SUBMITTED BY

MR. ANIRUDHA TAMBDE

 INTRODUCTION
NON-PERFORMING ASSETS (NPA)
An asset ceases to generate income for the bank is called a non performing asset. Generally, when a
borrower is unable to pay an interest or instalments of loan for 90 days, then the account is non
performing. The basic factor to determine whether an account is NPA or not is the record of the recovery
and the availability of security. Further, NPA status has to be worked out from the date of establishment of
irregularity. Interest or instalments of principle remain overdue for a period of more than 90 days in
respect of term loan.

The accounts remain out of order in respect of an overdraft/cash credit (OD/CC).

Interest and or instalment of principle remain overdue for two harvest season but for period not exceeding
two half years in case of an advance granted for agriculture purpose, and any amount to be received
remains overdue for a period of more than 90 days in respect of other accounts.
NPA Ratio:-
The net Non-Performing Assets to loan (advances) ratios are used as a measure of the overall quality
of the banks.Net NPAs are calculated by reducing cumulative balance of provisions outstanding at a
period end from gross NPAs. Higher ratio reflects rising bad quality of loans.

NPAs Ratio= Net Non-Performing Assets

Total Loans Disbursed
 RBI GUIDELINES ON CLASSIFICATION OF
BANK ASSETS
1). Standard Assets:-
Such an asset is not a non-performing asset. In other words, it carries not more than normal risk
attached to the business.

2). Sub-Standard Assets:-

It is classified as non-performing assets for a period not exceeding 12 months.

3). Doubtful Assets:-

An asset that has remained NPA for a period exceeding 12 months is a doubtful asset.

4). Loss Assets:-

Here loss is indentified by the bank concerned or by the internal auditors or by the external
auditors or by Reserve Bank of India (RBI) inspection.

In terms of RBI guidelines, as and when an asset become a NPA, such advance would be first
classified as a sub-standard one for a period that should not exceed 12 months and
subsequently as doubtful assets.
 AIMS & OBJECTIVES

1. To know the working of Nagpur Nagarik Sahakari Bank Ltd.
2. To know the types of loans offered by Nagarik Sahakari Bank Ltd.
3. To know about the Non-Performing Assets management of Nagarik
Sahakari Bank Ltd
4. To find out the category of advances which has the highest degree of NPA
and the reasons undertaken to tackle it.
5.To know about the loan Monitoring process and Loan Recovery Process.
6.to know Brief understanding of various department of banking Division
like Cash Counter, Loan Department, Cheque Clearing, Fixed Deposit,
Locker Department.
 RESEARCH & METHODOLOGY
RESEARCH:
Research is a process of finding answer to the questions through the application of the scientific
method.
PURPOSE OF THE RESEARCH
The purpose of research is to discover answer to question through the application of scientific
procedures. The main aim of research is to find out the truth which is hidden and which has not
been discovering yet.
The research is necessary because of its utility which is as follows.
1. Research is an aid to decision making.
2. Basis for Information is provided by research.
3. It helps in development in new product and modification of existing product.
4. Identification of problem areas.
5. It is an aid for forecasting.
6. It helps economic utilization of research.
7. It helps in development and maintenance of management Information System (MIS).
 OBSERVATION, INTERPRETATION AND ANALYSIS /
SUMMARIZE

1). Internal Checks and Control:-

2)Management/Resolution of NPAs

3) Wilful Defaulters:-

4)Legal and Regulatory Regime

5) Securitization and reconstruction of financial

Assets and enforcement of security interest
Act 2002 (sarfesi)

6) The Insolvency and Bankruptcy Code, 2016

 ANALYSIS OF DATA

Along with the fixed capital almost every small-scale industries requires NPA though the extent of NPA
requirement differs in different businesses. NPA is needed for running the day-to-day business activities.
When a business is started, NPA is needed for purchasing raw materials. The raw material is then
converted into finished goods by incurring some additional cost on it. Now goods are sold. Sales do not
convert into cash instantly because there is invariably some credit sales. Thus, there exists a time lag
between sales of goods and receipts of cash.

There are two concepts of NPA-

(1) Gross NPA Concepts.
GROSS NPA = TOTAL CURRENT ASSETS

(2) Net NPA Concepts.

Net NPA= Current Assets - Current Liabilities
 LIMITAION
LIMITATION OF THE STUDY :-

It is based on the study of only one Nagpur Nagarik Sahakari Bank Ltd

The study reveals the reasons only from the point of view of the bank and not the view of the
customers.

As per the banks policy there are restrictions on disclosing some information.
 FINDINGS

NPA is a weapon, which affects bank profitability due to interest income not being recognized on
NPA accounts and loan loss previously incurred to be absorbed from profit earned. Also the
provisions are to be made on the NPA accounts which will reduce the profits of the Bank. The bank
must adopt structured NPAs management policy for elimination or reducing the NPAs in the Bank.

. It has its limitations and may have adverse effects and hence has to be used judiciously with
proper understanding of the genuine problems and concerns of each other. To conclude this study
we can say about this report, that

Both the bank shows very much high NPA ratios.

NPAs represent high level of risk & low level of credit appraisal.
There are so many preventive measures available those can be adopted to stop an Asset or A/C
becoming NPA.

There are some certain guidelines made by RBI for NPAs which are adopted by banks.
 SUGGESTIONS AND CONCLUSION
SUGGESTIONS
The Bank has to increase in the quality of assets which adds value to its profitability.The quality of

assets can be increased by scouting the best Borrowers and by increasing the quality of advances.
The percentage of NPAs to Total Advances can be brought down by increasing the standard assets.
Early Alert System, should be implemented inorder to prevent the account from becoming NPA.
The banks should undertake frequent monitering and checking of NPA advances, which will help
the bank to find out the accounts which are under the category of NPA or which are likely to fall
under this category. If there are more variations over a period of time, then the reasons should be
sorted out and corrective actions such as issuing notices, etc should be implemented as early as
possible.
As for as possible, repayment of term loans should be fixed on monthly basis rather than on
quarterly or semi annual basis.
Personal guarantees of the promoter directors/major shareholders should normally be insisted
upon.
The major default of the Bank is in SSI Sector. So, inorder to reduce NPAs form this sector, the Bank
should undertake various checks like; timely checks on the Cash Flow Statement (Specifically Cash
from Operating Activities), Level of Sales (Growth Rate), Coverage ratios (Interest Coverage Ratios,
Debt Service Coverage Ratio), etc of SSI Units should be analysed.

 SUGGESTIONS AND CONCLUSION

CONCLUSION

Bank should prevent diversion of funds by the promoters and Effective inspection system should
be implemented.

Proper follow-up should be maintained with the SSI Sector, which will help them to reduce the
NPAs in this sector to a greater extent.

Banks should evaluate the SWOT analysis of the borrowing companies i.e. how they would face
the environmental threats and opportunities with the use of their strength and weakness, and
what will be their possible future growth in concerned to financial and operational performance.