PANKAJ MITTAL(5335) MBA 3rd SEM

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, The account remains out of order in respect of an overdraft/ cash credit The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted The installment or interest remains overdue for two crop seasons in case of short duration crops and for one crop season in case of long duration crops
2

There are three major types of NPA: Sub-standard : The account holder comes in this category when they dont pay three installment continuously after 90 days and up to 1year. for this category bank has made 10% provision of funds from their profit to meet the losses generated from NPA.

 Doubtful NPA : under doubtful NPA there are three sub categories

D1 i.e. up to 1 year : 20% provision is made by the banks D2 i.e. up to 2 year: 30% provision is made by the bank D3 i.e. up to 3 year : 100% provision is made by the bank.

 Loss Assets : under this 100% provision is made. When

account holder comes in this category their account can be written off by the banks.
After this the assets are handed over to recovery agents for

sale

Ineffective recovery tribunal Willful Defaults

Change on Govt. policies

Poor credit appraisal system Absence of regular industrial visit

The basic idea behind undertaking the Grand Project on NPA was to:
To study the past trends of NPA
To analyze financial performance of banks at different level of

NPA To Know the Concept of Non Performing Asset To Know the Impact of NPAs To Know the Reasons for NPAs

This study will help to know the recent norms of NPA.

This study helps to know how NPA Causing Problems to

Banking Sector and what might be the solution to overcome from this problem and also its impact on Profitability of New Profit Banks.

Secondary data is used in this research. In secondary data, the published is collected from the Dera Bassi Co-operative Bank.

Basic tools which I used for project from statistics are

Bar Charts Pie charts Bar charts and pie charts are useful tools for every research to show the result in a well clear, ease and simple way. Because I used bar charts and pie charts in project for showing data in a systematic way, so it need not necessary for any observer to read all the theory.

DATA ANALYSIS AND INTERPRETATION STATUS OF NPA ON MARCH 2006 Total Loan Outstanding 24848.77 Standard Assets 23224.90 % of Standard Assets 93.46% Total NPA 1623.87 % of NPA 6.54%

CLASSIFICATION OF NPA
Sub-Standard Assets Overdue 3 to 4 Years 1033.31 81.24

Overdue 4 to 6 Years
Overdue Above 6 Years Loss Assets

141.96
129.75 237.61

Interpretation
This chart shows the position of NPA in Cooperative Bank. In 2006 the contribution of sub- standard assets in NPA is 64% and the overdue 3-4 year is 5%, 4 to 6 years 9% and overdue above 6 years is 8%.

The loss assets of the bank are 14% of the total NPA. Standard assets in 2006 are 93.46% of the total
assets and NPA is 6.54%. In 2006 NPA has been decreased than 2005 in the Dera Bassi Co-Operative Bank. The bank should have taken effective steps to reduce the NPA because this reduction was not sufficient to improve recovery of loan balances.
11

Total Loan Outstanding Standard Assets % of Standard Assets Total NPA % of NPA

32403.00 29561.44 91.13% 2871.56 8.87%

CLASSIFICATION OF NPA

Sub-Standard Assets Overdue 3 to 4 Years Overdue 4 to 6 Years Overdue Above 6 Years Loss Assets

1407.72 531.10 303.24 235.44 394.06

Interpretation
This chart shows that in the year 2007 sub-standard Assets are 49% of the total NPA .The assets with overdue 3 to 4 Years are 18%, 4 to 6 years are 11% and assets with overdue above 6 years are 8% of the total NPA. The % amount of loss assets is same in 2007 which is also 14%. Standard assets are 91.13 % in this year and NPA is 8.87 % in 2007 which is greater than last Three years.

Total Loan Outstanding Standard Assets % of Standard Assets Total NPA % of NPA

23414.89 21732.34 92.8% 1682.55 7.18%

CLASSIFICATION OF NPA
Sub-Standard Assets Overdue 3 to 4 Years Overdue 4 to 6 Years Overdue Above 6 Years Loss Assets 991.15 128.85 90.14 93.65 378.76

Interpretation
This chart shows that in the year 2008 sub-standard Assets are 58% of the total NPA .The assets with overdue 3 to 4 Years are 8%, 4 to 6 years are 5% and assets with overdue above 6 years are 6% of the total NPA. The amount of loss assets has increased in 2008, which is 23%. Standard assets are 92.8 % in this year and NPA is 7.18 % in 2008, which is less than last years.

Total Loan Outstanding Standard Assets % of Standard Assets Total NPA % of NPA

22595.60 20368.88 90% 2226.72 10%

CLASSIFICATION OF NPA

Sub-Standard Assets Overdue 3 to 4 Years Overdue 4 to 6 Years Overdue Above 6 Years Loss Assets

1241.4 480.62 49.48 113.82 341.40

Interpretation
This chart shows that in the year 2009 sub-standard Assets are 56 % of the total NPA .The assets with overdue 3 to 4 Years are 22 %, 4 to 6 years are 2% and assets with overdue above 6 years are 5 % of the total NPA. The amount of loss assets has decreased in 2009, which is 15 %. Standard assets are 90 % in this year and NPA is 10 % in 2009, which is greater than last years.

Total Loan Outstanding Standard Assets % of Standard Assets Total NPA % of NPA

27145.74 25238.03 92.97 % 1907.71 7.03 %

CLASSIFICATION OF NPA

Sub-Standard Assets Overdue 3 to 4 Years Overdue 4 to 6 Years Overdue Above 6 Years Loss Assets

1060.93 318.25 115.59 105.37 307.57

Interpretation
This chart shows that in the year 2010 sub-standard Assets are 56 % of the total NPA .The assets with overdue 3 to 4 Years are 17 %, 4 to 6 years are 6 % and assets with overdue above 6 years are 5 % of the total NPA. The amount of loss assets has increased in 2010, which is 16 %. Standard assets are 92.97 % in this year and NPA is 7.03 % in 2010, which is less than last years. Thus 7.03% has been reduced in the profit of RCCB In 2009.

In march 2006 standard assets was 93.46% of total loan outstanding and

NPA was 6.54% of total loan outstanding In march 2007 standard assets was 91.13% of total loan outstanding and NPA was 8.87% of total loan outstanding In march 2008 standard assets was 92.80% of total loan outstanding and NPA was 7.18% of total loan outstanding In march 2009 standard assets was 90% of total loan outstanding and NPA was 10% of total loan outstanding In march 2010 standard assets was 92.97% of total loan outstanding and NPA was 7.03% of total loan outstanding In march 2010 NPA has decreased from 10% to 7.03% as compare to march 2009. Dealing with NPAs bank has adopted a policy to remove its own or sell the assets AMCs to clean up its balance sheet.

Credit Appraisal System Debt Recovery Tribunals Dont Eliminate Manage Effects of Capital Norm Tightening Legal Issues