST FIVE YEAR

SUBMITTED TO BHAVDEEP SINGH KHOCHAR

SUBMITTED BY DEEPIKA BALUTIA RT1902 A21 MBA 3 RD SEM

COMPARATIVE ANALYSIS OF NPA & ITS MANAGEMENT TECHNIQUES OF A PRIVATE SECTOR BANK WITH A PUBLIC SECTOR BANK.

INTRODUCTION
Abstract

The Indian commercial banking sector is characterised by both a high average non-performing share in total bank advances and a high dispersion between banks. This paper presents the findings of a formal attempt to explain inter-bank variations in NPAs for the year 1996-97. The specification tests for the impact of region of operation on domestically-owned banks, as measured by percentage branches in each of a set of state clusters. One cluster of three eastern and seven north-eastern states carries a robust and statistically significant positive coefficient; another cluster of the southern and some of the northern states carries a significantly negative coefficient. These findings bear out those of Demirguc-Kunt and Huizinga on the significance of the operating environment for bank efficiency. No sustainable improvement in the performing efficiency of domestic banks is possible without prior improvement in the enforcement environment in difficult regions of the country. Another finding of some importance is that it is not foreign ownership in and of itself so much as the banking efficiency and technology correlates of the country of origin of the foreign bank which determine NPA performance in the Indian environment .Private sector banks average return on assets (RoA) is higher compared to that of
nationalised banks and SBI & associated banks during 2009-10.

The net non performing assets (NPA) ratio is higher for SBI & associated banks compared to nationalised and private sector banks said a RBI study on the RoA of private sector banks, nationalised banks and SBI & associated banks during 2009-10. ROA is an indicator of how profitable a bank is relative to its total assets. RoA of nationalised banks decreased from 1.03% in 2008-09 to 1.00% in 2009-10, but the net NPA ratio increased from 0.68% to 0.91% in the

same period. For SBI and associate group, RoA also decreased from 1.02% to 0.91% during 2009-10 while the net NPA ratio of the SBI group increased from 1.45% to 1.50%. The highest decrease in the RoA was in the case of Bank Of India, it decreased from 1.49% in 2008-09 to 0.70% in 2009-10. This decline is due to lower profit performance of bank. During 2009-10, Bank Of India posted net profit of Rs 1,741 crore compared to Rs 3,007 crore during 2008-09. Decline in profit was due to pressure on margin on account of high cost of deposits and slow growth in other income. For Dena Bank, the RoA decrease from 1.02% in 2008-09 to 1.01% in 2009-10. In SBI & Associates group, SBI had a ROA of 1.04% in 2008-09 which declined to 0.88% by 2009-10. But the net NPA ratio of SBI decreased from 1.79% in 2008-09to 1.72% in 2009-10 . On the other hand, average RoA of private banks increased from 1.12% in 2008-09 to 1.28% during 2009-10. Highest increase in RoA was seen in the case of IndusInd Bank followed by ICICI Bank during 2009-10. The RoA of ICICI Bank increased from 0.98% in 2008-09 to 1.13% in 2009-10. The net NPA ratio of private banks decreased from 1.30% in 2008-09 to 1.03% in 2009-10. And the net NPA ratio of ICICI Bank marginally increased from 2.09% to 2.12%. In 2008-09, Axis Bank had a RoA of 1.44% while Dhanlaxmi Bank and ING Vysya Bank have RoA of 1.21% and 0.70%, respectively. But in 2009-10, Axis Bank had the highest RoA of 1.67% while ING Vysya Bank and Dhanlaxmi Bank have RoA of 0.80% and 0.35%, respectively

Comparision on the basis of profitability

Bank HDFC Punjab national bank gross NPA 1.08 1.67 net NPA 0.33 0.38

Gross NPA and Net NPA Of different Private Sector banks in the year 2003-09
BANKS
Punjab national bank HDFC

GROSS NPA
0.45 0.65

NET NPA
0.23 0.22

Comparison of GROSS NPA with all banks for the year 2003-09. The growing NPAs affect the health of banks, profitability and efficiency. In the long run, it eats up the net worth of the banks. institutions. We can say that NPA is not a healthy sign for financial

Here we take all the ten banks gross NPA together for better understanding.

Average of these banks gross NPAs is 1.29 as percentage of total assets. So if we compare in private sector banks HDFC Bank are below average of public sector bank. Average of the private sector banks gross NPA is 1.25 and average of public sector banks is 1.33. Which is higher in compare of private sector banks.

COMPARISON OF NET NPA WITH PUBLIC AND PRIVATE SECTORS BANKS FOR THE YEAR 2003-09 Comparison of NET NPA with the banks for the year 2003-09. Average of the NPA is 0.56. And in the public sector banks is below this. But in private sector banks are above average. The difference between private and public banks average is also vast. Private sector banks net NPA average is 0.71 and in public sector banks it is 0.41 as percentage of total assets. As we know that net NPA shows actual burden of banks

Comparision between HDFC and Punjab national bank on the basis of product offering
The asset quality of the banks can be examined by considering the NPAs. These NPAs should be considered against not just total assets but also against the advances, cause the NPAs primarily arise. When NPAs arise, banks have to make provision for the same as per the regulatory prescriptions. When the provisions are adjusted against the Gross NPAs it gives rise to the net NPAs. Provisions reduce the risk exposure arising due to the NPAs to a reasonable extent as they ensure that the banks sustain the possible loss arising from these assets.

Comparision on the bases of customer

QPAC is a 360-degree analysis i.e. economy, business and financial analysis of a sector following the E-I-C framework. It provides the major highlights of the industry in the quarter and also provides the global and Indian scenario of the banking industry analyzing industry trends in the quarter and against the quarter of the previous year. It presents the outlook of the industry. QPAC makes a comparative analysis of the three major public sector banks and three major private sector banks separately. Private sector banks have been analysed on the parameters like operational performance (operating profit margin, Net NPA), financial performance (profit after tax PAT, net interest margin, capital adequacy ratio CAR) and stock performance while the Public sector banks have been analysed on the parameters like operational performance (operational profit vs OPM, segmented income, provisioning vs net income) , financial performance (net profit vs net profit margin, CAR) and the stock performance. QPAC provides the company analysis of the major players in question along with the projections for the coming quarters, year as a whole and the next year with the Industry aggregate.

Comparision on the basis of services offered

Both the bank provide many service to their customer those include bank loan , insurance, atm etc they both provide more and more different type os services to their customers , not only to maintain their previous cutomer but because of attracting new customer towards their bank. Punjab national bank is the public bank and the public bank provide many service to their customer in a very reasonable interest , but on the other side in case of HDFC the private bank they also provide many service to their customer but they charge a little bit high price as compare to the public sectore bank. They private sectore bank providing a high quality of service to their customer but public sectore most lacking in that. The service quality of private banks is more higher than public bank because their main focuse on the quality work . In today world there is cut throught comptatition in the world every industry want to be at the top of the list for that they try each and every step in attracting customer towards them.

CONCLUSION
comparison between private sector(hdfc bank) and public sector banks(Punjab national bank), we take one -one banks from both sector to compare the non performing assets of banks. For understanding we further bifurcate the non performing assets in priority sector and non priority sector, gross NPA and net NPA in percentage as well as in rupees, deposit investment advances. Deposit Investment Advances is the first in the analysis because due to these we can understand the where the bank stands in the competitive market. As at end of march 2009, in private sector HDFC Bank is the highest deposit-investment-advances figures in rupees crhas least figures. In public sector banks Punjab National Bank has highest deposit investmentadvances and almost the similar in public sector bank. When we compare the private sector banks with public sector banks , we can understand the more number of people prefer to choose public sectors r banks for deposit-investment. But when we compare the private sector bank