m


 




 

 





 



 




‡ The development of banking is an inevitable
precondition for the healthy and rapid
development of the national economic structure.
Banking institutions have contributed much to
the development of the developed countries of
the world. Today we cannot imagine the
business world without banking institutions.
Banking is as important as blood in the human
body. Due to the development of banking
advances are increased and business activities
developing so it is rightly said,
‡ " The development of banking is not only
the root but also the result of the
development of the business world." After
independence, the Indian government also
has taken a series of steps to develop the
banking sector.
‡ Due to considerable efforts of the government,
today we have a number of banks such as
Reserve Bank of India, State Bank of India,
nationalised commercial banks, Industrial Banks
and cooperative banks. Indian Banks contribute
a lot to the development of agriculture, and trade
and industrial sectors. Even today the banking
system of India possess certain limitations, but
one cannot doubt its important role in the
development of the Indian economy
 
 




‡ The accumulation of huge non non--performing
assets in banks has assumed great
importance. The depth of the problem of
bad debts was first realized only in early
1990s. The magnitude of NPAs in banks
and financial institutions is over
Rs.1,50,000 crores.
(hile gross NPA reflects the quality of the loans
made by banks, net NPA shows the actual
burden of banks. Now it is increasingly evident
that the major defaulters are the big borrowers
coming from the non-
non-priority sector. The banks
and financial institutions have to take the
initiative to reduce NPAs in a time bound
strategic approach.
 
 






 

‡ Unlike commercial banks which are engaged in
serving the industrial and commercial sectors of
the economy, the cooperative banks, on the
other hand provide credit and allied facilities to
the rural and agricultural sectors. The dawn of
this country saw the evolution cooperative
movement in India. Cooperative societies came
into being when the Cooperative Societies Act,
1904, was enacted. The movement was started
with the aim of providing farmers funds with low
rates of interest so that exploitation by the village
moneylenders is foiled.
The Act provided for the formation of cooperative credit
societies and a number of small primary credit societies
were established in various parts of the country. These
societies, however, could not mobilise enough resources
as compared to loans demanded by its members. This
led to the enactment of a new act in 1912. The
Cooperative Societies Act of 1912 provided for starting
Central Cooperative Banks with headquarters located in
urban centers. In 1914, necessary steps were taken by
the then government to strengthen the cooperative
movement .
 




‡ Bank should ensure that subsequent to sale of
the non performing financial assets to other
banks, they do not have any involvement with
reference to assets sold and do not assume
operational, legal or other type of risks relating
to the financial assets sold.
‡ Each bank will make its own assessment of the
value offered by the purchasing bank for the
financial asset and decide whether to accept or
reject the offer.
‡ Under no circumstances can a sale to other
banks be made at a contingent price whereby in
the event of shortfall in the realization by the
purchasing banks, the selling banks would have
to bear a part of the shortfall
‡ A non ±performing asset in the books shall be
eligible for sale to other banks only if it has
remained a non-performing asset for at two
years in the books of the selling bank.

  




‡ The basic idea behind undertaking the
Grand Project on NPA was to:
‡ To evaluate NPAs (Gross and Net) in
different banks.
‡ To study the past trends of NPA
‡ To calculate the weighted of NPA in risk
management in Banking
‡ To analyze financial performance of banks
at different level of NPA
‡ To evaluate profitability positions of banks
‡ To evaluate NPA level in different
economic situation.
‡ To Know the Concept of Non Performing
Asset
‡ To Know the Impact of NPAs
‡ To Know the Reasons for NPAs
‡ To learn Preventive Measures
 

‡ It was critical for me to gather the financial
date of the every bank of the public sector
banks so the better evaluations of the
performing of the banks are not possible.
‡ since my study is based on the secondary
data, the practical operations as related to
naps are adopted by the banks are not
learned.
‡ Since the Indian banking sector is so wide
so it was not possible for me to cover all
the banks of the Indian banking sector.
‡ the RBI norms for the classification of
asset/ NPA¶s are available on a pay site &
not publicly available through any source.
  

‡ The accumulation of huge non-performing
asset in banks has assumed great
importance. The depth of the problem of
bad debts was first realized only in early
1990s. The magnitude of NPAs in banks
and financial institutions is over
Rs.1,50,000 crores. (hile gross NPA
refects the quality of the loans made by
banks, net npa shows the actual burden of
the banks.
 
‡ Gross NPA ratios i,e urban co-operative bank
has stable 5 to 6 % and prime bank ratio has
increses from the last three years. So quality of
credit portfolio of bank is lower.
‡ Net NPA ratio of this bank was higher than prime
bank. It shows that urban co-operative bank
consist of risky asset. It will become dangerous
in nthe long term solvency.
‡ Depositor¶s safety ratio is lower than
compare to prime bank in each year , so
urban co-operative bank should improve it.
‡ The prime bank is reduce the share
holder¶s risk in last three years while in
case of urban co-operative bank ratio is
moderate but increasing µ so bank is divert
their funds to other banks.
 
 

‡ Bank should check the credibility of farmer
like the proper identification and his/her
reputation in the village.
‡ Banks have to find out the original reasons
should be check by the bank and his/her
wealth also, so that he/she can¶t mislead
the bank.
‡ Sarpanch of the village should also inquire
before the disbursement of the loan
amount.
‡ The stocks and receivables are to check
randomly by the bank, so that the bank are
aware of position of the firms.

 

‡ The Indian banking sector is facing a serious
problem of NPA . The extent of NPA is
comparatively higher in public sectors banks. To
improve the efficiency and profitability, the NPA
has to be scheduled. Various steps have been
taken by government to reduce the NPA. It is
highly impossible to have percentage NPA. But
at least Indian banks can try competing with
foreign banks to maintain international standard.