A STUDY ON NON-PERFORMING ASSETS WITH SPECIAL

REFERENCE TO CANARA BANK

Project Final Report submitted in partial fulfilment of the requirements for the award of
the degree

MASTER OF BUSINESS ADMINISTRATION

OF

BANGALORE UNIVERSITY

Submitted By: NaveenaShankara Upadhyaya.M

Register No: 17YUCMD123

Under the Guide Of

Ashwin R John

Assistant Professor

ACHARYA BANGALORE B-SCHOOL

Bangalore University

2018-2019
 DECLARATION BY THE STUDENT

I hereby declare that “A Study on Non-Performing Assets with Special Reference to Canara
Bank” is the result of the project work carried out by me under the guidance of Ashwin R John
in partial fulfilment for the award of Master’s Degree in Business Administration by Bangalore
University.
I also declare that this project is the outcome of my own efforts and that it has not been
submitted to any other university or Institute for the award of any other degree or Diploma or
Certificate.

Place: Bangalore Name: NaveenaShankara Upadhyaya.M

Date: Register Number:17YUCMD123

 BANGALORE UNIVERSITY
Certificate of Originality (Plagiarism)

Name of the Student: NaveenaShankara Upadhyaya.M

Registration Number:17YUCMD123
Title of the Project: A Study on Non-Performing Assets with Special Reference to Canara Bank
Name of the Guide: Ashwin R John
Similar Content (%) Identified: 7%
Project ID number(s) in DrillBit: 181227010506
The project report has been checked using “DrillBit anti-plagiarism software” and found within
limits as per plagiarism policy and instructions issued by the University.
We have verified the contents of the project report, as summarized above and Certified that the
statements made above are true to the best of our knowledge and belief.

Signature of the Guide Signature of the Director

 ACKNOLDGEMENT

It is a matter of Great Pleasure for me in submitting the project report on Non-Performing

Assets For the fulfilment of the requirement of my course from Bangalore University.
I am thankful to and owe a deep dept gratitude to all those who have helped me in preparing
this report. Words seem to be inadequate to express my sincere thanks to Mr. Ashwin R John
for his valuable guidance, constructive criticism, untiring efforts and immense encouragement
during the entire course of the study due to which my efforts have been rewarded.
I would also like to thank Mr. Venkatakrishna (Chief Manager), Mr. Vimal, (Employee), who
gave me an opportunity to learn the recurring acknowledgement of what is working in our lives
that can help us not only to survive but surmount our difficulties. I am highly obliged to those
who had helped me to procure primary data to complete my project. Also, not to be forgotten
all the Lecturers of MBA who contributed their ideas and suggestions.
I express my sincere thanks to whole Canara Bank (Founders Branch.) for giving me all the
facilities during my project and helping & guiding me during my whole internship period.
I want to thank all who have supported me and gave their timely guidance. Last but not least I
am very grateful to all those who helped me in one-way or the other way at every stage of my
work.

NaveenaShankara Upadhyaya.M
 TABLE OF CONTENT
CHAPTER PARTICULARS PAGE No
1 Introduction 1-12
1.1 Introduction 1
1.2 Early history 1

1.3 Banking in India 2

1.4 Indian Banking Sector 3
2 Profile of the Organization 13-19
2.1 Company Profile 14
2.2 Vision and Mission 15
2.3 Products of the Company 15
2.4 Competitors 15
2.5 Market share of company 16
2.6 Milestones and Awards 16
2.7 CSR of Canara Bank 18
2.8 SWOT Analysis of Canara Bank 19
3 Design of Project Work 20-28
3.1 Literature Review 21
3.2 Statement of the problem 22
3.3 NPA Concept 23
3.4 Research Methodology 26
3.5 Data collection 27
3.6 Plan of Analysis 27
3.7 Limitations 28
4 Data Analysis and Interpretation 29-41
4.1 Data Analysis and Interpretations 29-41
5 Findings, Conclusions and Suggestions 42-45
5.1 Findings 43
5.2 Suggestions 43
5.3 Conclusions 44
Annexures
A. Bibliography 45
 LIST OF TABLES
Table No. Title of Table Page No.

4.1 Financial Ratios of Canara Bank 30

4.2 Balance sheet of Canara Bank 31
4.3 Progress of Canara Bank 32

4.4 Retail lending operations of Canara bank 37

4.5 Gross NPA Ratio of Canara Bank 38

4.6 NET NPA Ratio of Canara Bank 39

4.7 Capital Adequacy Ratio of Canara Bank 40
 List of Graphs
Chart Title of Graph Page No.
No.
4.1 Composition of Income 33

4.2 Composition of Expenditure 34

4.3 Deposits of Canara Bank 35

4.4 Advances of Canara Bank 36

4.5 Net NPA and Gross NPA Ratio 39

4.6 Advances of Canara Bank 41

 EXECUTIVE SUMMARY

NPAs are the major thing that effect the profitability of Indian banks before the year 1992,
banks did not disclose their bad debts to the public fearing that it may have adverse effect on
its goodwill. Owing to the low-level profitability banks owned funds had to be strengthened by
repeated infusion of additional capital by the government. The introduction of prudential norms
strengthens financial position of bank and enhance transparency is considered as a milestone
measure in the financial sector reform. These norms are related to asset classification, income
recognition, provision for bad and doubtful debts and capital adequacy.
An explorative and descriptive study was conducted to achieve the objectives of the study and
the study was conducted in Canara Bank (Founders Branch, Mangalore) on “Non-Performing
Assets”. The general objectives of the study were to analyse the NPA level in Canara Bank.
However, the study was conducted with the following specific objectives: -
 To have a brief insight into the existing environment in Canara Bank.
 To examine about NPA’s in Canara Bank.
 To know the effects of NPA on banking.

The major limitation of study is shortage of time. Even then maximum care has been taken to
arrive at appropriate conclusion. The method adopted for the collection of data is mainly
secondary data. After collecting the data from different sources analyse and interpretation of
data has been made.
Based on findings, logical conclusion is drawn and further suitable suggestions and
recommendations were made. The entire project report is presented in the form of report using
chapter scheme developed logically and sequentially from ‘introduction’ to ‘bibliography and
references’.
 CHAPTER 1
INTRODUCTION
Introduction
A strong banking sector is important for flourishing the economy. One of the major roles played
by banking sector is lending money to the public. It is generally encouraged because it has
effect of funds being transferred from the system to productive purposes which also results in
economic growth. As there is pros and cons of everything the same is with the lending of money
which carries credit risk, which arises from the failure of borrower to fulfil the contractual
obligations during the course of transaction or on a future obligation. The failure of banking
sector will have adverse effect on other sectors. Non-Performing Asset is one of the major
problems faced by Indian banks. NPA reflects the performance of bank. A high level of NPA
will affect the profitability of the bank and it also brings down the value of its assets. The
problem of NPA is not only for Indian banks but it is the problem of banks all over the world.
The problem of NPA doesn’t only affect the bank it affects the whole economy. In fact, high
level of NPA in Indian banks is nothing but reflection of state of health of industry and trade.
This project deals with understanding of NPA, its magnitude, and major causes for an account
being non-performing, projection of NPA over the next couple of years and concluding the
remarks.

The level of NPA will have direct impact on the banks profitability and they are not allowed to
book income on such records and in mean time they are compelled to make arrangements on
such arrangements on such resources according to RBI rules The RBI has prompted the all
state Co-agents banks and additionally Co-agent banks in the nation to receive prudential
standards from the year finishing 31-03-1997. These have been amended several times from
1997. As per the RBI guidelines the meaning of NPA, the standards with respect to resources
arrangement and provisioning it’s now exceptionally realized that the banks and money related
organizations in India confront the issue of confront the intensification of Non-Performing
Assets and the issue is winding up increasingly unmanageable. In order to control the situation
under control various steps have been taken. Among all the steps Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Tax 2002 by the
parliament, which was an important step towards elimination and reduction of NPA.

An asset is considered as NPA if dues in the principal and interest are not paid by the borrower
for a period of 180days. However, with effect from March 2004, NPA status would be given
to the borrower if dues are not paid for a period of 90days. If any advance or loan given by the
banks to a borrower becomes non-performing then the bank has to treat all the advances given
to that borrower as non-performing assets, even if that borrower has some advances from the

1
bank which is performing. The NPA level of Indian banks is very high when compared to the
International standards. We cannot ignore the fact that a part of reduction in NPA is due to
writing off bad loans by the banks. Indian banks should make sure that they give loan to credit
worthy customers, because it is said that ‘prevention is always better than cure’.

Introduction of Banking
Bank a monetary institution which is authorised to manage cash and its substitutes by tolerating
time and demand deposits, making loans and investing in securities. The bank generates profit
from the difference in interest rate charged and paid. The development of banks in the country
is very important for the development and enhancement of the economy. Banking institutions
have contributed lot to the development of the economy all over the world. Today we cannot
imagine the world without banking system as it has become the lifeline of whole financial
system. With the development of banking the business also developed considerably and with
that the need for advances is also increased. After independence the Indian government has
taken serious steps towards the development of banks in the country. Due to such kind of effort
from the govt today we have, RBI, State Bank of India, nationalised commercial banks, and
cooperative banks. Indian banks have contributed lot to the development of agriculture and
trade and industrial sector. Even though banking sector has several drawbacks we cannot doubt
its important towards the development of the country.

Early history
The origin of Indian banking history goes back to 18th century. The first banks were the General
Bank of India which started in 1786, and Bank of Hindustan, both of which are not there today.
The oldest bank existence in India is the State Bank of India (SBI)which originated from Bank
of Calcutta in June 1806, which later named as Bank of Bengal. This was one of the 3
presidency banks, the other two being the Bank of Bombay and Bank of Madras, which are
established under charters from British Est India Company. For many years these three
presidency banks acted as quasi-central banks, as did their successors. These 3banks merged
in 1921 to form the Imperial Bank of India, which became State Bank of India after the
independence.

Banking in India
As of now India has 96 scheduled commercial banks in which 27are public sector banks, 31
private banks (these don’t have govt stake; they may be publicly listed and traded on stock

2
markets) and 38 foreign banks. Al these banks have over 53,000branches and nearly 49,000
ATMs. As per the report of ICRA Limited a rating agency, the public sector banks hold over
75% of total assets of the baking industry, with the private banks and Foreign banks holding
18.2% and 6.5% respectively.

INDIAN BANKING SECTOR

The origin of Indian banking history goes back to Vedic period. It’s been believed that
transition from lending of money to banking have occurred even before Manu (the great Hindu
jurist) who has dedicated a segment of his work to advances and laid down rules relating to
rate of interest. During the time of Mogul empire, the indigenous bankers played a very
important role in lending money and foreign trade and commerce.

During the time of East India Company, it was the turn of the organization houses to carry on
the managing an account business. The first joint stock bank was established I the year 1786
which is known as ‘The General Bank of India’. The others which followed it are Bank of
Hindustan and Bank of Bengal. The Bank of Hindustan continued till the year 1906 and then
it failed along with other two banks.

After that in 19th century East India company established 3banks which are, Bank of Bengal
(1809), Bank of Bombay (1840), Bank of Madras (1843). At that time these three banks are
known as Presidency Bank and they amalgamated these 3banks in the year 1920 and a new
bank Imperial Bank was formed in 1921. After passing of State Bank of India Act in 1955 the
undertaking of Imperial Bank was taken over by State Bank of India. The Reserve Bank of
India (RBI) which is the central bank of the country is formed in the year 1935 under RBI Act
1934. Swadeshi movement led to the emergence of more Indian banks namely Punjab National
Bank Ltd, Bank of India Ltd, Canara Bank Ltd, Bank of Baroda Ltd, Central Bank of India
Ltd. On July 19,1969, 14 major banks in the country were nationalised and in 15th April 1980,
6more private sector banks were taken over by the government.

Impact/ Effects of NPA upon banks:

A strong banking sector is very important for the well-being of an economy. The failure of
banking sector will have adverse effect on other sectors of the economy. Non-Performing
Assets are one of the major concerns for banks in India. The only problem that reduces the
financial performance of a bank is Non-Performing Assets. The NPA will have very bad impact
3
on banks. The efficiency of a bank doesn’t only depend upon the size of the balance sheet but
also on the level of returns it gets on its assets. NPAs do not generate any interest income for
the banks, but the same time banks are required to make some provisions for such NPAs from
their current profits. The major effect of NPAs are listed down below;

 NPAs erode current profits through provisioning requirements.

 NPAs results in reduced interest income.
 As NPAs require higher provisioning it will affect the profits and accretion to capital.
 NPAs limit recycling of funds, set in assets-liability mismatches etc. and will have
adverse impact on Capital Adequacy Ratio.
 Return on Equity and Return on Assets of a bank goes down because NPAs don’t bring
any money.
 Bank’s rating will be affected.
 The cost raising fund of bank will go up.
 If the banks Net NPA Ratio goes above 3%, then the approval of RBI is required for
declaration of dividend.
 NPAs will have bad effect on the goodwill of the firm.
 NPA will also have bad effect on the equity value of the bank.

RBI has developed many schemes and tools which will help the banks to reduce the NPA assets
by internal checks and control scheme, relationship managers as stated by RBI who have
complete knowledge of the borrowers, credit rating scheme, early warning system and so on.

Even after RBI taking all these measures the return is not up to the expectation. To improve
the NPAs each bank should be motivated to introduce their own precautionary steps. Before
lending banks must evaluate the financial and operational prospective of the borrower or the
customer. They must analyse if the customer has repayment capability or not. NPAs will reflect
the performance of the bank. A higher level of NPA will mean that the bank is in very
dangerous position and a lower level of NPA will suggest that the bank is performing well in
the market.

4
Causes for an Account becoming NPA:

 Those Attributable to Borrower:

 Failure to bring in Required capital.

 Too ambitious project.
 Longer gestation period.
 Unwanted Expenses.
 Over trading.
 Imbalances of inventories.
 Lack of proper planning.
 Dependence on single customers.
 Lack of expertise.
 Improper working Capital Management.
 Mis management.
 Diversion of Funds.
 Poor Quality Management.
 Heavy borrowings.
 Poor Credit Collection.
 Lack of Quality Control.

 Causes Attributable to Banks:

 Wrong selection of borrower.

 Poor Credit appraisal.
 Unhelpful in supervision.
 Tough stand on issues.
 Too inflexible attitude.
 Systems overloaded.
 Non-inspection of Units.
 Lack of motivation.
 Delay in sanction.
 Lack of trained staff.

5
  Lack of delegation of work.
 Sudden credit squeeze by banks.
 Lack of commitment to recovery.
 Lack of technical, personnel & zeal to work.

 Other Causes:

 Lack of Infrastructure facility.

 Fast changing technology in the country.
 Un helpful attitude of the Government.
 Changes in consumer tastes and preferences.
 Increase in material cost.
 Government policies will also affect NPA.
 Credit policies.
 Taxation laws of the government.
 Civil commotion.
 Political hostility
 Sluggish legal system in the country.
 Changes related to Banking amendment Act.

Importance of management of NPA:

NPA’s management is very important for every bank. If it is not managed properly then it has
the ability to kill the organization. So, the importance of managing NPA are,

 Due to NPA bank can lose the shareholders’ value.

 Bank will have to face capital adequacy problem by NPA.
 Tandem Committee said that Capital Account Convertibility (CAC) should not be
introduced if bank’s NPA doesn’t come down.
 NPA will cause asset liability mismatches.

6
Early symptoms by which one can recognize a performing asset turning in
to Non-performing asset:

There are some symptoms by which one can recognise that the asset will turn into NPA. Such
symptoms are divided into 4 categorises.

Four categories of early symptoms:

Financal Operational Attitudinal

and Physical Changes

Other

Financial:

 Non-payment of the very first installment in case of term loan.

 Bouncing of cheque due to insufficient balance in the accounts.
 Irregularity in installment.
 Irregularity of operations in the accounts.
 Unpaid overdue bills.
 Declining Current Ratio.
 Payment which does not cover the interest and principal amount of that installment.
 While monitoring the accounts it is found that partial amount is diverted to sister
concern or parent company.

7
Operational and Physical:

 If information is received that the borrower has either initiated the process of winding
up or are not doing the business.
 Overdue receivables. v Stock statement not submitted on time.
 External non-controllable factor like natural calamities in the city where borrower
conduct his business.
 Frequent changes in plan.
 Nonpayment of wages

Attitudinal Changes:

 Use for personal comfort, stocks and shares by the borrower.

 Avoidance of contact with bank.
 Problem between partners

Others:

 Changes in Government policies.

 Death of borrower.
 Competition in the market.

SALE OF NPA TO OTHER BANKS:

A bank can sell their NPA to other banks only in certain circumstances. Which are discussed
below,

 An NPA is eligible for sale to other banks only if it has remained as NPA for at least 2
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 banks but not to bank, which originally sold the NPA.
 The NPA may be classified as standard in the books of the purchasing bank for a period
of 90 days from date of purchase and thereafter it would depend on the record of
recovery with reference to cash flows estimated while purchasing.

8
  The bank may purchase or sell NPA only on without recourse basis.

 If the sale is conducted below the net book value, then the short fall should be debited
to P&L account and if it is higher, then the excess provision will be utilized to meet the
loss on account of sale of other NPA’s.

Preventive measures for NPA:

There are some measures by which a bank can avoid NPA in the coming days. Such measures
are;

 Early recognition of the problem:

When the bank begins the process of revival of the amount, its too late situation for them.
So, it is very important for them to identify the accounts that might impose some difficulties
in recovering the amount. When an account starts showing signs of weakness, without
considering the fact that it turns into NPA or not is imperative. Study of the potential revival
may be done on basis of techno-economic viability study.
Restructuring must be attempted only after objective assessment of promoter’s intention,
banks are convinced of a turnaround within that scheduled time frame. In case of totally
unviable units which decided by banks, then it is better to facilitate winding up of unit
earlier so that bank can recover whatever amount possible through legal means before it
becoming worst.

 Identifying the borrowers with genuine intent:

Banks should identify the borrowers with genuine intent from those who are not serious
with no commitment or stake in revival is the big challenge for a banker. Here the role
of frontline officials at the branch level will play big role as they are the one who have
intelligent inputs with regard to promoter’s sincerity and capability to make the
turnaround. Based on the on the objective assessment, banks should decide very quickly
if it is good to commit additional finance. For this purpose, banks can set-up a “Special
Investigation’ of all the financial transaction or business transaction, in order to
ascertain the reasons for the sickness of the borrower. Banks may have board of

9
 technical experts who track record the techno-economic study of the project of the
borrowers.
If by the study the tank found that a particular borrower is having some genuine problem
due to mismatch in fund flow or sudden requirement for additional capital can be
entertained at the branch level, and for this kind of situation a special limit to such type
of cases has to be set-up in earlier itself. This will lead to the need of additional funding
through the controlling offices in deserving cases, and help to divert many accounts
from becoming an NPA.

 Timeliness and adequacy of response:

If the bank delays in respond to the account that might become NPA then the effect is
more. Time is more essential element in any restructuring activity. The response
decided is on the basis of techno-economic study and the promoter’s commitment, has
to be accurate in terms of extend of additional funding and relaxations etc. under
restructuring exercise. The assistance given may be flexible and bank may look at the
exit options available.

 Focus on cash flows:

At the time of financing, the restructuring of the banks may not be guided by the
conventional fund flow analysis only, that could mislead the banks. Appraisal for fresh
credit requirements can be done by analyzing the fund flow in relation with the cash
flow rather depending only on basis of fund flow.

 Management Effectiveness:

The general thinking or view among borrowers is that it is the lack of finance which
lead to the sickness and NPA. But it is not true in all the cases. Managements
effectiveness in tackling the business conditions is very important aspect which affects
a borrowing unit’s fortunes. A bank may get additional finance to align unit only after
basic viability of the enterprise in the context of quality of the management examined
and confirmed. The viability study or investigation audit is useful to have consultant

10
 appointed quickly to examine the current aspects. A proper techno-economic viability
study is must to become the basis, on which the future action will be considered.

 Multiple Financing:

Multiple financing has several other processes. They are listed below;
 At the time of assessment of viability and restructuring, a unified approach by all
the banks which do lending activities as also sharing of all relevant information on
the borrower will go a long way towards the success of rehabilitation exercise,
irrespective of success or failure.
 In some cases where the unit is in working state, bank must make sure that it
captures the cash flow (there is a behavior of some borrowers to switch to other
bank when they become default in one bank with the fear of cash flow forfeited),
and must ensure that such cash flows are used for the working capital purpose. At
the end, there should be regular flow of information between the concerned
members. A bank which doesn’t follow the guidelines are not allowed to offer credit
facilities to its customers. Current account facilities can also be denied if the
guidelines are not followed and they might be penalized also for that.

 While lending the priority of each lender will be different. While one lender may
be willing to wait for a longer period for the recovery of the amount and while the
other lender might not be ready to wait for longer time for the recovery of dues and
he will demand for repayment in short period. So, sometimes these lenders might
accept even if it is discounted just to get back their principal amount. So, the plan
of restructuring will take on basis of this aspect only.
 Corporate Debt Restructuring (CDR) has been established in the year 2001 to give
timely and transparent system for restructuring of corporate debt which is above
₹20 crores with banks and financial institutions on a voluntary basis and it is outside
the legal framework. By this system, banks will be benefited in large extent by
restructuring of large standard accounts and viable sub-standard accounts with
multiple banking arrangements.

11
Income Recognition – Policy:

 Income recognition policy is objective based policy. Internally income from NPA is not
recognized on accrual basis but it recorded as income only when its actually received.
So, banks should not charge and take to income account on any NPA.
 If an account turns into NPA, banks should take back the interest already charged and
not collected by debiting profit and loss account, and should stop applying interest on
that account.
 The interest on advances against term deposit, NSCs, KVPs and Life Policies may be
taken into income account at the time of due date, if adequate margin is available in the
account.
 If govt guaranteed advances becomes NPA, then the interest on such advances should
not be considered into income account at the time of due date unless the interest has
been realized.
 If any advances, bills purchased and discounted becomes NPA at the end of the year,
then the entire interest accrued and credited to income account in past years or periods
should be taken back.

12
 CHAPTER 2
PROFILE OF THE ORGANIZATION

13
COMPANY PROFILE:
Canara bank is one of the largest public sector banks which is owned by Government of India
whose headquarters located in Bengaluru, Karnataka. It was established in the year 1906 by
Ammembal Subba Rao Pai in Mangalore. It was one of the oldest public sector banks in India.
It also has its branches in other countries like, London, Moscow, Doha, South-Africa, Bahrain,
Dubai, Tanzania and New York.

Canara Bank has several first to its crown. These include,

 Launching of Inter-City ATM Network.

 Obtaining ISO Certification for a branch.
 Commissioning Exclusive Mahila Banking Branch.
 Articulation of ‘Good Banking’- banks citizen charter.
 Launching of Exclusive Subsidiary for IT Consultancy.
 Providing Agricultural Consultancy Services.

Over the years, bank has been scaling up its market position to emerge as a major ‘Financial
Conglomerate’ with as many subsidiaries sponsored institutions in India and abroad. By
September 2018 Canara bank has had more than 6300branches and more than 9000 ATMs
spread across different areas.

Vision and Mission Statement of Canara Bank:

 Vision:
To emerge as ‘Best Practices Bank’ by pursuing global benchmarks in profitability,
operational efficiency, asset quality, risk management and expanding the global reach.

 Mission:
To provide quality banking services with enhanced customer orientation, higher value
creation for stakeholders and continue as a responsive corporate citizen by effectively
blending commercial pursuits with social banking.

14
Products of Canara Bank:

The products or the services provided by Canara Bank are,

 Commercial Banking
 Investment Banking
 Retail Banking
 Private Banking
 Asset Banking
 Credit Cards
 Mortgages
 Canara e-info book
 Canara Bank Mobile Banking
 Canara Vehicle

Competitors of Canara Bank:

In every field there is competition. In this competitive world every organizations have to face
it. It’s not easy to survive in banking sector. In recent years the private sector banks are giving
a big competition to all the public sector bank. And in my opinion Canara Bank is doing its
best to overcome these competitors. Top competitors for Canara bank in both private and public
sector are mentioned below;

 HDFC Bank
 Axis Bank
 Bank of Baroda
 State Bank of India
 Indian Overseas Bank

Market share of Canara Bank:

Market share means the total proportion of the market that’s been controlled by the company.
For example, in banking field the market share means total number of customers that the
company has out of all the population.

15
In India banking sector is sufficiently capitalised and well organized. The Indian banking
system has 27public sector banks, 21private sector banks, 49foriegn banks, 56regional rural
banks. As Canara Bank is one of the leading public sectors bank its market share is also big.
Its net-worth as on March 2018 stood at Rs.23086crores as compared to Rs.26914crores at
March 2017. While the total paid-up capital of the bank stood at Rs.733crore, while the reserves
and surplus stood at Rs.34782crores.

The deposits of the bank are also increasing from year to year as it is increased from
Rs.495275crores in 2017 to Rs.524772 crores in recent financial year 2017-18. Current and
Savings Deposit (CASA) increased by 1154% to Rs.1167035crores at March 2018. Canara
banks CASA deposits share to domestic deposits improved to 34.82% from previous years
32.85%.

Canara bank also expanded its asset based to well diversified one by expanding its advances to
more productive sectors like agriculture, Micro Small and Medium Enterprises (MSMEs) and
other sectors like housing, education and vehicle loan segments.

The aggregate investment of the bank stood at Rs.144054crores at March 2018. The yield on
investment works out to 7.63% as at 32st March 2018 when compared to 7.75% at 31sr March
2018 due to sale of securities and profit booking during the period.

Foreign business turnover of Canara bank aggregated or increased to Rs.261449crores,

comprising of Rs.95317crores under exports, Rs.54619crores under imports, and
Rs.111533crores under remittance during the year end of 31st March 2018.

Milestones and Awards of Canara Bank:

Canara bank has achieved several milestones and bagged several awards. Some of the
important milestones and awards are listed below,

Milestones:

 In 1st July 1906 Canara Hindu Permanent Fund Ltd, formally registered with a capital
of 2000shares of Rs.50 each, with 4 employees.
 In 1910 Canara Hindu Permanent Fund Ltd renamed as Canara Bank Ltd.
 In 19th July 1969 Canara Bank was nationalized along with 14other banks.
 In 1983 Canara bank opened its overseas branch in London.

16
  In 1992-93 it became the first bank to adopt “Directive Principles” of good banking.
 In 2001-02 it opened “Mahila Banking Branch” first of its kind in Bangalore.
 In 2003-04 it launched its internet banking service.
 In 2005-06 it celebrated 100years of banking service.
 In 2012-13 highest dividend of 130% is paid.
 In 2016-17 banks network reached 6000milestones. As the total number of branches
rose to 6083 during that time.
 In 2017-18 the Global business of bank crossed 9lakh crore.

Awards:

 Recently during the year 2018-19 Central Vigilance Commission has awarded Canara
bank with “Vigilance Excellence Award Outstanding” under category “Timely
completion of Disciplinary Proceedings” for the year 2018.
 In the year 2017-18 received the award of “Master Card Innovation” for Canara
International Pre-paid card under pre-paid segment.
 Rupay Special award for issuing highest number of Rupay cards.
 Golden Peacock award for Corporate Social Responsibility from Institute of Directors,
New Delhi.
 MSME Excellence Award 2017 by Federation of Industrial Trade and Services.
 ASSOCHAM Social Banking Excellence Awards 2017 for govt sponsored schemes
and runner up for Agricultural Banking in the large bank class.
 CSR Leadership award in 2016 for best CSR practices.
 Star Performer award in 2016 in 31st Depository Participant Conference.
 Best bank award under PMEGP, IN South Zone in the field of khadi and village
industries for the financial year 2014-15.
 Visa award for crossing the milestone on issuance of 1.35crore Visa Debit Card.
 Dun& Bradstreet Award for being the best Public Sector bank under Priority sector
lending and retail growth performance.
 ‘SKOCH Order of Merit’ Award for initiative under financial inclusion.
 Best strategy in HR and Training Excellence-Gold Awards in 6th annual Greentech HR
Award.

17
Corporate Social Responsibility of Canara Bank:

Earlier Corporate Social Responsibility (CSR) was voluntary for the organizations, where
organizations were contributed to the welfare of the society with their own interest. But
Companies Act 2013 stated that companies should spend minimum of 2% of their net profit on
CSR activities. So, with that Canara bank is also focusing on certain areas to do their CSR
activities. Its main areas for CSR are,

 Small and marginal farmers.

 Artisans.
 Women and girl children.
 Unemployed and school drop-outs.
 Differently abled people.
 Minority community.
 Scheduled caste.
 Prisoners and ex-convicts.
 Victims of natural calamities.

One of the major milestones for Canara bank in CSR is it bagged “Golden Peacock Global
Award for Corporate Social Responsibility” for the year 2013 from Institute of Directors in
New Delhi.

SWOT Analysis of Canara Bank:

SWOT Analysis is the study undertaken by the organization to know its internal strengths and
weaknesses along with external opportunities and threats. It is very important for every
organization to carry out SWOT analysis to know where it stands I the market. The SWOT
analysis of Canara bank is,

Strengths:

 Canara bank has comfortable capital adequacy ratio.

 It boasts unbroken record of profit since its formation.
 It has wide network of branches and ATMs
 It consolidated its business position by rebalancing its assets and liabilities.

18
Weakness:

 It has limited presence in Western India.

 There is potential for political interference.
 The non-performing assets is increasing.

Opportunities:

 Banks may expand in Western market.

 It took several measures to increase its overseas branches.
 Canara bank is one of the fastest to increase infrastructure lending ahead of its rivals.
 Net worth of the bank increased after 2012.

Threats:

 Increased competition from private sector banks.

 Changing policies of RBI and government.
 Lack of interest of people to save money.

19
 CHAPTER 3

DESIGN OF PROJECT REPORT

20
Literature Review:

Many studies have been conducted on the topic “Non-Performing Asset” from different
researchers. A literature review surveys the books, journals relating to the area of the study.

Amandeep (1991) studied profit and profitability of Indian nationalized banks and impact of
priority sector lending, credit policies, geographical expansion, competition, industrial
sickness, ancillary income. For this purpose, trend analysis, ratio analysis and regression
analysis were used.

Chandra Shekhar and Roy (2005) show that PSBs have increasingly opted for investment in
risk free returns of government securities, their share in total earning assets raising from 26%
to 33% during 31st century. But due to the stringent norms have reduced the risk of NPA by
giving loan to the credit worthy customers.

Dr. Amitabh Joshi (2003) conducted a survey on “Analysis of NPA of IFCI Ltd”. The study
found that the profit of a financial institution is directly affected by its advances. The most
important thing in NPA is to identify the NPAs in initial stage itself to reduce the level of losses
and to reduce the risk. It also been observed that collateral securities should not be solely
considered to sanction advances as there are several other factors which should be considered.
This study also reveals that exchange of credit information of customers will help to avoid
NPAs.

Tamal Datta Chadhuri (2005) examined the “Resolution Strategies for maximizing value of
NPAs” This article says that defining capital adequacy will adversely affect the shareholders’
value and it also restrict the ability of bank to access to capital market. So, this study says that
if the resolution strategy for recovery NPA is not put up quickly, then the value of the asset
would deteriorate and only a little value can be recovered.

Satya (2005) examined effect of privatization of banks on its performance and efficiency. He
took a period of 5years from 1998-2002 for his study. As in India the banking sector was
divided into public sector and private sector, the objective of the study was to know the impact
of privatization. And at the end of the study it was concluded that the private sector banks
performed better than public sector banks.

Pach Mayadri (2011) in his research paper “A Comparative Study on NPAs in Indian Banking
Industry” analysed NPAs in both public sector and private sector banks. In this study it’s been

21
observed that there is a steady increase in the amount of lending and it’s also observed that
public sector banks have improved in managing their NPAs.

Dr. Janardhan G Naik (2006) pointed out on problems of NPAs and the challenges faced by
the banks.

Ms. Kanika Goyal (2010) has written an article on “Empirical Study of Non-Performing Assets
and Management of Indian Public Sector Banks”. In this study she analysed quality of asset,
trend of gross NPA, net NPA etc.

A report on “Non-Performing Assets-Challenge to Public sector banks” by Sachin Nadha. The

major objective of this report was to know, what is NPA, what are the reason for NPA, why
NPAs are greater challenge to PSBs, and what are the steps taken to reduce NPAs in public
sector banks. After analysing the data researcher concluded that NPAs have increased
drastically after 2001 and banks must find a way to overcome it.

Statement of the problem:

In this competitive economy banking industry plays a major role. But one of the major
problems faced by banks in this growing economy is Non-Performing Assets. An NPA is the
loan or advance for which no interest is paid for the period of 90days. The main impact of NPA
is that it will affect the liquidity position of the bank. So, it is very important to look after the
issue carefully.

Objectives of the study:

 To have brief insight into the existing environment in Canara bank.

 To examine about NPA in Canara bank.
 To know the effect of NPA on banking.

Scope of the study:

The scope of my study is;

 Banks can increase their income or financial position by referring to the project’s
recommendations.
 This project can be used to compare the performance of Canara bank with other.

22
  This project can be referred to know the reasons for NPA.
 It also gives information about the impact of NPA.
 This project will say how Canara bank will manage its NPAs.

Non-Performing Assets (NPA) - Concept

The world NPA will give a heart attack to the banking sector in recent days. In simple term
NPA means unpaid loans. There are basically 2types of assets that is, performing asset and
non-performing asset. Performing assets are those loans for which both the principle and
interest are paid in correct time and its repayment is sure.

Non-performing asset means loan which is issued by the bank but not recoverable. An NPA
account in the books of account is considered as an asset as it indicates the amount receivable
from the defaulters. It means any bank is gives loan to customer and if the customer doesn’t
pay the interest till the period of 90days then that account is considered as NPA for the bank.

Definitions:

An asset, including a leased asset, becomes the NPA when it fails to generate income for the
bank. An NPA can be defined as credit facility in respect of which the repayment is remained
due for a specified period of time. This specified period of time has been reducing over the
period of time as follows;

 In 31.03.1993 = 4 quarters
 In 31.03.1994 = 3 quarters
 In 31.03.1995 = 2 quarters
 In 31.03.2001 = 180 days
 In 31.03.2004 = 90 days

With effect from 01.03.2004, NPA shall be a loan or advance where;

 If the interest amount doesn’t remain overdue for a period of more than 90days.
 The account remains out of order for a period of 90 days.
 Any amount to be received remains overdue for a period of more than 90 days.

23
  If the loan is given to agriculture purpose and the repayment is made by agriculture
income, then it will be classified as NPA as under;

 If the loan is given for short duration crop then the interest remains overdue for
two crop seasons beyond the due date.
 If the loan is given to the long duration crop then the interest remains overdue
for one crop season beyond due date.

In the year 1992 RBI introduced prudential norms for income recognition, asset classification
and for provisioning of IRAC norms in respect of the loan portfolio of the banks. The motive
behind is to bring out the true picture of the bank’s loan portfolio. The quality of banks loan
portfolio can impact the profitability, capital and liquidity. Asset quality problem is considered
as one of the root financial problem for banks. If the losses from loan exceed the bad and
doubtful debt reserve, then the capital strength is reduced. Reduced cash means less income,
which will reduce the liquidity flow. Thus, the performance of bank is highly dependent on the
quality of the asset.

The management of NPA begins with consciousness of good portfolio, which gives better
understanding of risks in lending business. The board will decide the strategy with a view of
regulatory norms, market share, risk profile and available resources etc. the essential
components of sound NPA management are:

 Quick identification of NPA.

 Containing NPA at lower level.
 Reducing the impact of NPA to minimum in financials.

24
Asset classification:

Assets can be categorised into 4catogaries namely,

Standard Assets

Sub-standard Assets

Doubtful Assets

Loss Assets

 Standard assets:
Standard assets are the loan accounts which are regular and do not carry more than normal
risk. With standard assets, there could be accounts which though have not become NPA
but are irregular, then such accounts are called as Special mention accounts.

 Sub-standard accounts:
After 31.3.2005, sub-standard account is one, which is classified as NPA for a period not
exceeding 12months. In this case, the current net worth of the borrower or the current
market value of the security charged is not enough to ensure recovery of the due to the bank
in full.
 Doubtful assets:
An asset is considered as doubtful asset, if it has remained NPA or sub-standard for a period
exceeding 12months (with effect from 31st March 2005). These doubtful assets have all the
weakness inherent in assets that were classified as sub-standard, with the added character
that the weakness make collection in full on basis of currently unknown facts and values.

25
 Loss assets:
A loss asset is the one where the loss has been identified by the bank or internal auditors or
RBI inspection but the amount is not written off fully. In other words, an asset is considered
uncollectible and of such little value that its progress as a bankable asset is not guaranteed,
although there may be some salvage value.

Basel 3 Capital Adequacy Framework:

Basel 3 is a regulatory framework on banks’ capital adequacy, stress testing and market
liquidity risk. It is intended to strengthen the banks’ capital requirements by increasing the
banks liquidity position and decreasing its leverage.

Canara bank has its own Risk management wing at the head office to manage its risks involved
in the business. Under this Risk Management Wing there is one more Risk Management
Section which works in all the Circle offices of Canara bank through India.

Research Methodology:
The purpose of any research or study is to find solutions to the problems. And the main aim is
to find the truth which is not yet discovered. Research methodology has several dimensions
and research methods are the part of it.

Research methodology is the systematic way of doing the research problem. It means the way
in which we conduct the research process. Before undertaking of any task or process it is very
important to determine the problem that we are going to study. I have adopted the following
procedure to do my research or study:

 Formulating the research problem.

 Research design.
 Determining the data sources for the study.
 Analyzing of data.
 Interpretation of the data collected.
 Preparing of research report.

Data collection:

The data may be primary data or secondary data. Primary data means the data which is collected
for the first time while doing the study. Secondary data means data which have been already
collected by others. Since my topic of study is “Non-Performing Assets” its very difficult to

26
get primary data, as the current year information’s are confidential for the bank. So, I went for
secondary data collection.

Sources of secondary data:

For my study or research, I have totally relied upon secondary sources of data which were
available and analysed them for my research study. The sources of secondary data that I
referred are,

 Internet.
 Bank’s balance sheet.
 Annual journals.
 Magazines.
 News papers
 Articles regarding NPA.
 Research papers regarding NPA.

Plan of analysis:

For a study or research, it is very important to present the data collected in a proper manner.
So, for the better presentation of the data I used several tools and techniques while doing the
analysis. Basic tools that I used in this study are;

 Tables
 Graphs.
 Pie charts.
I used some technical software’s also for my study. Which are;

 Microsoft excels.
 Microsoft word.

Limitations of the study:

In every study or research everyone will find some limitations. The limitations that I felt during
my study are;

 I was unable to get present year data as it was confidential information to the bank.

27
 Since I relied only upon secondary data, the practical operation related to NPA in banks
were not learned.
 The solution that I gave is applicable to only Canara bank, as my concentration was
only on one bank.
 The data collected by me was not so sufficient for the study.

28
 CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

29
TABLE 4.1: Financial of Canara Bank:
Canara banks growth in the financial year 2017-18 reflects the changing liquidity position of
the bank. And in the year 20197-18 the asset quality of every bank was under stress which led
to the profitability of the banks.

 Operating profit of the bank increased from ₹8914 crores in 206-17 to ₹9548 crores in
the year 2017-18.
 Canara bank reported a net loss of ₹4222crores in 2017-18 compared to a net profit of
₹1122 crores in previous year.
 Net interest income of the bank increased by 23.21% to ₹12163 crores compared to
previous years ₹9872 crores.
Some key financial ratios of Canara banks are given in following table for the last 2 years,

Financial ratios (%) March 2017 March 2018

Cost of funds 5.65 5.17

Yield of funds 7.42 7.34

Cost of deposits 6.25 5.60

Yield on deposits 8.99 8.12

Net interest margin 2.23 2.42

Return on assets 0.20 (0.75)

Return on equity 4.15 (16.74)

Cost to income ratio 48.85 50.03

30
TABLE 4.2: Balance sheet of Canara Bank:
Canara bank’s balance sheet for the year end 31st March 2018 (2017-18) is given below;
Schedule 31st March 2018 31st March 2017

Capital and Liabilities:

Capital 1 7332448 5972902
Reserves and Surplus 2 348715921 330882473
Deposits 3 5247718603 4952752422
Borrowings 4 388085117 395035590
Other liabilities and provisions 5 177008959 150551048

6168861048 5835194435
Total

Assets:
Cash and balance with RBI 6 22100381 199224973
Balances with bank and money at call 7 278122940 389029615
Investments 8 1440536704 1502658882
Advances 9 3817029864 3420087608
Fixed assets 10 83186432 71683159
Other assets 11 328984727 252510198

6168861048 5835194435
Total

Contingent liabilities 12 2937288900 4334704205

Bills for collection 267820790 271763119

5835194435

31
TABLE 4.3: Progress of Canara Bank:
Canara bank’s business has been expanding and improving the years. It is evident from the
table listed below;

Parameters 2o15-16 2016-17 2017-18

Number of branches 5849 6083 6212

Number of ATM 9251 10519 9395

Paid-up capital 543 597 733

Reserves 31060 33088 34872

Deposits 479792 495275 524772

Growth 1.26% 3.23% 5.96%

Non-resident deposits 34286 36745 39688

Foreign business turnover 201860 235425 261469

Advances 324715 342009 381703

Total income 48897 48942 48195

Total expenses 41751 40028 38467

Operating profit 7147 8914 9548

Net profit or Net loss (2813) 1122 (4222)

Cash recovery 4758 4162 6458

32
Income and Expenditure analysis:
 Graph 4.1: Composition of Income:
During the financial year 2017-18, Canara banks income stood at ₹48195 crores
comprising of ₹29096 crores interest from loans and advances, ₹10412 crores interest
from investments and ₹6943 crores from non-interest income and ₹1744 crores from
other source of income. This composition of income can be seen in following pie chart;

Composition of Income

4%
14%

22%

60%

Non-interest Income Interest on income Interest on advances Other interest income

33
 Graph 4.2: Composition of Expenses:

Total expenditure of Canara bank came down to 3.45% to ₹38647 crores from ₹40028
crores in the last year. Interest expenses of the bank also declined by 7.7% to ₹29089
crores. The operating expenses increased by 12.28% to ₹9558 crores which included
the staff cost of ₹5444 crores and other operating expenses of ₹4114 crores. Due to less
interest rate banks cost of deposit reduced by 65bps to 5.60% from previous years
6.25%. This composition of expense can be shown in pie chart as shown in below;

14%

11%

75%

Interest Expenditure Other Operating Expenditure Staff Expenses

34
Business Growth of Canara Bank:
 Graph 4.3: Deposits of Canara bank:

The deposits of Canara bank have been in increasing trend over the years. The total
deposits of the bank increased to ₹524772 crores at March 2018 compared to previous
years ₹495275 crores, with an increase of 5.96%.
Current and Savings (CASA) bank deposit of the bank increased to ₹167035 crores at
the end of March 2018. The banks CASA deposits share to the domestic deposit
increased to 34.28% from previous years 32.85%. Savings deposit grew by 11.7% to
₹142051 crores. And the current deposits grew by 10.64% to ₹24984 crores. This
business growth figures are shown in below graph;

Deposits
600000

500000

400000

300000

200000

100000

0
Jan-16 Jan-17 Jan-18

1.26% Growth 3.23% Growth 5.96% Growth

35
  Graph 4.4: Advances from Canara Bank:
Canara bank expanded its asset base to a well-diversified one by focusing more on
productive segments like agriculture, MSMEs, and other sectors like retail assets,
vehicle loan etc. the total advances of Canara bank grew by 11.61% to reach ₹381703
crores at 2018 when compared to ₹342002 crores of previous year. The total business
of the bank increased to ₹906475 crores with growth of 8.26% compared to ₹837284
crores in previous year. It can be shown graphically as below;

Advances
390000

380000

370000

360000

350000

340000

330000

320000

310000

300000

290000
Jan-16 Jan-17 Jan-18

Growth Growth2 Growth3

36
  TABLE 4.4: Retail Lending operation of Canara Bank:

The loan or advance given by Canara bank in the year 2018, 2017, to the retail sector
is given below in the table;

Retail Segment March 2017 March 2018

Housing 32285 40075

Housing (Direct) 24337 28308

Housing (In-direct) 7948 11767

Vehicle 5140 6739

Other personal 13835 21601

Education 7651 8438

Total retail loans 58910 76853

Canara bank opened five new retail hubs in addition to its 83hubs across all major cities in the
country. It also introduced several tech-based schemes by introducing miss call services for
retail lending schemes like giving information regarding due date, amount of EMI, pending
amounts etc.

Asset Quality:

There is a huge stress on banks to maintain a asset quality in the industry level. Canara banks
Gross Non-Performing Asset (GNPAs) to Gross Advances ratio increased to 11.48% as at
March 2018 compared to 9.63% as a at March 2017. GNPAs of Canara bank stood at ₹47468
crore in the year 2018 when compared to ₹28542 crores in previous year. Other points
regarding asset quality are;

 Cash recovery during 2017-18 was increased to ₹6458 crores compared to previous
years ₹4162 crores.

37
  Recovery from written off accounts stood at ₹1625 crore as on March 2018 compared
to previous years ₹705 crore.
 Recovery from loss of asset was ₹565 crore at the end of March 2018.
 Bank conducted 7661 recovery meets, which resulted in recovery of ₹615 crores.
 In 2017-18 14362 cases were referred to Lok Adalat’s out of which, 6229 cases were
settled by covering amount of ₹22 crores.
 Bank conducted Can Adalat’s at branch level and Mega Adalat’s at Circle level, Lok
Adalat’s at district level for the regular follow-up of loan accounts.

TABLE 4.5: Gross NPA Ratio of Canara Bank:

Gross NPA is the sum of all the loan assets which are classified as NPA as per RBI guidelines.
The ratio of Gross NPA has to be counted in percentage and the formula to calculate Gross
NPA is,

Gross NPA Ratio = Gross NPA\Gross advances*100

Gross NPA of Canara bank has been increasing from last 3years. The Gross NPA of Canara
bank is given in table below for last 3 years;

Year Gross NPA Ratio

2015-16 9.40%

2016-2017 9.63%

2017-18 11.84%

TABLE 4.6: Net NPA Ratio of Canara Bank:

Net NPA ratio is the ratio of net NPA to advances, in which the provision is to be deducted
from the gross advances. The provision is to be made for the NPA account. The formula for
the calculation of Net NPA ratio is,

38
 Net NPA Ratio= Gross NPA – Provision/ Gross advance – Provision*100

Net NPA Ratio of Canara Bank is given in the table below;

Year Net NPA Ratio

2015-16 6.42%

2016-17 6.33%

2017-18 7.48%

This ratio indicates the degree of risk in the portfolio of the bank. High NPA ratio means high
chances of risky assets in the bank for which no provision is made.

Graph 4.5: Net NPA Ratio and Gross NPA Ratio:

The Net NPA Ratio and Gross NPA Ratio of Canara bank for the last 3 years can be
graphically shown as below for the above-mentioned facts and figures;

Gross NPA Ratio and Net NPA Ratio

25.00%

20.00%

15.00%

10.00%

5.00%

0.00% Gross NPA Ratio Gross NPA Ratio2

2015-16 2016-17 2017-18

39
TABLE 4.7: Capital Adequacy Ratio of Canara Bank:

Capital adequacy ratio can be defined as ratio of the capital that available to the bank, to its
assets which are adjusted to risk attached to them. Capital adequacy ratio can be calculated
with help of following formula;

Capital Adequacy Ratio = Capital/ Risk weighted assets*100

And the Capital adequacy ratio of Canara bank for last 3years is given in table below:

Year Capital Adequacy Ratio

2015-16 11.08%

2016-17 12.86%

2017-18 13.22%

Capital Adequacy Ratio

13.50%

13.00%

12.50%

12.00%

11.50%

11.00%

10.50%

10.00%
2015-16 2016-17 2017-18

Capital Adequacy Ratio Column1 Column2

40
Graph 4.6: Advances of Canara Bank:

NPA of Canara bank from 2011 to 2015 are given in table below;

Year Advances
2011 212467.69
2012 232489.81
2013 242176.62
2014 301067.47
2015 330035.51

Advances of Canara Bank

350000

300000

250000

200000

150000

100000

50000

0
2011 2012 2013 2014

Advances

From the above table it is evident that the advances of Canara bank have been increasing over
the years. The profit decreased from 26% in 2012 to 21% in 2011 and 19% in 2013 and 16%
in 2014 and in the year 2015 it incurred a profit of 18%.

41
 CHAPTER 5

FINDINGS, CONCLUSION AND SUGGESTION

42
Findings of the study:

In my research I have find following things:

 Canara Bank manages its NPA well compare to other banks.

 Even though NPA’s are increasing every year the percentage is less.
 Good measures have been taken to eradicate NPA.
 Canara bank is doing a great job in risk management.

Recommendations / Suggestions:

In my study I have found some limitations. For that I can suggest both the Banks following
suggestions or areas of improvement;

 Bank should give stress upon credit appraisal.

 The credit should be backed up by securitization.
 Bank should make good provisioning policy.
 Bank should try their best to recover NPAs.
 The problem should be identified very early so that banks can try their best to stop an asset
or account becoming NPA.
 Bank should evaluate the SWOT analysis of the borrowing companies i.e. how they would
face the environmental threats and opportunities with the use of their strength and
weakness, and what will be their possible future growth in concerned to financial and
operational performance.

Conclusion:

For a study or research to be completed there must be a proper conclusion to it. A conclusion
will reveal the explanation about what the report has covered and what is the essence of the
study. What I want to conclude in my study is that;

The Indian banking sector is the important service sector that helps the people of the India to
achieve the socio-economic objective. The Indian banking sector has helped the business and
service sector to develop by providing them credit facilities and other finance related facilities.
The Indian banking sector is developing with good appreciate as compared to the global
benchmark banks.

43
RBI the regulator of all banks in India is trying its level best to tackle the problem of NPA by
introducing various norms and regulations. But even after that NPA ration has been in
increasing trend. The banks by their own has to find some measures to overcome it. If they take
it lightly it would destroy the whole banking system. The reduction of NPA will help the bank
to improve its profits, and for the smooth functioning of the bank. Which would eventually
lead to the development of banking sector and financial services in the country.

India is a country which is still in development phase. So, for a country to be said to be
developed it would prefer zero level NPA. As the name says NPA will never bring profit or
income to the bank. Banks should find a way to escape from the ever increasing NPA from
their balance sheet. As it will affect their profitability and liquidity position. Compromise is
also one of the measures to reduce the NPAs. It has its limitations and may have adverse effects
and hence it has to be used with proper understanding of the genuine problems and concerns
of each other. While concluding this study I can say that:

 NPAs represent high level of risk & low level of credit appraisal.
 There are so many preventive measures available those can be adopted to stop an Asset
or account becoming an NPA.
 There are some certain guidelines made by RBI for NPAs which are adopted by banks
and RBI is having strict norms for NPA management.
 If proper measures are not taken for the prevention of NPA, they can destroy whole
banking system.
 Canara Bank is better in all terms than all other Public sector banks in managing the
NPA in my opinion.

44
Bibliography:

 Books:
 A.K. Gupta’s (IMPACT) Banker’s Training Institute.
 C.R. Kothari, Research Methodology, Vikas Publications, New Delhi 2007.
 IIBF Vision (A monthly newsletter of Indian Institute of Banking& Finance.
 I M Pandey, Financial Management, Vikas Publications, New Delhi 2007.
 Annual Reports of Canara bank for the year 2017-18.
 Annual Reports of Canara bank for the year 2016-17 and 2015-16.

 Websites:

www.google.co.in
www.wiki.answers.com
www.homeloanshub.com
www.financialexpress.com
https://canarabank.com/english/about-us/profile/
www.rbi.org.in
www.iloveindia.com
www.allinterviews.com
http://www.equitymaster.com/stockquotes/mystocks.asp
www.investorsworld.com
http://en:wikipedia.org
www.bankerstraininginstitute.com
www.bankingindiaupdate.com
www.opppaper.com www.allfreepapers.com www.worldbank.co.in
www.basel.com
www.indiainfoline.com
http//:www.money.radiff.com
www.thehindhubusinessline.com
http://www.samarthbharat.com/banknpa/htm
https://www.ibef.org/industry/banking-india.aspx
https://canarabank.com/media/7479/annualreportwithaddendumnotice.pdf
https://canarabank.com/english/about-us/awards-and-achievements/

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