Non Performing Assets & Current NPA Management Measures

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By:ANKITA AGRAWAL

About PNB
PNB is the third largest bank in India by assets. Headquarters in New Delhi, India. Founded in 1894 in Lahore. The first Board comprises of 7 Directors but PNB Website now claims Lala Lajpat Rai to be the founding father. PNB is the first Indian bank to have been started solely with Indian capital that has survived to the present. Punjab National Bank was ranked #26 in the Fortune India 500 ranking of 2011.

Non-Performing Assets has been defined to be a credit facility in respect of which the interest and/or installment of principle has remained overdue for a specified period of time. Why I opted this topic? Bank grant loans and advances with a risk of having them defaulted. Default means customers incapability for non-payment of loan or any installment. For the bank it proves to be a NPA. I thought the default analysis is a very essential point .

Objectives of the study

To know what are NPAs. To study the past and present trends of NPA.

To know the reasons for emergence of NPAs.

To know why NPAs are great challenge to public sector banks?

Objectives
To analyze the impact of NPAs on the operations of public sector banks. To know what steps are being taken by the Indian banking sector to reduce NPAs? To evaluate the financial performance and growth of public sector banks at different levels of NPAs.

Research Methodology

Primary Data: Views of the concerned officials were gathered. Field research has been conducted through questionnaire. Sampling method used for the project is Random Sampling. To prepare this Project I took five branches of Punjab national Bank. Sample size taken is 25. Secondary Data: Collected from case studies, bank statements. Annual report, journals and web sites of Punjab National Bank.

Findings

Bank granted loans in various sectors such as Term loans, Personal loans, Housing loans, Educational loans, etc. The major cases of NPA are observed in Education Loans and Personal Loans.
The main reasons for defaults (NPA) are: The borrower may default intentionally. Default due to death of the borrower.

Findings
Default due to financial crisis or shut down of the business of the borrower. Borrower absconding. Negligence of bank while scrutiny. Government policies.

Recommendations & Suggestions

The scrutiny of the proposals should be done and great care is taken while granting the loans. After granting a loan the frequent follow-up must be taken by bank.

Restructuring up loans should be done for the genuine customer and hampered by industrial outlook and new government policies.

Recommendations
Separate RCU (Risk containment unit) department should be incorporated in our credit system so that fake documents can be caught and random samples would keep the fraudsters away from system.

Case of credit cards should be dealt leniently.

CIBIL data should reflect the name of financial institutes so that fraudsters who apply for multiple loans can be caught.

Contributions to the organization

Interacted with customers and recovered the amount from defaulters. My project report and field research benefitted the organization that they incorporated RCU which will keep fraudster away and save efforts of the employees.

Thank You