Professional Documents
Culture Documents
Supervised By
DR. B.D. Mishra
(Associate Professor)
Submitted By
Meenakshi Dhirwani
Roll No. -13605023
2015
Department of Management studies
Guru Ghasidas Vishwavidyalaya, Bilaspur (C.G)
This is to certify that I, Meenakshi Dhirwani, a student of MBA Fourth Semester of the
batch 2013-15 (Roll No. 13605023) have carried out a project entitled NPA Management
in SBI under the supervision of Dr. B.D. Mishra (Associate Professor) in the Department
of Management Studies, Guru Ghasidas Vishwavidyalaya, Bilaspur (C.G). This is an original
work carried out by me and the report has not been submitted to any other University for the
award of any degree of diploma.
Meenakshi Dhirwani
MBA IVth Semester
Batch:- 2013-15
Roll No.:- 13605023
This is to certify that Ms. Meenakshi Dhirwani, a student of MBA fourth semester of the
2013- 15 batch (Roll No. 13605023) has carried out a project NPA Management in SBI
under my supervision and guidance. It is also certified that the student has compiled with all
the guidelines designed for the project of report. To the best of my knowledge this report is
an authentic record of the work carried out by the student and it is considered fit for being
referred to evaluation.
II
OBJECTIVES:1. To understand what is non performing Assets and what are the underlying reasons for the
emergence of the NPA's
2. To study the position of NPA in SBI group
3. To understand the impact of NPA on strategic banking whole
4. To know the reason for an Asset becoming NPA
5. To suggest measures to reduce NPA
6. To study the methods adopted by the RBI to look after NPA management
7. To study why banks and financial institutions are facing problems of swelling NPAs even
after the passing of the act.
The main aim of any person is the utilization of money in the best manner since the India is
country where more than half of population has problem of running the family in the most
efficient manner. However Indian people faced large number of problems till the
development of full- fledged banking sector. The Indian banking sector came into the
developing nature mostly after 1991 government policy. The banking sector has really helped
the Indian people to utilize the single money in the best manner as they want. The banks not
only accept the deposits of the people but also provide them credit facility for their
development. Indian banking sector has the nation in developing the business and services
sectors. But recently the banks are facing the problem of credit risk. It is found that many
general people and business people borrow from the banks but due to some genuine of other
reasons are not able to repay back is known as the non- performing assets. Many banks are
facing the problem of NPA which hampers the business of banks. Due to NPAs the income of
the banks is reduced and the banks have to make large number of the provision that would
III
curtail the profit of the banks and due to that the financial performance of the bank would not
show good results.
The main aim behind making this report is to know how SBI is operating its business and
how NPAs play its role to the operations of the SBI bank. My study is also focusing upon
existing system in India to solve the problem of NPAs.
REASERCH METHODOLOGY
The key element of our methodology are as follow:-
1.Sample size:- the total sample size was 25. The respondent was bank members, especially
the bank manager, loan manager, the credit managers and the officers in charge of recovery
department.
3. Sources of Data collection:- the source of data is important consideration for any project.
The data used it:
Secondary data:Secondary data refers to the data which has already been generated and is available for use.
The data is taken from Reserve Bank of India website, SBI website and journals.
4. Period of the study:- the period of the study is done on the basis of availability of data.
The data are collected i.e. from 2003-04 to 2007-08.
5. Research design:- the research conducted is to analyze the NPA management in SBI
bank. The nature of research is exploratory as well as diagnostic. This study is based on the
discussions conducted with officials of the bank. The various data provided by them, the RBI
IV
circulars, journal, magazines, data from internet will be studied and interpretation made
thereof.
6. secondary information is obtained by the medium of internet, books and the journals of
various Management schools and the government web portals.
CHAPTER PLAN
1. Introduction
2. Company profile
3. NPA management
4. Data analysis and interpretation
5. Findings, conclusion and suggestion.
ACKNOWLEDGEMENT
On the very outset of this report, I would like to extend my sincere & heartfelt obligation
towards all the personages who have helped me in this endeavor. Without their active
guidance, help, cooperation & encouragement, I would not have made headway in the
project.
I am extremely thankful and pay my gratitude to my faculty guide Dr. B.D. Mishra for his
valuable guidance and support on this project in its presently.
I am extremely indebted to Dr. L.P. Pateriya sir for conscientious guidance and
encouragement to accomplish this assignment.
I also acknowledge with a deep sense of reverence, my gratitude towards my parents and
member of my family, who has always supported me morally as well as economically. At last
but not the least gratitude goes to all my friends who directly or indirectly helped me to
complete this project report
Any omission in this brief acknowledgement does not mean lack of gratitude.
Meenakshi Dhirwani
MBA IVthSemester
VI
PREFACE
Master of business administration of finance is course which combines with theory and its
application as its contents of study in the field of management as a part of this course every
aspirant has to submit a major project report.
Granting of credit facilities for economic activities is the primary task of banking. Apart from
raising resources through fresh deposits, borrowings, etc. recycling of fund received bank
from borrowers constitutes a major part of funding credit dispensation activities. Nonrecovery of installment as also interest on the loan portfolio negates the effectiveness of this
process of the credit cycle. Non- recovery also affects the profitability of banks besides being
required to maintain more owned funds by way of capital and creation of reserves and
provision to act as cushion for the loan losses. Avoidance of loan losses is one of the preoccupation of management of banks. While complete elimination of such losses is not
possible, bank management aim to keep the losses at a low level. In fact, it is the level of nonperforming advances, which, to a great extent, widespread repercussions. To avoid shock
waves affecting the system, the salvaging exercise is done by the Government or by the
industry on the behest of Government/ central bank of the country putting pressure on the
exchequer.
This project aims at providing overall view on the existence of NPAs, their treatment, the
ways at resolving this issue and also a few reports on the recent developments in this field. If
this report will be fruitful to any organization by any means, we will consider our work
worthwhile.
Date: 13/5/2015
Place- Bilaspur
Meenakshi Dhirwani
M.B.A IVth Semester
VII
TABLE
NO.
CONTENTS
PAGE
NO.
4.1
TOTAL ASSET
60
4.2
61
4.3
63
4.4
64
4.5
65
4.6
PROVISION RATIO
66
4.7
WHAT ISNPA?
68
4.8
PERCENTGE OF NPA
69
4.9
TREND OF NPA
70
4.10
CAUSES OF NPA
71
4.11
STEPS TO BE TAKEN
72
4.12
74
4.13
75
4.14
4.15
77
4.16
78
4.17
79
4. 18
80
4.19
81
4.20
82
VIII
4.21
4.22
4.22
85
4.23
NECESSITY OF IMPROVEMENT
86
4.24
87
4.25
4.26
89
4.27
90
4.28
PROGRESS OF NPA
91
4.29
92
4.30
93
IX
83
CONTENTS
S. NO
PARTICULARS
PAGE NO.
1.
2.
II
3.
III-V
4.
PREFACE
VI
5.
ACKNOWLEDGEMENT
VII
6.
VIII- IX
7.
EXECUTIVE SUMMARY
8.
CHAPTER-1 INTRODUCTION
1
2- 7
8- 30
31- 59
XI
60- 100
13.
ANNEXURE
106- 111
14.
BIBLIOGRAPHY
112
XII
101- 105
EXECUTIVE SUMMARY
The most important problem that the Indian banks are facing is the problem of their NPAs. It
is only since a couple of years that this particular aspect has been given so much importance.
The banks has to overcome these difficulty properly in order to effectively counter the
competition faced by the foreign banks. With the framing of law as per international
standards and setting up of Debt recovery tribunal we can say that steps have been taken in
this direction.
SARFAESI ACT 2002 (Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act) gave the banks the much needed teeth to curb the
menace of NPAs. the non- performing assets (NPAs) of banks have at last begun shrinking.
As reported from surveys, it is understood that there has been substantial improvement in
non- performing assets and this has been because of several measures such as formation of
asset reconstruction companies, debt restructuring norms, securitization, provisioning norms
and prudential norms for income recognition. The problem is no doubt about recovery
management where the objective is to find out about the reasons behind NPAs and to create
networks for recovery.
An explorative study was adopted to achieve the objectives of the study. The major limitation
of the study was the lack of time. Even then, maximum care has been taken to arrive at
appropriate conclusion. The method adopted for collection of data was personal interview
with the bank officials and observation. It was also sourced from secondary data. After
collecting data from the respective sources, analysis and interpretation of data has been made.
Based on the findings, logical conclusion are drawn, and further, suitable suggestions and
recommendation are brought out. The entire project report is presented in the form of a report
using chapter scheme, developed logically and sequentially from introduction to
bibliography.
CHAPTER - 1
1.1
Non- performing assets (NPAs) are the smoking gun threatening the very stability of Indian
banks. NPAs wreck a banks profitability both through a loss of interest income and writeoff of the principal loan amount itself.
According to economic survey:- During 2012-13, the deteriorating asset quality of the
banking sector emerged as a major concern, with gross NPAs ( non-performing assets ) of
banks registering a sharp increase...Growth of NPA is a cause for concern," the Survey tabled
in Parliament by Finance Minister ArunJaitley said. The bad loans of public sector banks
were at 4.4 per cent in March 2014 compared with 2.09 per cent in 2008-09, it said, adding,
the gross NPA increased by almost four times from March 2010 (Rs 59,972 crore) to March
2014 (Rs 2,04,249 crore).
Increase in NPAs of banks is mainly accounted forby switchover to system-based
identification of NPAs by PSBs (public sector banks), slowdown of economic growth, and
aggressive lending bybanks in the past, especially during good times, it said.Overall NPAs or
bad loans of the banks, includingprivate sector lenders, increased from 2.36 percent to 3.90
per cent in March 2014. Increase was sharp in case of infrastructure with NPAs rising from
3.23 per cent to 8.22 per cent, it said. Infrastructure, iron and steel, textiles, aviation and
mining are five main sector that are stressed.
"The next wave of infrastructure financing will require a capable bond market." Despite, asset
quality deteriorating, the survey said the capital positions of Indian banks, including that of
public sector, remained strong and above the stipulated minimum.Highlighting challenges
and outlook, the Surveysaid financial markets continue to suffer from illiquidity and a major
objective should be to develop bond-currency derivative (BCD) nexus to equity market
quality levels.
1.2
1.3
The main aim of any person is the utilization of money in the best manner since the India is
country where more than half of population has problem of running the family in the most
efficient manner. However Indian people faced large number of problems till the
development of full- fledged banking sector. The Indian banking sector came into the
developing nature mostly after 1991 government policy. The banking sector has really helped
the Indian people to utilize the single money in the best manner as they want. The banks not
only accept the deposits of the people but also provide them credit facility for their
development. Indian banking sector has the nation in developing the business and services
sectors. But recently the banks are facing the problem of credit risk. It is found that many
general people and business people borrow from the banks but due to some genuine of other
reasons are not able to repay back is known as the non- performing assets. Many banks are
facing the problem of NPA which hampers the business of banks. Due to NPAs the income of
the banks is reduced and the banks have to make large number of the provision that would
curtail the profit of the banks and due to that the financial performance of the bank would not
show good results.
The main aim behind making this report is to know how SBI is operating its business and
how NPAs play its role to the operations of the SBI bank. My study is also focusing upon
existing system in India to solve the problem of NPAs.
1.4
REASEARCH PROBLEM
Indian banking industry, which was in glory phase once upon a time, has been facing a lots of
challenges on non- performing assets at present scenario. Many banks have kept their NPAs
under the control but some banks are not able to control their NPA levels. They are facing
lots of problems there can be various reasons behind this NPA. Non- performing assets has
been hitting the profitability of the banks or it can be said that due to NPA, the profitability of
the banks are going down day by day. The subsidiary for this is the functioning of Debt
Recovery Tribunal (DRT) which is a judiciary for the bank for recovery amount from the
default customers. These can be considered as a research problem based on which the
information is collected, the object is measured and the data is analyzed and interpreted.
Secondary data:-
Secondary data refers to the data which has already been generated and is available for use.
The data is taken from Reserve Bank of India website, SBI website and journals.
Primary data:-
1.6 LIMITATIONS
The project was a very good learning experience but on the other side it was full of
challenging and difficulties. The most difficult part of the project was the interpretation with
the members of the banks with the purpose to collect feedback. The major constraints faced
can be listed as follow
It was not possible to collect the data from all the branches and members of the bank
due to the shortage of time data.
The conclusion of the study are based on the responces of the banks and secondary
information. Thus, some amount of subjectivity might remain.
1. Introduction
2. Company profile
3. NPA management
4. Data analysis and interpretation
5. Findings, conclusion and suggestion.
CHAPTER- 2
2.2 History:Banking in India has its origin as carry as the Vedic period. It is believed that
the transition from money lending to banking must have occurred even before Manu, the
great Hindu jurist, who has devoted a section of his work to deposits and advances and laid
down rules relating to the interest. During the mogal period, the indigenous bankers played a
very important role in lending money and financing foreign trade and commerce. During the
days of East India Company, it was to turn of the agency houses top carry on the banking
business. The general bank of India was the first joint stock bank to be established in the year
1786.The others which followed were the Bank of Hindustan and the Bengal Bank. The Bank
of Hindustan is reported to have continued till 1906, while the other two failed in the
meantime. In the first half of the 19th Century the East India Company established three
banks; The Bank of Bengal in 1809, The Bank of Bombay in 1840 and The Bank of Madras
in 1843.These three banks also known as presidency banks and were independent units and
functioned well. These three banks were amalgamated in 1920 and The Imperial Bank of
India was established on the 27th Jan 1921, with the passing of the SBI Act in 1955, the
undertaking of The Imperial Bank of India was taken over by the newly constituted SBI. The
Reserve Bank which is the Central Bank was created in 1935 by passing of RBI Act 1934, in
the wake of swadeshi movement, a number of banks with Indian Management were
established in the country namely Punjab National Bank Ltd, Bank of India Ltd, Canara Bank
Ltd, Indian Bank Ltd, The Bank of Baroda Ltd, The Central Bank of India Ltd .On July 19 th
1969, 14 Major Banks of the country were nationalized and in 15th April 1980 six more
commercial private sector banks were also taken over by the government. The Indian
Banking industry, which is governed by the Banking Regulation Act of India 1949, can be
broadly classified into two major categories, non-scheduled banks and scheduled banks.
Scheduled Banks comprise commercial banks and the co-operative banks.
The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969
and resulted in a shift from class banking to mass banking. This in turn resulted in the
significant growth in the geographical coverage of banks. Every bank had to earmark a min
percentage of their loan portfolio to sectors identified as priority sectors the manufacturing
sector also grew during the 1970s in protected environments and the banking sector was a
critical source. The next wave of reforms saw the nationalization of 6 more commercial
banks in 1980 since then the number of scheduled commercial banks increased four- fold and
the number of bank branches increased to eight fold.
After the second phase of financial sector reforms and liberalization of the sector in the early
nineties. The PSBs found it extremely difficult to complete with the new private sector
banksand the foreign banks. The new private sector first made their appearance after the
guidelines permitting them were issued in January 1993.
10
11
RBI
scheduled
commercial
private
public
unscheduled
cooperative
RRB
foriegn
Rural
Urban
Retail banking loans to individuals ( auto loan, housing loan, educational loan and
other personal loan) or small business.
Wholesale banking loans to mid and large corporate ( working capital loans, project
finance, team loans, lease finance)
12
STRENGHTS
WEAKNESSES
Valuable contribution to
Increasing NPA
GDP
Low penetration
Regulatory environment
Lack
Government support
of
product
differentiation
OPURTUNITIES
THREATS
Modern technology
Globalization
Unorganized money
lending market
Customer
dissatisfaction
Rise of monopolistic
structures
13
14
in growth, because the customers now have enough number of opportunities, and they choose
according to their satisfaction of responses and recognition they get. So the banks have to
play cautiously, else they may lose out the place in the market due to competition, where
slightest of opportunities are captured fast.
Another major role played by banks is in transnational business, transactions and networking.
Many leading Indian banks have spread out their network to other countries, which help in
currency transfer and earn exchange over it.
These banks play a major role in commercial import and export business, between parties of
two countries. This foreign presence also helps in bringing in the international standards of
operations and ideas. The liberalization policy of 1991 has allowed many foreign banks to
enter the Indian market and establish their business. This has helped large amount of foreign
capital inflow & increase our Foreign exchange reserve.
Another emerging change happening all over the banking industry is consolidation through
mergers and acquisitions. This helps the banks in strengthening their empire and expanding
their network of business in terms of volume and effectiveness.
15
SBI GroupThe Bank of Bengal, which later became the State Bank of India. State Bank of India with its
seven associate banks commands the largest banking resources in India.
NationalizationThe next significant milestone in Indian Banking happened in late 1960s when the then Indira
Gandhi government nationalized on 19th July 1949, 14 major commercial Indian banks
followed by nationalization of 6 more commercial Indian banks in 1980.
The stated reason for the nationalization was more control of credit delivery. After this, until
1990s, the nationalized banks grew at a leisurely pace of around 4% also called as the Hindu
growth of the Indian economy .After the amalgamation of New Bank of India with Punjab
National Bank, currently there are 19 nationalized banks in India.
LiberalizationIn the early 1990s the then Narasimharao government embarked a policy of liberalization
and gave licences to a small number of private banks, which came to be known as New
generation tech-savvy banks, which included banks like ICICI and HDFC. This move along
with the rapid growth of the economy of India, kick started the banking sector in India, which
has seen rapid growth with strong contribution from all the sectors of banks, namely
Government banks, Private Banks and Foreign banks. However there had been a few hiccups
for these new banks with many either being taken over like Global Trust Bank while others
like Centurion Bank have found the going tough.
The next stage for the Indian Banking has been set up with the proposed relaxation in the
norms for Foreign Direct Investment, where all Foreign Investors in Banks may be given
voting rights which could exceed the present cap of 10%, at pesent it has gone up to 49%
with some restrictions.
16
The new policy shook the Banking sector in India completely. Bankers, till this time, were
used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new
wave ushered in a modern outlook and tech-savvy methods of working for traditional
banks.All this led to the retail boom in India. People not just demanded more from their
banks but also received more.
2.9 CONCERN
Indian economy is one of the fastest growing economies of the world. The economy with its
vital geography and demography has specific requirements in order to traverse to the next
orbit and attain its full potential. Banks enable to cope with finance requirement for few
industries such as infrastructure, housing and real estate etc. Indias infrastructural financing
needs are not only huge but also vital. Traditionally banks have been the major source of
infrastructure financing and their exposure to infrastructure is already high at 17 per cent.
There are several major concerns which as noted below:
Intensifying competition
Indian banking industry has undergone qualitative changes due to banking sector reforms.
Indian banking sector, which is dominated by state- controlled, has facing formidable
challenges. Due to this new emerging competition, Indian banks, especially PSBs are trying
their best to improve their performance and preparing to compete in the emerging global
market. New private sector banks and foreign banks have more customer- centric policies,
high quality services, new attractive schemes and computerized branches. All these services
attracted more and more customers to their banks. In this context, there is a need to examine
the efficiency of public sector banks operating in India. Mainly, competition can intensify
and banks which is efficient. The transaction cost of customers could come down and a bank
which is efficient, nimble and customer focused would always be able to do better than
others. As a result of globalization, many new banks have the Indian banking industry,
further intensifying the competition.
17
Increasing NPA
The asset quality of banks is one of the most important indicator of their financial health. It
also reflects the efficiency of banks credit risk management and the recovery environment.
The Indian banks have shown very good performance as far as the financial operations are
concerned. But non- performing assets (NPA) has caused some concerns. Despite write- offs
gross NPAs have continued to rise significantly. The new accretion to NPAs has been much
faster than the reduction in existing NPAs due to lower levels of up gradation and recoveries.
To improve the banks ability their non performing assets (NPAs) and restructured accounts
in an effective manner and considering that almost all branches of banks have been fully
computrized, the Reserve bank of India in its monetary policy statement 2012- 13 proposed
the following measures:
To mandate banks to put in place a robust mechanism for early detection of signs of
distress, and measures, including prompt restructuring in the case of all viable accounts
wherever required, with view to presenting the economic value such accounts: and
To mandate banks to have proper system generated- wise data on their NPA accounts,
COMPANY PROFILE
2.10 INTRODUCTIONSTATE BANK OF INDIA
Not only many financial institution in the world today can claim the antiquity and majesty of
the State Bank Of India founded nearly two centuries ago with primarily intent of imparting
stability to the money market, the bank from its inception mobilized funds for supporting
both the public credit of the companies governments in the three presidencies of British India
and the private credit of the European and India merchants from about 1860s when the Indian
18
economy book a significant leap forward under the impulse of quickened world
communications and ingenious method of industrial and agricultural production the Bank
became intimately in valued in the financing of practically and mining activity of the SubContinent Although large European and Indian merchants and manufacturers were
undoubtedly thee principal beneficiaries, the small man never ignored loans as low as Rs.100
were disbursed in agricultural districts against glad ornaments. Added to these the bank till
the creation of the Reserve Bank in 1935 carried out numerous Central Banking functions.
Adaptation world and the needs of the hour has been one of the strengths of the Bank, In the
post depression exe. For instance when business opportunities become extremely restricted,
rules laid down in the book of instructions were relined to ensure that good business did not
go post. Yet seldom did the bank contravenes its value as depart from sound banking
principles to retain as expand its business. An innovative array of office, unknown to the
world then, was devised in the form of branches, sub branches, treasury pay office, pay
office, sub pay office and out students to exploit the opportunities of an expanding economy.
New business strategy was also evaded way back in 1937 to render the best banking service
through prompt and courteous attention to customers.A highly efficient and experienced
management functioning in a well defined organizational structure did not take long to place
the bank an executed pedestal in the areas of business, profitability, internal discipline and
above all credibility A impeccable
financial status consistent maintenance of the lofty traditions if banking an observation of a
high standard of integrity in its operations helped the bank gain a pre- eminent status. No
wonders the administration for the bank was universal as key functionaries of India
successive finance minister of independent India Resource Bank of governors and
representatives of chamber of commercial showered economics on it.
Modern day management techniques were also very much evident in the good old days years
before corporate governance had become a puzzled the banks bound functioned with a high
degree of responsibility and concerns for the shareholders. An unbroken records of profits
and a fairly high rate of profit and fairly high rate of dividend all through ensured
19
satisfaction, prudential management and asset liability management not only protected the
interests of the Bank but also ensured that the obligations to customers were not met. The
traditions of the past continued to be upheld even to this day as the State Bank years itself to
meet the emerging challenges of the millennium.
THE
PLACE
TO
THE
VIEWS
Togetherness is the theme of this corporate loge of SBI where the world of banking services
meet the ever changing customers needs and establishes a link that is like a circle, it indicates
complete services towards customers. The logo also denotes a bank that it has prepared to do
anything to go to any lengths, for customers.
The blue pointer represent the philosophy of the bank that is always looking for the growth
and newer, more challenging, more promising direction. The key hole indicates safety and
security.
20
VISION STATEMENT:
Premier Indian Financial Service Group with prospective world-class
Standards of efficiency and professionalism and institutional values.
Retain its position in the country as pioneers in Development banking.
Maximize the shareholders value through high-sustained earnings per
Share.
An institution with cultural mutual care and commitment, satisfying and
Good work environment and continues learning opportunities.
VALUES:
Excellence in customer service
Profit orientation
Belonging commitment to Bank
Fairness in all dealings and relations
Risk taking and innovative
21
Team playing
Learning and renewal
Integrity
Transparency and Discipline in policies and systems.
Name
Designation
Under
section
of
SBI Act 1955
1
Chairman
19(a)
Managing director
19(b)
Shri. B. Sriram
Managing director
19(b)
Managing director
19(b)
Shri. SanjivMalhotra
Director
19(c)
Director
19(c)
Shri. M. D. mallya
Director
19(c)
Director
19(c)
Shri. S. K Mukherjee
Officer
employee 19(cb)
director
10
Director
19(d)
11
Shri. HarichandraBahadursingh
Director
19(d)
12
Shri. TribhuwanNathchaturvedi
Director
19(d)
13
Dr. HasmukhAdhia
Director
19(e)
14
Director
19(f)
22
Medi-Plus Scheme
Rates Of Interest
'SBI-Home Loans'
23
features:
Option to club income of your spouse and children to compute eligible loan amount
Provision to club expected rent accruals from property proposed to compute eligible
loan
amount
Provision to finance cost of furnishing and consumer durables as part of project cost
Optional Group Insurance from SBI Life at concessional premium (Upfront premium
financed as part of project cost)
'Plus' schemes which offer attractive packages with concessional interest rates to
Govt. Employees, Teachers, Employees in Public Sector Oil Companies.
Special scheme to grant loans to finance Earnest Money Deposits to be paid to Urban
Development Authority/ Housing Board, etc. in respect of allotment of sites/ house/
flat
Prepayment penalty is recovered only if the loan is pre-closed before half of the
original tenure (not recovered for bulk payments provided the loan is not closed)
Provision for downward refixation of EMI in respect of floating rate borrowers who
avail Housing Loans of Rs.5 lacs and above, to avail the benefit of downward revision
of interest rate by 1% or more
Attractive packages in respect of loans granted under tie-up with Central/ State
Governments/ PSUs/ reputed corporates and tie-up with reputed builders (Please
contact your nearest branch for details)
24
SERVICES:
DOMESTIC TREASURY
BROKING SERVICES
ATM SERVICES
INTERNET BANKING
E-PAY
E-RAIL
RBIEFT
GIFT CHEQUES
ATM SERVICES
STATE BANK NETWORKED ATM SERVICES
State Bank offers you the convenience of over 8000 ATMs in India, the largest network in
the country and continuing to expand fast! This means that you can transact free of cost at the
ATMs of State Bank Group (This includes the ATMs of State Bank of India as well as the
Associate Banks namely, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State
Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, and
State Bank of Travancore) and wholly owned subsidiary viz. SBI Commercial and
International Bank Ltd., using the State Bank ATM-cum-Debit (Cash Plus) card.
25
2) ATM Cards issued by Banks under bilateral sharing viz. Andhra Bank,Axis Bank, Bank
of India, The Bank of Rajasthan Ltd., Canara Bank, Corporation Bank, Dena Bank, HDFC
Bank, Indian Bank, Indus Ind Bank, Punjab National Bank, UCO Bank and Union Bank of
India.
3) Cards issued by banks (other than banks under bilateral sharing) displaying Maestro,
Master Card, Cirrus, VISA and VISA Electron logos
4) All Debit/ Credit Cards issued by any bank outside India displaying Maestro, Master Card,
Cirrus, VISA and VISA Electron logos
Note: If you are a cardholder of bank other than State Bank Group, kindly contact your Bank
for the charges recoverable for usage of State Bank ATMs.
STATE
BANK
INTERNATIONAL
ATM-CUM-DEBIT
CARD
Eligibility:
All Saving Bank and Current Account holders having accounts with networked branches and
are:
NRE account holders are also eligible but NRO account holders are not.
26
Benefits:
Charges for usage abroad: Rs. 150+ Service Tax per cash withdrawal Rs. 15 + Service
Tax per enquiry.
27
E-PAY
Bill Payment at Online SBI (e-Pay) will let you to pay your Telephone, Mobile, Electricity,
Insurance and Credit Card bills electronically over our Online SBI website
E-RAIL
Book your Railways Ticket Online.
The facility has been launched wefIst September 2003 in association with IRCTC. The
scheme facilitates Booking of Railways Ticket Online.
The salient features of the scheme are as under:
On giving payment option as SBI, the user will be redirected to onlinesbi.com. After
logging on to the site you will be displayed payment amount, TID No. and Railway
reference no.
The user can collect the ticket personally at New Delhi reservation counter .
The Payment amount will include ticket fare including reservation charges,
courier charges and Bank Service fee of Rs 10/. The Bank service fee has
been waived unto 31st July 2006.
28
AGRICULTURE / RURAL
State Bank of India Caters to the needs of agriculturists and landless agricultural labourers
through a network of 6600 rural and semi-urban branches. here are 972 specialized branches
which have been set up in different parts of the country exclusively for the development of
agriculture through credit deployment. These branches include 427 Agricultural Development
Branches (ADBs) and 547 branches with Development Banking Department (DBDs) which
cater to agriculturists and 2 Agricultural Business Branches at Chennai and Hyderabad
catering to the needs of hitech commercial agricultural projects.
29
CHAPTER- 3
30
Interest and/or installment of principal remain overdue for a period of more than
90 days in respect of a term loan,
II.
The account remains out of order for a period of more than 90 days in respect
of an overdraft/ cash credit (OD/CC)
31
III.
The bill remains overdue for a period of more than 90 days in the case of bills
purchased and discounted,
IV.
V.
Any amount to be recived remains overdue for a period of more than 90 days in
respect of other accounts.
The policy of income recognition has to be objective and based on the record of
recovery. Internationally income from non-performing assets (NPA) is not recognised
on accrual basis but is booked as income only when it is actually received. Therefore,
the banks should not charge and take to income account interest on any NPA.
However, interest on advances against term deposits, NSCs, IVPs, KVPs and Life
policies may be taken to income account on the due date, provided adequate margin is
available in the accounts.
If any advance, including bills purchased and discounted, become NPA as at the close
of any year, the entire interest accured and credited to income account in the past
periods, should be reversed or provided for if the same is not realized.
32
Standard assets
Doubtful assets
Loss assets
Standard Assets:- Standard assets are the ones in which the bank is receiving interest as
well as the principal amount of the loan regularly from the customer. Here it is also very
important that in this case the arrears of interest and the principal amount of loan does not
exceed 90 days at the end of financial year. If asset fails to be in category of standard asset
that is amount due more than 90 days then it is NPA and NPAs are further need to classify in
sub categories.
Provisioning norms:
From the year ending 31. 03. 2000, the banks should make a general provision of a
minimum of 0.40 percent on standard assets on global loan portfolio basis.
The provisions on standard assets should not be reckoned for arriving at net NPAs.
The provisions towards standard assets need not be netted from gross advances but
shown seperately as contingent provisions aginst standard assets under other
liabilities and provisions- others in schedule 5 of the balance sheet.
Banks are required to classify non- performing assets further into the following three
categories based on the period for which the asset has remained non- performing and the
reasonability of the dues:
1) Sub- standard assets
2) Doubtful assets
3) Loss assets
33
Sub-standard Assets:-- With effect from 31 March 2005, a sub standard asset would be
one, which has remained NPA for a period less than or equal to 12 month. The following
features are exhibited by sub standard assets: the current net worth of the borrowers /
guarantor or the current market value of the security charged is not enough to ensure recovery
of the dues to the banks in full; and the asset has well-defined credit weaknesses that
jeopardise the liquidation of the debt and are characterised by the distinct possibility that the
banks will sustain some loss, if deficiencies are not corrected.
Provisioning norms: a general provision of 10% on total outstanding should be made
without making any allowance for DICGC/ECGC guarantee cover securities available.
Doubtful Assets:--A loan classified as doubtful has all the weaknesses inherent in assets
that were classified as sub-standard, with the added characteristic that the weaknesses make
collection or liquidation in full, on the basis of currently known facts, conditions and values
highly questionable and improbable.With effect from March 31, 2005, an asset would be
classified as doubtful if it remained in the sub-standard category for 12 months.
Provisioning norms:
100 percent of the extent to which the advance is not covered by the realisable value
of the security to which the bank has a valid recourse and the realisable value is
estimated on a realistic basis.
In regard to the secured portion, provision may be made on the following basis, at the
rates ranging from 20 percent to 50 percent of the secured portion depending upon the
period for which the asset has remained doubtful:
34
2. As on 31.03.2002, balance of the provisions not made during the previous year, in
addition to the provisions needed, as on 31.03.2002.
Banks are permitted to phase the additional provisioning consequent upon the
reduction in the transition period from substandard to doubtful asset from 18 to 12
months over a four year period commencing from the year ending March 31, 2005,
with a minimum of 20 % each year.
Loss Assets:--A loss asset is one which considered uncollectible and of such little value that
its continuance as a bankable asset is not warranted- although there may be some salvage or
recovery value. Also, these assets would have been identified as loss assets by the bank or
internal or external auditors or the RBI inspection but the amount would not have been
written-off wholly.
Provisioning norms: The entire asset should be written off. If the assets are permitted to
remain in the books for any reason, 100 percent of the outstanding should be provided for.
A NPA is eligible for sale to other banks only if it has remained a NPA for at least
two years in the books of the selling bank.
The NPA must be held by the purchasing bank at least for a period of 15 months
before it is sold to other banbks but not to bank, which originally sold the NPA.
The NPA may be classified as standard in the books of the purchasing banbk for a
period of 90 days from date of purchase and therefore it would depend on the record
of recovery with refrence of cash flows estimated while purchasing.
The bank may purchase/ sell NPA only on without recourse basis.
If the sale is conducted below the net book value, the short fall should be debited to
P&L account and if it is higher, the excess provision will be utilized to meet the loss
on account of sale of other NPA.
35
Gross NPA:Gross NPAs are the sum total of all loan assets that are classified as NPAs as
per RBI guidelines as on Balance Sheet date. Gross NPA reflects the quality of the loans
made by banks. It consists of all the non standard assets like as sub-standard, doubtful, and
loss assets.
It can be calculated with the help of following ratio:
Gross NPAs
Gross Advances
Net NPA:Net NPAs are those type of NPAs in which the bank has deducted the provision
regarding NPAs. Net NPA shows the actual burdenof banks. Since in India, bank balance
sheets contain a huge amount of NPAs and the process of recovery and write off of loans is
very time consuming, the provisions the banks have to make against the NPAs according to
the central bank guidelines, are quite significant. That is why the difference between gross
and net NPA is quite high.
It can be calculated by following_
Net NPAs =
36
EXTERNAL FACTORS
2. Wilful Defaults
There are borrowers who are able to payback loans but are intentionally withdrawing it.
These groups of people should be identified and proper measures should be taken in order to
get back the money extended to them as advances and loans.
3Natural calamities
This is the measure factor, which is creating alarming rise in NPAs of the PSBs. every now
and then India is hit by major natural calamities thus making the borrowers unable to pay
back there loans. Thus the bank has to make large amount of provisions in order to
compensate those loans, hence end up the fiscal with a reduced profit. Mainly ours farmers
37
depends on rain fall for cropping. Due to irregularities of rain fall the farmers are not to
achieve the production level thus they are not repaying the loans
4Industrial sickness
Improper project handling , ineffective management , lack of adequate resources , lack of
advance technology , day to day changing govt. Policies give birth to industrial sickness.
Hence the banks that finance those industries ultimately end up with a low recovery of their
loans reducing their profit and liquidity.
5Lack of demand
Entrepreneurs in India could not foresee their product demand and starts production which
ultimately piles up their product thus making them unable to pay back the money they borrow
to operate these activities. The banks recover the amount by selling of their assets, which
covers a minimum label. Thus the banks record the nonrecovered part as NPAs and has to
make provision for it.
6Change on Govt. policies
With every new govt. banking sector gets new policies for its operation. Thus it has to cope
with the changing principles and policies for the regulation of the rising of NPAs. Eg. The
fallout of handloom sector is continuing as most of the weavers Co-operative societies have
become defunct largely due to withdrawal of state patronage. The rehabilitation plan worked
out by the Central govt. to revive the handloom sector has not yet been implemented. So the
over dues due to the handloom sectors are becoming NPAs.
INTERNAL FACTORS
1 Defective Lending process
There are three cardinal principles of bank lending that have been followed by the
38
commercial banks since long. i. Principles of safety ii. Principle of liquidity iii. Principles of
profitability
i. Principles of safety By safety it means that the borrower is in a position to repay the loan
both principal and interest. The repayment of loan depends upon the borrowers:
a. Capacity to pay
b. Willingness to pay
Capacity to pay depends upon: 1. Tangible assets 2. Success in business Willingness to pay
depends on: 1. Character 2. Honest 3. Reputation of borrower The banker should, there fore
take utmost care in ensuring that the enterprise or business for which a loan is sought is a
sound one and the borrower is capable of carrying it out successfully .he should be a person
of integrity and good character.
2 Inappropriate technology
Due to inappropriate technology and management information system, market driven
decisions on real time basis can not be taken. Proper MIS and financial accounting system is
not implemented in the banks, which leads to poor credit collection, thus NPA. All the
branches of the bank should be computerized.
39
from a. From bankers b. Enquiry from market/segment of trade, industry, business.c. From
external credit rating agencies. Analyze the balance sheet True picture of business will be
revealed on analysis of profit/loss a/c and balance sheet. Purpose of the loan When bankers
give loan, he should analyze the purpose of the loan. To ensure safety and liquidity, banks
should grant loan for productive purpose only. Bank should analyze the profitability,
viability, long term acceptability of the project while financing.
5 Managerial deficiencies
The banker should always select the borrower very carefully and should take tangible assets
as security to safe guard its interests. When accepting securities banks should consider the 1.
Marketability 2.Acceptability 3.Safety 4.Transferability. The banker should follow the
principle of diversification of risk based on the famous maxim
do not keep all the eggs in one basket; it means that the banker should not grant advances
to a few big farms only or to concentrate them in few industries or in a few cities. If a new
big customer meets misfortune or certain traders or industries affected adversely, the overall
position of the bank will not be affected. Like OSCB suffered loss due to the OTM Cuttack,
and Orissa hand loom industries. The biggest defaulters of OSCB are the OTM
(117.77lakhs), and the handloom sector Orissa hand loom WCS ltd (2439.60lakhs).
40
7 Re loaning process
Non remittance of recoveries to higher financing agencies and re loaning of the same have
already affected the smooth operation of the credit cycle. Due to re loaning to the defaulters
and CCBs and PACs, the NPAs of OSCB is increasing day by day.
41
1. Impact on Profitability
"The efficiency of banks is not always reflected only by the size of its balance sheet but by
the level of return on its assets. NPAS do not generate interest income for the banks, but at
the same time banks are required to make provisions for such NPAS from their current
profits. NPAS have a deleterious effect on the return on assets in several ways:
They erode current profits through provisioning requirements.
They result in reduced interest income.
They require higher provisioning requirements affecting profits and accretion to
capital funds and capacity to increase good quality risk assets in future, and
They limit recycling of funds, set in asset-liability mismatches, etc.
There is at times a tendency among some of the banks to understate the level of NPAs in
order to reduce the provisioning and boost up bottom lines. It would only postpone the
process.
In the context of crippling effect on a bank's operations in all spheres, asset quality has been
placed as one of the most important parameters in the measurement of a bank's performance
under the CAMELS supervisory rating system of RBI.
Between 01.04.93 to 31.03.2001, SBI Group incurred a total amount of Rs. 31251 Crores
towards provisioning NPA. This has brought Net NPA to Rs. 32632 Crores or 6.2% of net
advances. To this extent the problem is contained but a what cost?
This costly remedy is made at the sacrifice of building healthy reserves for future
capitaladequacy.
The enormous provisioning of NPA together with the holding cost of such non-productive
assets over the years has acted as a severe drain on the profitability of the SBI Group. In turn
SBI Group are seen as poor performers and unable to approach the market for raising
42
additional capital. Equity issues of nationalized banks that have already tapped the market are
now quoted at a discount in the secondary market. Other bans hesitate to approach the market
to rise new issues. This has alternatively forced SBI Group to borrow heavily from the debt
market to build Tier II Capital to meet capital adequacy norms putting severe pressure on
their profit margins; else they are to seek the bounty of the Central Government for repeated
Recapitalization.
Considering the minimum cost of holding NPAs at 7% p.a. (reckoning average cost of funds
at 6% plus 1% service charge) the net NPA of Rs. 32632 Crores absorbs a recurring holding
ost of Rs. 2300 Crores annually. Considering the average provisions made for the last 8 years
which works out to average of Rs. 3300 crores from annum, a size business.
in the face of the deregulated banking industry, an ideal competitive working is reached,when
the banks are able to earn adequate amount of non-interest income to cover their entire
operating expenses i.e. a positive burden. In that event the spread factor i.e. the difference
between the gross interest income and interest cost will constitute its operating
profits.Theoretically even if the banks keeps 0% spread, it will still break even in terms of
operating profit and not return an operating loss. The net profit is the amount of the operating
profit minus the amount of provisions to be made including for taxation. On account of the
burden of heavy NPA, many nationalized banks have little option and they are unable to
lower lending rates competitively, as a wider spread is necessitated to cover cost of NPA in
the face of lower income from off balance sheet business yielding non-interest income.
The following working results of SBI Group an identified well managed nationalized banks
for the last two years and for the first nine months of the current financial year, will be
revealing to prove this statement.
Non-interest income fully absorbs the operating expenses of this banks in the currentfinancial
year for the first 9 months. In the last two financial years, though such income has
substantially covered the operating expenses (between 80 to 90%) there is still a deficit left.
43
Their operating expenses are higher due to surplus manpower employed. Wage
costs total assets is much higher to PSBs compared to new private banks or foreign
banks.
Their earnings from sources other than interest income are meagre. This is due to
failure to develop off balance sheet business through innovative banking products.
44
expansion through internal generations or by tapping the equity market, but have resorted to
II-Tier capital in the debt market orlooking to recapitalistion by Government of India.
3. Impact on Outlook of Bankers towards Credit Delivery
The fear of NPA permeates the psychology of bank managers in the SBI Group inentertaining
new projects for credit expansion. In the world of banking the concepts ofbusiness and risks
are inseparable. Business is an exercise of balancing between risk and reward. Accept
justifiable risks and implements de-risking steps. Without accepting risk, there can be no
reward. The psychology of the banks today is to insulate themselves with zero percent risk
and turn lukewarm to fresh credit. This has affected adversely credit growth compared to
growth of deposits, resulting in a low C/D Ratio around 50 to 54% for the industry.
The fear psychosis also leads to excessive security-consiousness in the approach towards
lending to the small and medium sized credit customers. There is insistence on provision of
collateral security, sometimes up to 200% value of the advance, and consequently due to a
feeling of assumed protection on account of holding adequate security (albeit
overconfidence). a tendencytowards laxity in the standards of credit appraisal comes to the
fore. It is well know that the existence of collateral security at best may convert the credit
extended to productive sectors into an investment against real estate, but will not prevent the
account turning into NPA. Further blocked assets and real estate represent the most illiquid
security and NPA in such advances has the tendency to persist for a long duration.
SBI Group have reached a dead-end of the tunnel and their future prosperity depends on an
urgent solution for handling this hovering threat.
4. Impact on Productivity:
High level of NPAs effect the productivity of the banks by increasing the cost of fundsand by
reducing the efficiency of banks employees. Cost of funds is increased becausedue to nonavailability of sufficient internal sources they have to rely on external sourcesto fulfill their
future financial requirements. Productivity of employees is also reducedbecause it keeps staff
busy with the task of recovery of overdue. Instead of devoting time for planning for
development through more credit and mobilization of resources thebranch staff would
45
primarily be engaged in preparing a large value of returns and statements relating to substandard, doubtful and loss assets, preparing proposal for filing of suits, waivement of legal
action, compromise, write off or in preparing DICGC claim papers etc.
5.Impact on other Variables:
High level of NPAs also leads to squeezing of interest spread, when asset becomes anNPA
for the first time it adversely affects the spread by not contributing to the interestincome and
from the second year onwards it will have its impact on the bottom line of the balance sheet
because of provisioning to be made for it and not have incremental effect on the spread.
Now a days Govt. does not encourage liberal capital support to be given to banks. Banks are
required to bring their own capital by issuing share to the public, whereas high level of NPAs
leads to lower profits hence less or no profits available for equity shareholders hence lower
EPS and fall in the value of share. During the year 2001-02 share of 12 public sector banks
were traded on the NSE out of which share value of three PSBs have decreased. Low market
value of shares has also forced the banks to borrow heavily debt market to build Tier II
capital to meet capital adequacy norms, putting severe pressure on their profit margin
6. Qualitative aspects of the Micro Level Impact of NPAs:
High incidence of loan defaults shakes the confidence of general public in the soundness of
banking setup and indirectly effects the capacity of the banking system to mop up the
deposits. It is a blot on the credibility of the banking system. It also leads to loss of trust of
foreign suppliers. Reputed foreign suppliers do not accept letter of credit opened bi Indian
banks or confine their transaction to top Indian banks only. Moreover, it puts negative effect
on granting of autonomy to PSBs whereas it is must for banks in this competitive
environment. Banks having positive net profits for the last three years, Net NPA level below
9%, owned funds of Rs. 100 Crore, CAR of > 8% are the 4 condition to be fulfilled to get
autonomous status, which becomes difficult in the situation of huge level of NPAs.
Inadequate recovery also inhibits the banks to draw refinance from higher levelagency. The
eligibility of a bank to draw refinance from NABARD is linked to the %age of recovery to
demand in respect of direct, medium and long term loans for agriculture and allied activities.
46
It implies that refinance facility would be progressively reduced depending on the position of
NPAs and also on the No. of years in which a banks branch remains in a particular category
of default. Due to fear of NPAs banks are being taken away from the basic function for which
these were established it is becoming more & more risky and less remunerative. They are
floating their subsidiaries to manage mutual funds, factoring, insurance business, Good
money is spent to recover bad money. Deterioration in the quality of loan assets and inability
to come with new products makes the Indian banks uncompetitive globally. Due to high cost,
they cannot reduce lending rate to meet the economy's demand of low lending rate. It is also
biggest threat for capital account convertibility.
47
Irregularity in installment.
Payment which does not cover the interest and principal amount of that
installment.
If information is received that the borrower has either initiated the process of
winding up or are not doing the business.
Overdue receivables.
External non- controllable factor like natural calamities in the city where
borrower conduct his business.
Nonpayment of wages.
48
3. Attitudinal changes:
4. Others:
Death of borrowers.
Invariably, by the time banks start their efforts to get involved in a revival process, its too
late to retrieve the situation- both in terms of rehabilitation of the project and recovery of
banks dues. Identification of weakness in the very beginning that is : When the account starts
showing first signs of weakness regardless of the fact that it may not have become NPA, is
imperative. Assessment of the potential of revival may be done on the basis of a technoeconomic viability study. Restructuring should be attempted where, after an objective
assessment of the promoters intention, banks are convinced of a turnaround within a
scheduled timeframe. In respect of totally unviable units as decided by the bank, it is better to
facilitate winding up/ selling of the unit earlier, so asto recover whatever is possible through
legal means before the security position becomes worse.
commitment or stake in revival is a challenge confronting bankers. Here the role of frontline
officials at the branch level is paramount as they are the ones who has intelligent inputs with
regard to promoters sincerity, and capability to achieve turnaround. Basedon this objective
49
Longer the delay in response, grater the injury to the account and the asset. Time is a crucial
element in any restructuring or rehabilitation activity. The response decided on the basis of
techno-economic study and promoters commitment, has to be adequate in terms of extend of
additional funding and relaxations etc. under the restructuring exercise. The package of
assistance may be flexible and bank may look at the exit option.
While financing, at the time of restructuring the banks may not be guided by the conventional
fund flow analysis only, which could yield a potentially misleading picture. Appraisal for
fresh credit requirements may be done by analyzing funds flow in conjunction with the Cash
Flow rather than only on the basis of Funds Flow.
Management Effectiveness:-
The general perception among borrower is that it is lack of finance that leads to sickness and
NPAs. But this may not be the case all the time. Management effectiveness in tackling
adverse business conditions is a very important aspect that affects a borrowing units
fortunes. A bank may commit additional finance to an aling unit only after basic viability of
the enterprise also in the context of quality of management is examined and confirmed.
Where the default is due to deeper malady, viability study or investigative audit should be
50
done it will be useful to have consultant appointed as early as possible to examine this
aspect. A proper techno- economic viability study must thus become the basis on which any
future action can be considered.
Multiple Financing:I.
II.
In some default cases, where the unit is still working, the bank should
make sure that it captures the cash flows (there is a tendency on part of
the borrowers to switch bankers once they default, for fear of getting their
cash flows forfeited), and ensure that such cash flows are used for working
capital purposes. Toward this end, there should be regular flow of
information among consortium members. A bank, which is not part of the
consortium, may not be allowed to offer credit facilities to such defaulting
clients. Current account facilities may also be denied at non-consortium
banks to such clients and violation may attract penal action. The Credit
Information Bureau of India Ltd.(CIBIL) may be very useful for
meaningful information exchange on defaulting borrowers once the setup
becomes fully operational.
III.
51
IV.
NPAs)
and
viable
sub-standard
accounts
with
52
Guidelines were modified in July 2000 for recovery of the stock of NPAs of Rs. 5 croreand
less as on 31 March 1997. [The above guidelines which were valid up to June 30, 2001
helped the public sector banks to recover Rs. 2600 crore by September 2001]. An OTS
Scheme covering advances of Rs. 25000 and below continues to be inoperation and
guidelines in pursuance to the budget announcement of the Hon'ble Finance Minister
providing for OTS for advances up to Rs. 50,000 in respect of NPAs of small/marginal
farmers are being drawn up.
LokAdaltas:
LokAdalats help banks to settle disputes involving accounts in 'doubtful" and "loss"category,
with outstanding balance of Rs. 5 lakh for compromise settlement underLokAdalats. Debt
Recovery Tribunals have now been empowered to organize LokAdalats to decide on cases of
NPAs of Rs. 10 lakhs and above. The public sectorbanks had recovered Rs. 40.38 crore as on
September 30, 2001, through the forum ofLokAdalat. The progress through this channel is
expected to pick up in the comingyears particularly looking at the recent initiatives taken by
some of the public sectorbanks and DRTs in Mumbai.
53
2001. Theamount recovered in respect of these cases amounted to only Rs. 1864.30
crore.Looking at the huge task on hand, with as many as 33049 cases involving Rs.42988.84
crore pending before them as on September 30, 2001, I would like thebanks to institute
appropriate documentation system and render all possible assistanceto the DRTs for speeding
up decisions and recovery of some of the well collateralized NPAs involving large amounts. I
may add that familiarisationprogrammes have beenoffered in NIBM at periodical intervals to
the presiding officers of DRTs inunderstanding the complexities of documentation and
operational features and otherlegalities applicable of Indian bankingsystem. RBI on its part
has suggested to theGovernment to consider enactment of appropriate penal provisions
againstobstruction by borrowers in possession of attached properties by DRT Receivers,
andnotify borrowers who default to honour the decree passed against them.
Circulation of information on defaulters:The RBI has put in place a system for periodical
circulation of details of willfuldefaults of borrowers of banks and financial institutions. This
serves as a caution listwhile considering requests for new or additional credit limits from
defaulting borrowing units and also from the directors/proprietors/partners of these entities.
RBIalso publishes a list of borrowers (with outstanding aggregating Rs. 1 croreandabove)
against whom suits have been filed by banks and FIs for recovery oftheir funds, as on 31st
March every year. It is our experience that these measures hadnot contributed to any
perceptible recoveries from the defaulting entities. However,they serve as negative basket of
steps shutting off fresh loans to these defaulters. Istrongly believe that a real breakthrough
can come only if there is a change in therepayment psyche of the Indian borrowers
Recovery action against large NPAs:
After a review of pendency in regard to NPAs by the Hon'ble Finance Minister, RBIhad
advised the public sector banks to examine all cases of willful default of Rs 1 crore and above
and file suits in such cases, and file criminal cases in regard to willful defaults. Board of
Directors are required to review NPA accounts of Rs. 1 crore and above with special
reference to fixing of staff accountability.On their part RBI and the Government are
contemplating several supporting measures including legal reforms, some of them I would
like to highlight.
54
55
borrowers can be made effective and criminal prosecution canbe made demonstrative against
willful defaulters.
Corporate Governance:
A Consultative Group under the chairmanship of Dr. A. Ganguly was set up by theReserve
Bank to review the supervisory role of Boards of Banks and financialinstitutions and to
obtain feedback on the functioning of the Boards vis--viscompliance, transparency,
disclosure, audit committees etc. and makerecommendations for making the role of Board of
Directors more effective with aview to minimising risks and overexposure. The group is
finalising itsrecommendations shortly and may come out with guidelines for effective control
andsupervision by bank boards over credit management and NPA prevention measures.
Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002:
The Act provides, inter alia for enforcement of security interest for realisation of dueswithout
the intervention of courts or tribunals. The Security Interest (Enforcement)Rules, 2002 has
also been notified by Government to enable Secured Creditors toauthorise their officials to
enforce the securities and recover the dues from theborrowers. As on June 30, 2004, 27
public sector banks had issued 61, 263 noticesinvolving outstanding amount of Rs. 19,744
crore, and had recovered an amount ofRs. 1,748 crore from 24,092 cases.
56
2. Political interferences:
Political interference in the day -to-day functioning of public sector banks created anumber of
problems for them. The populist policies of the national level politicians,such as waiver in
repayment only added to these problems.
3. Slow legal procedure:
Before the establishment of DRTs in 1993, the banks had to approach the normalcourts to
recover their dues. There were provisions under various acts whichhampered the smooth
takeover and sale of secured assets. The legal process couldtake years to be completed, with
the borrower having ample scope for delaying thetakeover of assets. A number of loopholes
provided the borrower with opportunitiesto delay or ignore repayment of loans. During this
period, it was said by someunscrupulous businessmen that - "there is no difference between
equity and debt younever have to repay either of them ".
4. Swamping of DRTs with cases:
Once DRTs were established to quicken the pace of recovery procedures, the pace ofrecovery
improved quite a bit. However, the DRTs were soon drowned in the everincreasing number
of cases. The pending number of cases with the DRTs increasedmanifold during the period
1993-2002.
5. Misuse of BIFR/SICA:
This was one of the favourite methods of willful defaulters to delay repayment. If
thedefaulter's company is declared sick and taken for financial reconstruction underBIFR, it
is not possible to undertake any recovery proceeding against the company.The procedure of
financial reconstruction can take a number of years together,thereby delaying recovery to a
great extent.
57
58
CHAPTER- 4
59
2010
2011
2012
2013
2014
TOTAL
10534.13
12237.36
13355.19
15662.61
17922.35
ASSET(RS.
In billons)
CHART 1
TOTAL ASSETS
20000
15000
10000
Rs. In billions
5000
0
2010
2011
2012
2013
2014
INTERPRETATION
Above graph show that total assets of SBI is increased in 2011 by 1703.23 billion, in 2014
increased by 2259.74 billion. So assets of the SBI bank increased from last five year.
60
Gross NPAs
*100
Gross Advances
TABLE 2
YEAR
GROSS NPA
GROSS
(IN CRORE)
ADVANCES
GROSS
(IN RATIO
CR.)
2010
61605.35
3.05
2019847.54
2011
51189.39
1560652.134
3.28
2012
39676.46
893613.96
4.44
2013
25326.29
533185.052
4.75
2014
19534.89
394644.24
4.95
61
NPA
CHART 2
Rs. In crores
0
2010
2011
2012
2013
2014
INTEPRETATION
The above table and graph makes it very clear that the average gross NPA of SBI is not very
satisfactory. It has seem that the gross NPA which was 3.05% in 2010 increased every year
and finally reached 4.95% in 2014. It seems that SBI need to take more care and follow ideal
norms of granting advances, so that the recovery is satisfactory leading to lower gross NPA.
62
Net NPAs
*100
Net Advances
TABLE 3
YEAR
NET NPA
NET ADVANCES
2010
10870.17
631986.63
1.72
2011
12346.89
757477.91
1.63
2012
15818.85
869167.58
1.82
2013
21956.48
1045546.67
2.10
2014
31096.07
1209963.81
2.57
CHART 3
Series 1
2010
2011
2012
2013
63
2014
INTERPRETATION
The above graph presents the NPA ratio of SBI bank. It can be noticed that the NPA ratio
was decreased in 2011 by 0.9 crore. After that it is continuously increased. The bank had
failed to make sufficient provisions against NPA.
TABLE 4
YEAR
ADVANCES
INCREASE/
GROSS NPA
INCREASE/
( Rs. In billion)
DECREASE
Rs. In crore)
DECREASE
PERCENTAGE
PERCENTAGE
2010
6319.14
---
19534.89
---
2011
7567.19
19.75
25326.29
26.65
2012
8675.79
14.65
39676.46
56.66
2013
10456.17
20.52
51189.39
29.017
2014
12098.29
15.70
61605.35
20.35
INTERPRETATION
In this table we can see that increase in gross NPA is not because of increase in advances.
There is another possibility of increasing in NPA may be this is because of poor credit system
in bank.
CAPITAL ADEQUACY RATIO
The bank manages and maintains capital as a cushion against risk of problem losses and to
protect its depositors and creditors. The future capital requirement of the bank is projected as
a part of its annual business plan, in accordance with its business strategy. In calculating the
capital requirements of the banks, broad parameters viz. balance sheet composition, portfolio
mix, growth rate and relevant discounting are considered. In addition, views regarding market
64
behavior of interest rate and liquidity positions are also taken into account. Further, the loan
composition and rating matrix is factored in to reflect precision in projections. The New
Capital Adequacy Framework (NCAF) of RBI stipulates the methodology for computation of
CRAR which is a ratio of the total capital of the bank to its risk adjusted assets. The CRAR
for the bank is calculated on a quarterly basis and credit, market and operational risks are
considered to arrive at the ratio. The bank has adopted the standardized approach for credit
risk, the Standardized Measurement Method (SMM) for market risk and the Basic Indicator
Approach (BIA) for operational risk. The position of the CRAR of the bank is as follow.
TABLE 5
YEAR
CAPITAL
ADEQUACY
RATIO
2010
13.39
2011
11.98
2012
13.86
2013
12.92
2014
12.96
CHART 5
13
12
11
2010
2011
2012
2013
2014
65
INTERPRETATION
Each bank needs to create the capital reserve to compensate the non- performing assets. Here,
SBI has shown better capital adequacy ratio with 13.86% in 2012as compared to 11.98% in
2011, 12.92% in 2013, 12.96% in 2014 and 13.39 in 2010. The capital adequacy ratio is
important for them to maintain as per the regulation. Each bank needs to create the capital
reserve to compensate the non- performing assets.
PROVISION RATIO
Provision are to be made for to keep safety the NPA, and it directly effect on the gross profit
of the banks. The provision ratio is nothing but total provision held for NPA to gross NPA of
the banks. The formula for that is:
Provision Ratio =
Total Provision
*100
Gross NPAs
(Additional Formula: Net NPA = Gross NPA- Provision
Therefore, provision = Gross NPA Net NPA)
TABLE 6
YEAR
TOTAL
GROSS NPA
PROVISION
PROVISIONS
(IN CR.)
RATIO
(IN CR.)
2010
9155
61605.35
14.86
2011
17071
51189.39
33.35
2012
19866
39676.46
50.07
2013
16977
25326.29
108.61
2014
21218
19534.89
67.03
66
CHART 6
PROVISION RATIO
120
100
80
60
PROVISION RATIO
40
20
0
2010
2011
2012
2013
2014
INTERPRETATION
This ratio indicates the degree of safety measures adopted by the banks. It has direct bearing
on the profitability, dividend and safety of shareholders fund, if the provision ratio is less, it
indicates that the banks has made under provision. The highest provisions ratio is showed by
SBI is 108.61% in 2013 as compared to 14.86% in 2010, 33.35% in 2011, 50.07% in 2012
and 67.03% in 2014.
67
TABLE 7
What is NPA?
RESPONDENT
PERCENTAGE
20%
72%
for
lender
8%
of
CHART 7
WHAT IS NPA
80%
70%
60%
50%
40%
30%
20%
10%
0%
PERCENTAGE
68
INTERPRETATION
According to above chart 72 percentage respondent said that,If the customers do not pay
principal and interest for a certain period of time (90 days) ,it can be called as NPA . 20
percentage said that when an asset ceases to generate income from the bank and only 8
percentage said that if periodical income is not generated from the borrower of money it is
called as NPA.
TABLE 8
Percentage of NPA
RESPONDENT
PERCENTAGE
A.1-4%
20
80%
B.4-7%
20%
C. 7-10%
CHART 8
percentage of NPA
100%
50%
PERCENTAGE
0%
1-4%
4-7%
69
INTERPRETATION
80 % respondent said that percentage of NPA in their bank is 1-4%, and other 20 %
respondent said that percentage of NPA in their bank is 4-7 %.
Q.3 what is trend of NPA in your bank ?
TABLE 9
TREND OF NPA
RESPONDENT
PERCENTAGE
A. highly decreasing
4%
B. slowly decreasing
15
60%
C. constant
12%
D. slowly increasing
20%
E. highly increasing
4%
CHART 9
TREND OF NPA
70%
60%
50%
40%
30%
PERCENTAGE
20%
10%
0%
highly
decreasing
slowly
decreasing
constant
slowly
increasing
70
highly
increasing
INTERPRETATION
60% of the respondent have said that the NPA in their branch is slowly decreasing, 20% have
said that NPA is slowly increasing, 12% of respondent have said that NPA is constant, 4%
have said that NPA is highly increasing and highly decreasing.
Q.4 According to your opinion, What are the main causes of NPA?
TABLE 10
CAUSES OF NPA
RESPONDENT
PERCENTAGE
A. Willful effect
24%
B. Lack of monitoring
C. Lack of persuasion
D. No risk assessment
E. Mismanagement
of 3
12%
fund borrowers
F. Delay
in
legal 1
4%
proceeding
G. All the above
15
60%
CHART 10
CAUSES OF NPA
70%
60%
50%
40%
30%
20%
10%
0%
PERCENTAGE
71
INTERPRETATION
60% of respondent have said all the above mentioned points are causes of NPA, 24%
respondent have said that
mismanagement of funds by borrowers and 4% have said that delay in legal proceedings is
the cause of NPA.
Q. 5 What are the steps to be taken by bank to control NPA?
TABLE 11
STEPS TO BE TAKEN
A. Caution
and
RESPONDENT
care 2
PERCENTAGE
8%
of 0
0%
C. Vigorous follow up at 0
0%
recovery cell
branch level
D. Out
of
court 0
0%
settlement
E. All the above
23
92%
72
CHART 11
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Series1
INTERPRETATION
92% respondent have said that all the above mentioned steps can be taken to reduced NPA,
and only 4% respondent have said to reduce NPA caution and care should be done during
loan processing.
73
OF RESPONDENT
PERCENTAGE
MEASUREMENT OF NPA
A. Early stage
21
84%
B. Alert stage
16%
C. Advance stage
0%
CHART 12
40%
30%
20%
10%
0%
early stage
alert stage
advance stage
INTERPRETATION
84% respondent follow the early stage method while, 16% prefer alert stage method.
74
FOR RESPONDENT
PERCENTAGE
RECOVERY OF NPA
Persuasion
16%
20%
Legal actions
16%
12
48%
CHART 13
out of court
settlement
legal actions
INTERPRETATION
20% and 16% respondent have voted out of court settlement and legal actions, while 16%
feel NPA can be recovered by persuasion. 48% of the respondent feel that all the methods are
equally important for the recovery of NPA.
75
RESPONDENT
PERCENTAGE
14
56%
Dealing clerk
0%
Branch manager
0%
24%
Any other
20%
CHART 14
percentage
20%
10%
0%
loan
sanctioning
officer
dealing clerk
branch
manager
none of the
above
any other
INTERPRETATION
56% of respondent feels that loan sanctioning manager is responsible for non- recovery of
outstanding credit, while 24% respondent have said none of these are responsible for nonrecovery of outstanding loan and 20% have said any other are responsible- like loan
maintenance officer and loan dealing or recovery manger .
76
Q. 9 How does your bank realize money from a NPA(In realizing the amount whom does
your bank appoint)
TABLE 15
APPOINMENT MADE FOR RESPONDENT
PERCENTAGES
REALIZING MONEY
Recovery agent
36%
Files suit
20%
36%
Appointment of arbitrator
8%
CHART 15
percentage
recovery agent
files suit
meeting with
borrowers
appoinment of
arbitrator
INTERPRETATION
36% of respondent have voted for recovery agent and meeting and persuading the borrower
to pay the amount. While 20 % of respondent are in the favor of filing a suit and 8% have
said for appointing of arbitrator.
77
Q. 10 Do you think that the law acts as a stumbling block to recover NPA?
TABLE 16
LAW
ACTS
AS
A RESPONDENT
PERCENTAGE
STUMBLING BLOCK
Yes
16
64%
no
36%
CHART 16
60%
50%
40%
percentage
30%
20%
10%
0%
yes
no
INTERPRETATION
64% of respondent agree that law acts as a stumbling block for recovering NPA. On the other
hand 36% of the respondent does not feel that law acts as a stumbling block for recovering
NPA.
78
Q. 11 How much time does it take to recover the money from customer?
TABLE 17
TIME
TAKEN
TO RESPONDENT
PERCENTAGE
RECOVER MONEY
Within the time limit
13
52%
12
48%
CHART 17
percentage
48%
47%
46%
within the time
limit
INTERPRETATION
52% of the respondent have said that the money recovered from the borrowers within the
time limit by making continues calls, sending notices, and personnel visit. While 48% feel
that the money is not received within the time limit.
79
PERCENTAGE
19
76%
no
24%
CHART 18
percentage
30%
20%
10%
0%
yes
no
INTERPRETATION
76% of the respondent feels that the government policies are responsible for NPA. While
24% of respondent feels government policies are not responsible for NPA.
80
CATETGORY
WHICH
FOR RESPONDENT
NPA
PERCENTAGE
IS
LARGELY OBSERVED
Agriculture and SME loan
17
68%
12%
Cash credit
4%
Over draft
8%
Term loan
4%
Housing loan
4%
CHART 19
PERCENTAGE
20%
10%
0%
Agriculture
Non
Cash credit Over draft
and SME agriculture
loan
loan
Term loan
INTERPRETATON
NPA is largely observed in agriculture and SME loan(68%), 12% is observed in nonagriculture loan, 4% in cash credit, 8% in over draft and 4% in term loan.
81
RESPONDENT
PERCENTAGE
YES
19
76%
NO
24%
INTERFERANCE
AFFECTS NPA
CHART 20
POLITICAL INTERFERANCE AFFECTS NPA
80%
70%
60%
50%
40%
percentage
30%
20%
10%
0%
yes
no
INTERPRETATION
76% respondent feel that political interference is an important factor affecting the NPA of the
bank, while 24% disagree to the same.
82
OF
COURT RESPONDENT
PERCENTAGE
SETTLEMENT
Yes
22
88%
no
12%
CHART 21
percentage
40%
30%
20%
10%
0%
yes
no
INTERPRETATION
88% of the respondent are in favor of out of court settlement. According to them small
amount can be recovered by this method instead of going for the legal procedures as they are
time taking. While 12% disagree with the same.
83
Q. 16 Dont you think that out of court settlement may develop a tendency among bank
borrowers to make deliberate attempt of default and then ask for concession?
TABLE 22
OPTIONS
RESPONDENT
PERCENTAGE
Yes
20%
no
20
80%
CHART 22
50%
percentages
40%
30%
20%
10%
0%
yes
no
INTERPRETATION
80% of the respondent feel that out of court settlement may not develop a tendency
amongborrowers to make deliberate attempt of default and then ask for concession. While
20% agree to the same.
84
PERCENTAGE
MONITORING SYSTEM
Yes
15
60%
no
10
40%
CHART 23
30%
20%
10%
0%
yes
no
INTERPRETATION
60% of the respondent agree to the fact that the present monitoring system in India is
adequate while 40% disagree, accounting to them it can be further improved.
85
OF RESPONDENT
PERCENTAGES
IMPROVEMENT
Yes
15
60%
no
10
40%
CHART 24
NECESSITY OF IMPROVEMENT
70%
60%
50%
40%
percentages
30%
20%
10%
0%
yes
no
INTERPRETATION
60% of that respondent said that it is necessary to bring improvement in this system of
monitoring while 40% are satisfied with the present system.
86
OF RESPOMDENT
PERCENTAGE
EXTERNAL RECOVERY
AGENT
Yes
20
80%
no
20%
CHART 25
40%
30%
20%
10%
0%
yes
no
INTERPRETATION
80% of the respondent feel that there is need for the appointment of the external recovery
agents. While 20% agree for the appointment of external agents.
87
Q. 20 Do you feel delay in legal procedure make the recovery procedure difficult?
TABLE 26
DELAY
IN
LEGAL RESPONDENT
PERCENTAGE
PROCEDURES CREATE
DIFFICULTY
IN
RECOVERY
YES
15
60%
NO
10
40%
CHART 26
30%
20%
10%
0%
Yes
No
INTERPRETATION:
40% feel that legal procedure take time, but does not create difficulty in recovery of NPA.
While 60% agree to the fact that delays in legal procedure create difficulty.
88
21. Do you favour cash incentive schemes for bank staff for recovery of dues?
TABLE 27
CASH
INCENTIVE RESPONDENT
PERCENTAGE
SCHEME
YES
24
96%
NO
4%
CHART 27
80%
60%
percentage
40%
20%
0%
yes
no
INTERPRETATION:
96% respondent agree to the fact that there should be a cash incentive scheme for the bank
staff for recovery of dues, while 4% of respondent not agree.
89
FROM RESPONDENT
PER CENTAGE
INCENTIVE
SCHEME
Yes
20
80
No
20
CHART 28
40%
30%
20%
10%
0%
yes
no
INTERPRETATION:
80% of the respondent are satisfied from the present incentive scheme. While 20% are not
satisfied. Currently, SBI bank provides a cash incentive of
90
Q. How would you assess the progress of NPA management in your bank?
TABLE 29
PROGRESS OF NPA
RESPONDENT
PERCENTAGE
Poor
0%
Slow
8%
Moderate
12
48%
Good
11
44%
CHART 29
PROGRESS OF NPA
60%
50%
40%
30%
percentage
20%
10%
0%
poor
slow
moderate
good
INTERPRETATION:
48% of the respondent believe that the progress of NPA in SBI bank is moderate. 44% feel
that it is good. 8% have voted for slow.
91
Q. 24 Do you have similar recovery strategy in all sectors and in all geographical regions?
TABLE 30
SIMILAR
RECOVERY RESPONDENT
PERCENTAGE
STRATEGY
Yes
10
40%
No
15
60%
CHART 30
30%
20%
10%
0%
yes
no
INTERPRETATION:
60% of the respondent said that they do not have similar strategy for all sector and
geographical regions, while 40% said that they have similar strategy for all sector and
geographical regions.
92
Q. 25 From the following strategies, choose which are helpful in reducing NPA.
TABLE 31
STRATEGIES, HELPFUL RESPONDENT
PERCENTAGE
IN REDUCING NPA
Securitization of asset
4%
Legal recovery
12%
Lokadalats
8%
Compromise settlement
12%
16%
By
48%
evaluation process
CHART 31
60%
50%
40%
30%
20%
10%
percentage
0%
Securitization
of asset
Legal
recovery
93
CHAPTER- 5
94
FINDINGS
The asset quality of banks is one of the most important indicators of their financial health. It
also reflects the efficiency of banks credit risk management and the recovery environment.
The SBI bank has shown very good performanve as far as the financial operations are
concerned. But non- performing assets (NPA) has caused some concerns. The NPA has been
continuously increasing this was due to ineffective recovery of bank credit, credit recovery
system, inadequate legal provision etc.
Various steps have been taken by the government to recover and reduce NPAs. Some of them
are:
Release of willful Defaulters list. RBI also releases a list of borrowers with
aggregate outstanding of Rs. 1 crore and above against whom banks have filed suits
for recovery of their funds.
Norms of lenders liability- framing of fair practices code with regard to lenders
liability to be followed by banks, which indirectly prevents accounts turning into
NPAs on account of banks own failure.
RBI has advised banks to examine all cases of willful default of Rs. 1 crore and above
and file suits in such cases. Board of directors are required to review NPA accounts of
Rs. 1 crore and above with special references to fixing of staff accountability.
Special mention accounts for early identification of bad debts. Loans and advances
overdue for less than one and two quarters would come under this category. However,
these accounts do not need provisioning.
95
Other findings
Default by customer
Non-inspection of borrower
Lack of expertise
Imbalance of inventories
Poor credit collection
Lack of trained staff
Lack of commitment to recovery
Change in consumer preference
96
CONCLUSION
A strong banking sector is important for a flourishing economy. The failure of the
banking sector may have an adverse impact on other sectors.
Over the years, much has been talked about NPA and the emphasis so far has been only
on identification and quantification of NPAs rather than on ways to reduce and upgrade
them.
There is also a general perception that the prescriptions of 40% of net bank credit to
priority sectors have led to higher NPAs, due to credit to these sectors becoming stickly
managers of rural and semi-urban branches generally sanction these loans. In the changed
context of new prudential norms and emphasis on quality lending and profitability,
mangers should make it amply clear to potential borrowers that banks resources are scare
and these are meant to finance viable ventures so that these are repaid on time and
relevant to other needy borrowers for improving the economic lot of maximum number
of households. Hence selection of right borrowers, viable economic activity, adequate
finance and timely disbursement, correct and use of funds and timely recovery f loans is
absolutely necessary pre conditions for preventing of minimizing the incidence of new
NPAs.
To conclude this study we can say about this report, that
NPAs represent high level of risk and 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.
97
SUGGESTION
machinery and put in place effective credit risk management systems to reduce the fresh
incidence of NPAs.
Better Inspection: We shall keep a close watch on the manner in which NPA
Cash Recovery: We should also insist that cash recoveries should more than
Financial System: As you are aware, one of the main reason for corporate default
Coordinator: Extending credit involves lenders and borrowers and both should
realize their role and responsibilities. They should appreciate the difficulties of each
other and should endeavor to work contributing to a healthy financial system.
98
QUESTIONAIRE
I am pursuing MBA and I am conducting a study on non- performing assets in SBI bank.
Please answer the questions below. Your response in this regard is very valuable for the
success of my project. Also note that the information so revealed will be utilized without
directly disclosing the identity of the concern bank/ officials. Further, the information
provided will be used strictly for academic purposes only.
Name of respondentDesignationBank name and branch-
99
d. Slowly increasing
e. Highly increasing
100
9. How does your bank realise money from a NPA(In realizing the amount whom does
your bank appoint)?
a. Recovery agent
b. Files suit
c. Meeting with borrower
d. Appointment of arbitrator
10. Do you think that the law acts as a stumbling block to recover NPA?
a. Yes
b. No
11. How much time does it take to recover the money from customer?
a. Within the time limit
b. Beyond the time limit.
101
16Dont you think that out of court settlement may develop a tendency among bank
borrowers to make deliberate attempt of default and then ask for concession?
a. Yes
b. No
102
21 Do you favour cash incentive schemes for bank staff for recovery of dues?
a. Yes
b. No
23 How would you assess the progress of NPA management in your bank?
a. Poor
b. Slow
c. Moderate
d. Good
24 Do you have similar recovery strategy in all sectors and in all geographical regions?
a. Yes
b. No
25 From the following strategies, choose which are helpful in reducing NPA.
103
a. Securitization of asset
b. Legal recovery
c. Lokadalats
d. Compromise settlement
e. Credit information bureau
f. By adopting proper credit evaluation process
g. Any other (Please Specify)
104
BIBLIOGRAPHY
BOOKS
MAGAZINES
Investors
Business India
E- NEWSPAPER
PUBLISHED MATERIAL
WEBSITES
WWW.rbi.org.in
www.google.co.in
www.wiki.answers.com
www.wikipedia.com
www.moneycontrol.com
www.sbi.com
105