”A STUDY ON NON

PERFORMING ASSETS IN
STATE BANK OF MYSORE”

Project Guide: External Guide

Mrs. Neena Prasad Mr. Dinesh Ubar
Asst. Professor Branch manager
DSCE DOMS SBM

By:
Abhijna.P
Reg No. 1DSO7MBA03
 COMPANY PROFILE
Founded : Mysore, 1913 (as Mysore bank)

Head office : Bangalore

Key people : Managing Director P.P.Pattanayak

Products : loans, credit cards, savings.

Slogan : working for better tomorrow

Industry : banking, insurance and allied industries

 NPA : NON-PERFORMING ASSET

Meaning:
An asset, including a leased asset, becomes
nonperforming when it ceases to generate income
for the bank.
A NPA is a loan or an advance where Interest
and/ or installment of principal remain overdue for
a period of more than 90 days in respect of a term
loan.
 INTRODUCTION

OBJECTIVE OF THE STUDY:

 
 To analyze the NPA and its relation with operating
profit of the bank. 
 To study the general reasons for assets become NPAs.
 To point out the amount of NPAs in SBM.
 What is the criteria to recover the advances from the
bank.
 What are the methods adopted by the bank to look
after NPA management.

Scope of this study:

 To present a picture of movement of NPA in SBM.
 To know how NPA level will affect the profit of the
bank.
 RESEARCH DESIGN
Statement of problem:
The bank will always face the problem of NPA
because of poor recovery of advances granted by the
bank and several other reasons like adopting a poor
recovery strategies so when the loan is not recovered
from the bank effectively and efficiently that balance
amount will become the NPA to the bank it may create
some huge problem to the bank’s net profit.

The study completely depends on the secondary

data.
The secondary data collected from –
 SBM’s annual reports.
 RBI’s Annual reports.
 SBM’s quarterly bulletins.
 SBM’s website.
 ANALYSIS
Gross NPA v/s Operating profit

2008-09
2005- 2006- 2007- projecte  Inference:
Items 06 07 08 d
Gross NPA
level 398.13 383.76 376 336 From the chart,
Operating
profit 438 471.58 515 721 it is understood
that as the gross
NPA level started
decreasing in
recent year,
operating profit
started increasing
drastically.
 CORRELATION TEST

HYPOTHESIS 
H0: There is no significant relationship between gross NPA of a bank to its 
operating profit.
H1: There is a significant relationship between gross NPA of a bank to its 
operating profit.
Operating
Gross NPA profit
Gross NPA Pearson Correlation 1 -.992(**)
Sig. (2-tailed)
.008
N
4 4
Operating Pearson Correlation -.992(**) 1
Sig. (2-tailed)
Profit .008
N
4 4
** Correlation is significant at the 0.01 level (2-tailed).

 INFERENCE: 
There is a negative correlation exists between gross NPA of a
bank with operating profit at a 0.01 level significance. So H1
is accepted, which states there is a significant relationship
between gross NPA of a bank to its operating profit.
 RECENT YEAR NPA PERFORMANCE
CHART
All
Grou bank
p s
avera avera
2 2 ge ge
State bank 2003 2004 2005 006 007 2007- 2007-  Inference:
of Mysore -04 -05 -06 -07 -08 08 08
Net NPA
ratio 2.96 0.92 0.74 0.45 0.43 1.43 1

In recent
years Net NPA
ratio has come
down drastically,
which is very
much below the
standard level of
1, which is very
favorable for the
bank.
 COMPARISON WITH OTHER GROUP
BANKS

SBI &  nationalised Foreign  All 

  SBM its associates  banks banks banks
 Inference:
Net NPA 
Ratio 0.43 1.43 0.77 0.78 1 Compared to
all other group
banks SBM is in
good position
with 0.43 NPA
ratio.
SEGMENT WISE POSITION OF NPAS

Segment Position  Reductio Addition Position 

as 2007 ns during  s during  as 2008
the year the year
Industry 141.38 124.78 95.54 112.14

Trade 22.79 13.02 14.33 24.10

SSI 45.08 15.87 8.28 37.49

SBF 47.61 20.20 18.14 45.55

AGR 38.23 19.67 11.68 30.24

Personal 84.52 36.74 61.70 109.48

Misc 4.15 4.15 - -

TOTAL 383.76 234.43 209.67 359.00

 FINDINGS
 The bank has achieved its target because the net
profit is also increased and there is a decrease in
NPAs. So it is in better position compared to last year.

 The total NPA is 376 crore, last year it was 383.76

crore.

 The loans and advances have been increased from

2006-07 to 2007-08

 There is decrease in doubtful assets compared to last

year.

 There is a slight decrease in ROA but there is a slight

increase in ROE.
 SUGGESTIONS AND
RECOMMENDATIONS
 Effective
inspection system should be
implemented.

 Operating staff should scrutinize the level of

inventories/receivables regularly.

 Large exposure on big corporate or single project

should be avoided.

 Uneven scale of repayment schedule with higher

repayment in the initial years normally is
preferred.
 CONCLUSION
 It is not possible to eliminate totally the NPAs in the banking
business but can only be minimized. It is always wise it
follow the proper policy appraisal, supervision and follow-up
of advances to avoid NPAs.
 
 The banks should not only take steps for reducing present
NPAs, but necessary precaution should also be taken to
avoid future NPAs.
 
 But in the case of SBM it is one of the good sign that the
amount of NPA is decreased from last financial year and it
should be move like this in future.
 REFERENCE

 State Bank of Mysore Books and articles:

Annual reports  Bank Management: Timothy
Other circulars
W. Koch
 Reserve Bank of India
 Banking theory and practice:
Annual reports K.C.Shekhar
NPA circulars  SBM: Policy guidelines 2008-
09
Internet sources:   Business world magazine
 www.rbi.org.in
 www.eeaecon.org  News paper articles
 www.thehindubusinessline.com
 www.icai.org
 www.statebankofmysore.co.in
Thank You…….!