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SECTOR.
73- Meghna Pandya
74- Sejal Panwar
75- Shivam Parekh
76- Divya Parmar
77- Hiren Patel
78- Riya Patel
79- Twinkle Patel
80- Mayank Poddar
1. NPAs
The Non-Performing Assets (NPA) is a term referred to those kinds of
loans and advances in banking channels for which, the borrower fails
to make any payment in interest or principle for 90 days and there is a
high risk of default.
2. Capital Inadequacy
One way a bank tries to ensure it is protected from bad loans is by
setting aside money as 'provision’. This money cannot be used for any
other purposes including lending. As a result, banks have lower capital
available to use for its various operations resulting in low Capital
Adequacy Ratio which measures how much capital a bank has. Due to
this, the bank has to borrow money or use depositor's money to lend.
This money, however, is riskier and costlier than the banks own capital.
So if banks do not increase their capital soon, some could fail to
meet the minimum capital requirement set by the RBI and could face
severe issues.
3. Losses in Rural Branch
• Economical Reasons
• Asset quality
• Heavy overhead costs
• Prevalence of the barter system in some parts
• Complicated Bank formalities
• Procedural rigidities
4. Large overdue
• Delayed earnings
• Insider lending
• Willful negligence
• High interest rate
• Inadequate financial analysis
5. COMPETITION WITH FOREIGN
BANKS
• Increase overheads and high risks.
• Raise investment in high-end technology and costs of employee
training.
• Compels to operate more efficiently.
• Due to plight of mounting NPA’s, households and industries have
turned to foreign banks for loans.
• Stability and soundness of central bank attracts the foreign banks.
• Transfer of savings out of domestic banks to foreign banks due to
better service quality and international status.
6. POLITICAL PRESSURES
• The asymmetric information between lending banks and outsiders about
the quality of a specific loan makes it easy to disguise political motivation
behind a loan.
• Revealing the costs of any politically motivated loan can be deferred until
the loan maturity.
• Elections, in particular, might tempt the politicians in power to use the
government-owned banks for political purposes
• Firms with political connections have easier access to debt financing and
enjoy lower taxation.
• Politicians can reward their allies and punish their opponents by using their
influence on government-owned banks.
7. CYBER THREATS
A cyber or cybersecurity threat is a malicious act that seeks to damage data, steal
data, or disrupt digital life in general. Cyber threats are a big deal. Cyber attacks can
cause electrical blackouts, failure of military equipment and breaches of national
security secrets. They can result in the theft of valuable, sensitive data like medical
records.