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I ANKIT KUMAR YADAV declare that the project work entitled as

authentic record of my own carried out at “FACULTY OF
BEEGHA, VARANASI” as required for the project semester for the
award of degree of MBA (Masters of Business Administration), under
the guidance of “Mr. Ganesh Prasad Jaiswal, FACULTY OF


MBA III Semester

ROLL NO-1815470001

It is indeed a moment of immense gratefulness for me to express my

deepest gratitude to the faculty of SMS for providing me with any
opportunity to carry out this survey and help me create survey report

I am immensely grateful to
…………………………………………………………….. for
providing me opportunity to prove my skills and shoulder the
responsibilities through this survey report. my project guide Mr.
valuable guidance and suggestions while pursuing the project and for
taking pains to give his valuable inputs to structure the report. Without
his help and valuable inputs and guidelines, the completion of this
project would not have been possible.

I am highly indebted and thankful to each and every person who

devoted valuable time out of their busy schedule to fill-up the
questionnaire in the time. I am also thankful to our faculty and
classmates for their suggestion and support to undertake this work and
also during the course of study.


MBA III Semester

ROLL NO-1815470001

Allahabad Bank offers loans of various types to meet the requirements of the individuals.
It offers loans to self employed persons, business men, salaried employees and
professionals. The diverse range of Allahabad Bank loans that are offered to the
individuals includes:
 Housing Loan
 Education Loan
 Car Loan
 Saral Loan
 Personal Loans for Pensioners
 Personal Loans for Doctors
 Loan against NSC/KVP
 Allbank Rent Loan
 Allbank Property Scheme
 Allbank Furnishing Loan
 Gold Loan Scheme
 All Bank Mobike Scheme
 AllBank Abhushan Scheme
 Allbank Trade Scheme
 AllBank Gyan Dipika Scheme
 AllBank Reverse Mortgage Scheme

The car loans by the Allahabad Bank are given for the purchase of the new vehicle, which
are to be for personal use only. It also offers loans for the purchase of pre- owned vehicle,
which is not more than 3 years old.

To get the benefit of the loan, the person should be a salaried person, with the gross
income of Rs. 10,000 p.m. Agriculturalists and professional self employed and business
men are also eligible to get loans from Allahabad Bank. It must be kept in mind that the
car loan should be fully repaid before the individual turns 70 years of age.

The car loan amount that is offered to the individual does not exceed 2 times of the Net
Annual Income or Net Annual Salary.

Allahabad Bank Home Loans

Allahabad Bank offer home loans for the construction of the residential house on the
already owned land. It also offers loans for other purposes like purchase of plot by
salaried people, purchase of flat or house, renovation of residential house and other

Home loans are offered to permanent salaried people, businessmen, self employed
persons and individuals with regular income who can liquidate loans. Allahabad Bank
offers term loans to the loan seekers.

For the salaried persons the loan amount is restricted to 60 times of the monthly gross
salary. For other individuals, the loan amount is limited to 4 times of the gross income.

Allahabad Bank Education Loans

The educational loans are offered by the Allahabad Bank to the Indian students only. The
students should seek admission to educational courses through entrance test selection
process. The bank offers loans for various courses like graduation and post graduation
courses, professional courses, computer certificate courses, courses conducted by IIM,
IIT etc. Allahabad Bank offers loans for studies abroad as well.

For the students studying in India, the maximum loan amount offered is Rs.10 lacs and
for studying abroad the maximum loan amount increases to Rs. 20 lacs.
Allahabad Bank Personal Loans

Personal loans are offered to all the pensioners drawing pensions from Allahabad Bank.
The personal loans are given to the pensioners who have not exceeded 70 years of age.
This kind of loan can be availed without assigning any definite purpose. The maximum
loan amount of Rs.75,000 and minimum of Rs.15,000 are offered to the individuals.

Personal loans are also provided to the doctors and medical practitioners by the
Allahabad Bank. The loans are offered for the expenses of professional requirement.
Annual income or Rs. 5 lacs, whichever is less are offered as the loan amount.

Allahabad Bank Loans are offered to the Non Resident Indians as well. NRIs are
offered housing loans and education loans by this bank. How you use the money is
entirely up to you. Personal loans are unsecured loans with a fixed payment schedule and
payment amount. Use them to consolidate debt, pay off a credit card, or put money in the
bank. One can apply quickly for personal loan today and quickly access cash and also pay
of credit cards make upgrades to your home. And confidential and secure no-obligation
quotes. One can get from Allahabad bank which provides it at very low rate of
interest.For students bank can understand that paying for college can be difficult. Find
low-interest public and private loans specifically designed for students. Private loans help
students fill the gap when federal loans, scholarships, and grants don't cover all of your
college expenses. That's why we made getting the additional funds you need an easy
process. Federal aid doesn't always cover all of the costs and Many student loans don't
require repayment until graduation and also interest rates on student loans is generally
lower than other loan types All for this is the bank from which student can get the loan.
One person always have the dream of his own house and Allahabad bank get the dream to
fulfill through home loans.Whether you're looking to purchase a home, refinance an
existing mortgage, or take out a low interest second mortgage to consolidate loans or get
some cash, lenders are standing by to compete for your business. Credit.com has
partnered with Home-Account.com to help guide you through the process. Bank provide
the home loan based on your income, learn how much house you can afford , Find out if
refinancing makes sense (dollars and cents) for you and also Discover if points on a
mortgage is a good investment , also avoid common mistakes on the path to home


1. . INTRODUCTION TO THE TOPIC………………………..........


3. METHODOLOGY…………………………………………….
4. LIMITATIONS………………………………………………....







8.MAJOR FINDINGS…………………………………………....
11. IMPACT OF NPA’s……………………………………………….


12. MANAGEMENT OF NPA’s……………………………………….










A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of
financial assets over time, between the lender and the borrower.

In a loan, the borrower initially receives or borrows an amount of money, called the
principal, from the lender, and is obligated to pay back or repay an equal amount of
money to the lender at a later time. Typically, the money is paid back in regular
installments, or partial repayments; in an annuity, each installment is the same amount.
The loan is generally provided at a cost, referred to as interest on the debt, which
provides an incentive for the lender to engage in the loan. In a legal loan, each of these
obligations and restrictions is enforced by contract, which can also place the borrower
under additional restrictions known as loan covenants. Although this article focuses on
monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial institutions. For
other institutions, issuing of debt contracts such as bonds is a typical source of funding.

Types of loans


A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property)
as collateral for the loan.

A mortgage loan is a very common type of debt instrument, used by many individuals to
purchase housing. In this arrangement, the money is used to purchase the property. The
financial institution, however, is given security — a lien on the title to the house — until
the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have
the legal right to repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the
car, in much the same way as a mortgage is secured by housing. The duration of the loan
period is considerably shorter — often corresponding to the useful life of the car. There
are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives
the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an
intermediary between the bank or financial institution and the consumer.

A type of loan especially used in limited partnership agreements is the recourse note.

A stock hedge loan is a special type of securities lending whereby the stock of a borrower
is hedged by the lender against loss, using options or other hedging strategies to reduce
lender risk.[citation needed]

A pre-settlement loan is a non-recourse debt, this is when a monetary loan is given based
on the merit and awardable amount in a lawsuit case. Only certain types of lawsuit cases
are eligible for a pre-settlement loan.[citation needed] This is considered a secured non-recourse
debt due to the fact that if the case reaches a verdict in favor of the defendant the loan is

Unsecured loans are monetary loans that are not secured against the borrower's assets.
These may be available from financial institutions under many different guises or
marketing packages:

 credit card debt

 personal loans
 bank overdrafts
 credit facilities or lines of credit
 corporate bonds

The interest rates applicable to these different forms may vary depending on the lender
and the borrower. These may or may not be regulated by law. In the United Kingdom,
when applied to individuals, these may come under the Consumer Credit Act 1974.


Demand loans are short term loans that are atypical in that they do not have fixed dates
for repayment and carry a floating interest rate which varies according to the prime rate.
They can be "called" for repayment by the lending institution at any time. Demand loans
may be unsecured or secured.[1]

Loan payment

The most typical loan payment type is the fully amortizing payment in which each
monthly rate has the same value overtime.[2]

The fixed monthly payment P for a loan of L for n months and a monthly interest rate c
is: [3]
Abuses in lending

Predatory lending is one form of abuse in the granting of loans. It usually involves
granting a loan in order to put the borrower in a position that one can gain advantage over
him or her. Where the moneylender is not authorized, they could be considered a loan

Usury is a different form of abuse, where the lender charges excessive interest. In
different time periods and cultures the acceptable interest rate has varied, from no interest
at all to unlimited interest rates. Credit card companies in some countries have been
accused by consumer organisations of lending at usurious interest rates and making
money out of frivolous "extra charges".[4]

Abuses can also take place in the form of the customer abusing the lender by not repaying
the loan or with an intent to defraud the lender.


Most of the basic rules governing how loans are handled for tax purposes in the United
States are uncodified by both Congress (the Internal Revenue Code) and the Treasury
Department (Treasury Regulations — another set of rules that interpret the Internal
Revenue Code).[5] Yet such rules are universally accepted.[6]

1. A loan is not gross income to the borrower. [7] Since the borrower has the obligation
to repay the loan, the borrower has no accession to wealth.[8]

2. The lender may not deduct the amount of the loan. [9] The rationale here is that one
asset (the cash) has been converted into a different asset (a promise of repayment). [10]
Deductions are not typically available when an outlay serves to create a new or different

3. The amount paid to satisfy the loan obligation is not deductible by the borrower.
4. Repayment of the loan is not gross income to the lender. [13] In effect, the promise of
repayment is converted back to cash, with no accession to wealth by the lender.[14]

5. Interest paid to the lender is included in the lender’s gross income. [15] Interest paid
represents compensation for the use of the lender’s money or property and thus represents
profit or an accession to wealth to the lender.[16] Interest income can be attributed to
lenders even if the lender doesn’t charge a minimum amount of interest.[17]

6. Interest paid to the lender may be deductible by the borrower. [18] In general,
interest paid in connection with the borrower’s business activity is deductible, while
interest paid on personal loans are not deductible. [19] The major exception here is interest
paid on a home mortgage.[20]

Income from discharge of indebtedness

Although a loan does not start out as income to the borrower, it becomes income to the
borrower if the borrower is discharged of indebtedness. [21] Thus, if a debt is discharged,
then the borrower essentially has received income equal to the amount of the
indebtedness. The Internal Revenue Code lists “Income from Discharge of
Indebtedness” in Section 62(a)(12) as a source of gross income.

Example: X owes Y $50,000. If Y discharges the indebtedness, then X no longer owes Y

$50,000. For purposes of calculating income, this should be treated the same way as if Y
gave X $50,000.

For a more detailed description of the “discharge of indebtedness”, look at Section 108
(Cancellation of Debt (COD) Income) of the Internal Revenue Code.[22]

Research Design
This dissertation is consisted by the following structure of five chapters
which can be seen in below:
Figure 1.1: Research Design

Chapter 1: Introduction

Chapter 2: company profile

Chapter 3: Research Methodology

Chapter 4: Data Analysis – Results

Chapter 5: Conclusions
Loan offered by Allahabad bank
1.1Emergency Loans

We need a loan every time we face a situation where we can not meet the ends meet and
we need some kind of financial injection that’ll cure the problem. Specially in
emergencies, getting a loan can really help and once the emergency is over, repaying that
loan never feels like a burden. Emergencies can vary, one might have to travel to attend
an important an event like a wedding or a tragic family funeral or might require some
quick cash in order to pay for expensive medicines if he/she falls sick etc.

Ever now and then we face a situation where things are not under our control and if you
are low on savings or have low income, a loan provided in emergency does feel like a
blessing. In such cases, people mostly prefer short term loans that they mean to pay back
on the next pay day or a couple of months max. The best places to get a loan are the
financial institutions but you can also apply for payday advance loans that are available
online. Google the terms and you’ll see how many choices can be found online.Apply
now for an EmergencLoan

1.2 Home Loans

Banks, as I am sure that you are already aware of, can also provide loans. People usually
apply in banks for large sum of loans for instance home loans. First time home buyers
mostly plan to spend around a hundred and fifty thousand (USD $150,000) to three
hundred thousand dollars ($300,000). For the first time home buyers, it’s absolutely
important that they find a bank which is offering home loans on lower interest rates and
with a good 25-30 years of repayment schedule.

1.3 Car loans / Auto Loans

At present, one of the most widely used and important loan for a common man is a car
loan. These types of loans are designed for people who want to purchase a car and are
normally known as car loans or auto loans. You can apply for a car loan regardless what
kind of car you are looking for. It can be a small more economical compact car or it can
also be a SUV. The amount of loan that you want to borrow and the interest rates will
heavily depend on your credit, your monthly income and your age. If you have a poor
employment history then that will also have a negative effect on the total amount and the
interest rate associated with the loan.

1.4 Student Loans

You can apply for a student loan if you are going to a college or a trade school. You can
also apply for student loan if you want to get a new diploma in a specialized field. You
can get in touch with government or private sector lenders to borrow these loans. What
you have to make sure is that you strike a deal where you don’t have to pay high interest
rates. If you are going to a trade school then there is a good chance that you won’t have to
borrow as much money as you would if you are going to join a college and graduate in 4
years. With trade schools, your loan repayment schedule will begin after you have

1.5 Personal Loans

People need loans for personal needs, needs that do not really have anything to do with
the basic necessities of life like medical, car loans or loans for home purchasing.

For instance personal needs like traveling during holidays, cosmetic surgeries, going out
for a lovely honeymoon or getting a loan to have a wedding of your dream. This type of
loan is known as Personal loan. Usually personal loans carry a higher interest rate
because these loans are tailor made for personal needs of the borrower that vary from
case to case. Before you apply for personal loans with a financial institute, you should do
a little research on the internet. There is a good chance that you will find a lender that is
offering these loans on lower interest rates.

1.6 Credit Cards

Many people do not realize that by using credit cards, they are already using loans. In
fact, many Americans believe that they just have to have a credit card because for them
it’s a thing that everybody has which can also lead you to believe that their interest rates
are the lowest possible interest rates and life can become very easy thanks to credit cards.
The fact is that credit cards are the biggest loan industry in the world, left alone America.
It makes your life easier by giving facilities like not paying using cash or having to buy
something off the shelf when you don’t have enough to pay for it at once but the interest
rates are pretty high compared to any other loan. There are good chances that you will
miss paying a monthly bill because lets face it, sometimes work and domestic issues can
lead to missing out the deadline of the bill that you need to clear before you cross the due
date and that will leave a big bad stain on your credit report.

Housing loans

The housing finance market is on a high growth trajectory. Over the last seven years, it
has grown exponentially from Rs4630 crore in 1996-97 to an estimated Rs42, 000 crore
in 2003-04. This makes it one of fastest growing industries in the country, with growth
rates in excess of 37 percent per annum. Going by the shortage of housing in the country,
it is poised to grow at a similar pace for the next three years at least.

The penetration of housing in India is among the lowest in the world,

with a housing –to-GDP ratio of 2 percent. By contrast, in most Asian countries the ratio
is around 15 percent. Government estimates of housing shortage in the country are
1.9crore units. Also, on the financing side, household debt-to-GDP ratio in India is
around 4 percent, much lower than the 25-30 percent in most Asian countries.

Retail buyers have mushroomed over the last couple of years, thanks to
growing income levels, low penetration of housing, fall in retail property prices and steep
fall in interest rates on housing loans.

In the last seven years, interest rates have come down by over 50 percent
(from 14 percent to 7 percent), resulting in huge savings. Now a 20-years Rs 10 lakh loan
will save the customer over Rs 11.24 lakh in interest costs.
Falling interest rates have further boosted an individual’s preference to
avail credit. Now almost 60-65 percent of individuals finance their home through a
mortgage as against 30-35 percent five years ago.A reason for this growth is that
consumers ,particularly the younger generation ,have become less debt averse. The
average age of individuals opting for a housing loan has fallen to around 32 years as
against an age of early 40’s around seven years ago.

Another reason that has contributed to the growth in housing finance is the
sharp rise in disposable income levels. The cost of a house today is merely five times the
average annual income. About seven years ago, it used to be more than 20 years income.
Back then it was also difficult to get a loan for more than 7-8 years, now loans are offered
for a period of 15-20 years.

Besides, property prices have stayed in the last 3-4 years. Having peaked
in the mid –90’s, prices tumbled by more than 40 percent, making homes more affordable
.the Indian buyer has also become more quality conscious .now they want facilities like
schools, hospitals, shopping malls, recreation centers and health clubs close to their place
of residence. Developers have tuned into their demands and are offering quality products,
thus giving an all –round push to housing and housing finance.

The housing finance portfolio is considered safe as loan defaults have

traditionally been below 1 percent. this is why many public sector banks and foreign
banks have entered the industry.

In fact, in the last three years, banks have tripled their exposure to retail
loans –the bulk of which is towards housing-from about 5 percent of the total credit three
years ago to 14-17 percent.

Adoption of prudential norms with reference to capital adequacy asset

classification. Income recognition and provisioning has improved the internal health, i.e.
the soundness and solvency of each Bank. Banks have made major headway in housing
finances where the competition is the severest. The main reason for this is that this
product offers maximum security, fixed yield, long repayment period and opportunities
into the banks cross sell other products.

Due to income tax exemption for interest &repayment and eligibility for
coverage under priority sector. Advances, the share of housing finances in retail banking
operations is the largest.

Housing Finance is the fastest growing sub- segment in retail Finance.

Incidence of NPA is also the lowest in this sub segment being only around 0.50 to 0.75
percent of total finance. The total market size of HF is present Rs.25000 and is expect to
grow at an annual growth of 30%.
Housing is a priority area even for the government, which is providing
various incentives for boosting growth and development in this sector, the factors
responsible for growth in this sub segment have been:

 Repeat of urban land ceiling Act

 Fall in the prices of real estate to more realistic levels and increase in income
levels resulting in improved ratio of cost of housing to annual income 14.66 to
5.22 in 2001-02
 Deduction of interest paid on housing loans from total income for calculation of
Income tax and rebate under section 88 for repayment of principal up to Rs.
20000 p.a.

However, reforms are necessary in stamp act and tenancy has to give further
boost to this sector. Although of the implementation of the Kelkar committee
recommendation might result in a set back to the development of this sector.
Home Financing had been a safe proposition as instances of NPA have
minimal. But the story has changed of late and home loan players are being forced to do a
The first hint of a revision in strategy was done by an unassuming Union
Bank of India. The bank hiked its interest rates for fresh home by 50bps. (Ref. The
Financial Express March 15,2019). The latest buzzword in the real estate market is for
home finance companies to purchase real estate and then lease it out to multinational
companies. ALLAHABAD BANK Home Finance has invested Rs.200 crore in acquiring
space in hi- tech cities across in India, which are then rented out to IT companies.
Home finance sector leader Housing Development Finance Corporation
(HDFC) proposes to set up a separate entity for acquiring and leasing properties to
corporate clients.

The housing finance major proposes to set up a separate entity with 49%
equity holding which will acquire properties and lease them to MNCs. “there is a good
potential for such business in the country as currently there are no institution property
finance companies willing to own property and lease them out to corporate."


Against the milieu of rapid urbanization and a changing socio-economic

scenario, the demand for housing has grown explosively. The importance of the housing
sector in the economy can be illustrated by a few key statistics. According to the National
Building Organization (NBO), the total demand for housing is estimated at 2 million
units per year and the total housing shortfall is estimated to be 19.4 million units, of
which 12.76 million units is from rural areas and 6.64 million units from urban areas. The
housing industry is the second largest employment generator. It is estimated that the
budgeted 2 million units would lead to the creation of an additional 10 million man-years
of direct employment and another 15 million man-years of indirect employment.

Having identified housing as a priority area in the Ninth Five Year

Plan (2015-2020), the National Housing Policy has envisaged an investment target of Rs.
1,500 billion for this sector. In order to achieve this investment target, the Government
needs to make low cost funds easily available and enforce legal and regulatory reforms.

Thus the research indicates that customer are seeking more than just a loan,
they seek convenience in the entire process of acquiring a home loan as well as finance
for it. The aim is to make the process seamless for the customer by offering access to the
complete real estate market in his city at one place, helping him to select the property as
per the requirement, guiding him through the documentation and also providing the loan.
Leading players are looking at acquiring the customer not only through fresh application,
but also through refinance.

Importance of customer satisfaction

Customer satisfaction has been regarded as an important theoretical and practical issue
for many academics and most marketers (e.g. Dabholkar et al., 1996; Fournier and Mick,
2016). Unfortunately, today many managers still think that customer satisfaction is not
something necessary and important element of success (Goodman and Ward, 2017).
However, customer satisfaction is very crucial for the success of the companies in this
competitive world of business and more and more companies recognize its importance as
a serious organizational goal (Jamal and Naser, 2018; Bitner and Hubbert, 2014).
Similarly, Bhote (2016) refer that “clearly defining and understanding customer
satisfaction can help any company identify opportunities for product and service
innovation and serve as the basis for performance appraisal and reward systems”.
Additionally, Lynch (1995) argues that organizations in order to increase their customer
satisfaction must take into consideration five key elements: self-esteem, security,
information for customers and “atmospherics”.

1). Longer tenure of loans, ranging from minimum 5 years to 20/30 years. Higher outlays
of funds longer duration of housing loans make it different from that of other retail loans.
Therefore the risk horizon also differs for the hosing loans.

2). Rather low cost of operations in terms of deployment of manpower for processing and
follow up etc. as compared to other loans of the same size within the retail or any other

3). Safe advances, as these are invariably backed by tangible security in the form of
mortgage of house/flat.

4). Tendency to default on housing loan is low as house is considered as big ticket deal of
an individual’s life.

5). At present, the housing loan portfolio of banks is highly sensitive to sops announced
by the government on exemption on personal tax.

 To get a fair view of the functioning of the vehicle finance

department in a banking organization.
 To know about the inflow and the outflow of the funds in the loans
 To know the reason behind the fluctuation in the interest rates charged
by banks.
 To know about the various competitors which really give a tough
competition to the I.C.I.C.I bank.
 To know about the role played by reserve bank of India in deciding
the interest rate charged on loans by any bank.
 To know about the basis for calculating the loan interest rate.
 To do the comparative study on the basis of the interest rates charged
by various banks.
 To know about the various deciding factors for any individual before
taking car loan from any bank.
 How is Allahabad Bank better than other banks in terms of extending
loans and serving their customers?
 What is the customer base of ALLAHABAD BANK?
 What are the formalities that an individual is supposed to comply
with before acquiring for educational loan from Allahabad Bank?
 How can ALLAHABAD BANK bank take an edge over their
 How far are the customers satisfied with the services extended by
Allahabad Bank and what changes do they expect that can be
brought about to have a smooth functioning of the loans department?
 How far are the employees satisfied with the functioning of the loans
department of their bank and how can the changes be brought about to
make the functioning more effective and efficient?
After we have discussed the relevant past research in regard to our research problem ,now

in this Chapter we are going to proceed and explain the research methodology that we

have used for our project. The main discussed issues will be based to the six proposed

stages of the research process by Zikmund (2014)

Problem discovery and definition

According to Malhotra and Birks (2013, p.31), problem definition can be defined “the

general problem and the identification of the specific components of the research

problem”. Parasuraman (2017) refer that is critical to define the problem in order to

communicate it correctly to both decision - makers and researchers, however at the same

time we should fully understand the scope and the nature of the problem avoiding any


Research design

“The Research Design is the ‘blueprint’ that enables the investigator to come up with

solutions to these problems and guides him or her in the various stages of the research”

(Nachmias and Nachmias, 1996; Churchill, 1991). Research design involves different

research techniques that we are going to use to get the information needed relevant to the

problem, the measurement and scaling techniques for understanding the collected

information, the questionnaire design etc (Lawley and Gardiner, 1999; Malhotra and

Birks, 2003). Also Tull and Hawkins (1987) argue that one of important research design’s
goals is to maximize the accuracy of the gathered information to create a proper budget


Research design can be broadly classified in some basic types. One useful classification

is the one that is related with the main target of the research into three main categories

which are: (i) Exploratory research, (ii) Descriptive research and (iii) Causal research

(e.g. Churchill, 1979; Green and Tull, 1978).

Exploratory research

The primary goals of research design are to help to the understanding of marketing

phenomena, determine the problem in a better way and provide additional insights and

ideas (Malhotra and Birks, 2003; McDaniel and Gates, 1999).

Descriptive research

Descriptive research is a very important research design method and may be undertaken

to describe something e.g. consumer’s beliefs and attitudes, other market characteristics

etc (Parasuraman, 1991; Jobber, 2004). According to Churchill (1979, p.53-54)

descriptive research can be used to describe the characteristics of certain groups, to

estimate the proportion of people in a specified population who behave in a certain way

and to make specific predictions.

Causal research

Causal research “is used to obtain evidence of cause-and-effect (causal) relationships”

(Malhotra and Birks, 2003, p.69). The most common types of causal studies are the

experiments, since they are the best to determine the cause and the effect (Churchill,

1979; Zikmund, 2000).

The research approach and strategies

This is the first stage of the research design; it involves the way that we are going to

conduct the research. The choice of the research is a difficult decision and it depends on

the nature and scope of the problem, the funding of the research and to the availability of

the time (Birn, 2000).

Secondary data

Secondary data are the data gathered or authored by another person who has a different

research purpose from that of the initial researcher (Bailey, 1982). Secondary data include

internal published data such as annual company reports, reports to stockholders and

external published data such as government reports and statistics (McDaniel & Gates,

1999; Peneault & McCarthy, 1997). In addition, another form of collecting secondary

data is the search engines (e.g. Google) where the data can be quickly and simply

collected (Jobber, 2004).

Primary data

Primary data are “the data originated by the researcher specifically address the research

problem” (Malhotra and Birks, 2003, p.85). Parasuraman (1991) argues that primary data

are necessary where the secondary data are unavailable or inappropriate and can be

collected by several methods. The purpose of primary data collection is the answering of

questions of the defined problem of the study (Dodge et al., 1982).

Below we are going to refer to the three main types of primary research.


Surveys are regarded to be the most popular method of collecting primary data and are

used to describe marketing phenomena at a particular time (Dodge et al., 1982). “Survey
techniques are the techniques based upon the use of structured questionnaires given to a

sample of a population” (Malhotra and Birks, 2003, p.224).

The main advantages of surveys are that they are more objective and reliable; they have a

more representative sample of the target population; the gathered data can be manipulated

with the use of statistical techniques; the collection of the information is not time

consuming, costly and difficult (Dodge et al., 1982; Emory, 1980; Zikmund, 2000).


Observation method is defined as “the systematic process of recording the behavioural

patterns of people, objects and occurrences without questioning or communicating with

them” (Zikmund, 2000, p.217). McDaniel and Gates (1999) argue that there are three

conditions for using observation research. These are: a) the observation research duration

should be of relatively short duration; b) the needed information must be observable or

inferable; c) the behaviour of the interest should be relatively frequent, repetitive and



Experiment is “a research investigation in which conditions are controlled so that one or

more variables can be manipulated in order to test a hypothesis”. The main purpose of

the experimental research is the control of the research evaluation in order to evaluate

causal relationships between several variables (Zikmund, 2000, p.238).

The research method

After we have chosen the survey method as the research approach that we are going to

use we should talk now for the four options when choosing that method. As we have said
before, the survey method is based on the use of a structured questionnaire given to

respondents to obtain useful information (Malhotra and Birks, 2003).

Face-to-face surveys

Personal or face-to-face interviewing “is a two-way purposeful conversation initiated by

an interviewer to obtain information that is relevant to some research purpose” (Emory,

1980, p.293). The interviewer asks from the respondent to answer issues in the form of

attitudes, opinions, feelings, motives, intentions and so on; thus the personal interviewing

is regarded as an excellent data collection method because of the great personal

interaction between the interviewer and the respondent (Dodge et al., 1982).

Telephone surveys

Telephone survey can be characterized as a semi-personal method of collecting

information which is very popular because of the widespread acceptance of the telephone

from all the people as a basic communication tool (Nachmias and Nachmias, 1996).

Mail and internet surveys

A mail survey is self-administered questionnaire sent to respondents through the mail. On

the other hand, internet survey appears when a computer user intentionally navigates and

answers questions in a web site (Zikmund, 2000, p.201+210).

Questionnaire construction

“A questionnaire is simply a set of questions designed to generate the data necessary for

accomplishing a research project’s objectives” (Parasuraman, 1991, p.363). Malhotra and

Birks (2003) present the questionnaire design process in ten steps, as shown in Figure

Figure 3.2: Questionnaire design process

Source: Malhotra N.K. and Birks D.F. (2016). “Marketing Research: An Applied

Approach”, 2nd European Edition, England: FT Prentice Hall

There are three conditions that are important researchers to take into consideration in

order to get a true response to questions. These are: i) the questions must be clear for

respondents; ii) respondents must be able to give the information; iii) respondents must

be reluctant to answer (Jobber, 2014).

Pilot testing

In order to identify and eliminate any potential problems in the functionality of the

questionnaire and ensure that there aren’t any mistakes in it,


Another key component in the research process is the selection of the sample population

that we are going to study (Emory, 1980).

Data collection

As we have said in previous sessions we have used face-to-face interviews to collect any

data and information for our study.


 Educational loan is not offered by Allahabad Bank in Bhopal.

 Interest rates charged on CAR loan is very high.
 Lot many formalities like notary, guarantors etc are involved.
 The documentation part is very lengthy and time consuming.
 They don’t have any customer redressal system.
 Whenever any individual acquires for any loan from ALLAHABAD BANK.
bank, he does not gets a proper information and guidance from the staff working
 They give More priority to their personal work and do not readily listen to the
customer until they are done with their work, in short the customer does not holds
a top place in their priority list.
 The staff does not gives proper directions and guidelines to guide the customer as
in how the customer should move further with the further proceedings.
 Inspite of the centralized air conditioning the atmosphere inside is very sticky.
 A lot of hidden charges are there at various transactional levels.
 At time it is experienced that the staff working there is relatively inexperienced as
is comprises of the youth which does not live upto the expectations of the
 The recovery system adopted by Allahabad Bank is considered to be unethical and
also illegal at times.






Allahabad Bank

Allahabad Bank,(Hindi: इललाहलाबलाद बबक) which began operations in 2014, now has its
head-quarters in Kolkata. Currently the bank has 2260 branches [1] across the country. The
Chairman and Managing Director of the bank is Shri J P Dua. The bank has a branch in
Hong Kong and a representative office in Shenzen. The bank's internet banking is
maintained by EBankWorks Team of TCS.

 On April 24, 1865, a group of Europeans founded the bank at Allahabad, making
it the oldest Joint Stock bank in India.
 In 1920, P&O Bank bought Allahabad Bank.
 In 1923 the bank moved its headquarters to Calcutta.
 In 1927, Chartered Bank of India, Australia and China acquired and amalgamated
P&O Bank. However, Chartered Bank continued to operate Allahabad Bank as a
separate entity.
 On July 19, 1969, the Government of India nationalized Allahabad Bank, together
with 13 other banks.
 In October, 1989 Allahabad Bank acquired United Industrial Bank, a Calcutta-
based bank that had been established in 1940.
 In October, 2012, the bank came out with Initial Public Offer (IPO), which
reduced the Government's shareholding to 71%.
 A second public offering in April, 2015, further reduced the Government
shareholding to 55%.
 In June, 2016, the bank opened a representative office at Shenzen, China, its first
office outside India.
 In February, 2017, Allahabad Bank opened its first overseas branch, in Hong




Q1. Which loan have you taken?

S.NO. options No.of respondent

(A) Educational loan 70
(B) Home loan 20
(C) Personal loan 10


70% of the respondent loans have taken education loan.

Q2. Which types of loan do you prefer most?

S.no. Options No.of respondent

(A) Educational loan 70
(B) Home loan 20
(C) Personal loan 10


70% of the respondent loans have preferred education loan.

Q3. How many types of loan are provided by Allahabad bank?

S.no. Options No.of respondent

(A) Educational loan 0
(B) Home loan 0
(C) Personal loan 0
(D) All 30


70% of the respondent loans have preferred education loan.

Q4. For how many years loan is provided by the bank?

S.no. Options No.of respondent
(A) 1years 0
(B) 2years 0
(C) 3years 6
(D) More than 3years 24


80% of the respondent have taken loans for more than 3years which is provided by the

Q5. How much time is given by bank to payback loan?

s.no. Options No.of respondent
(A) 0 to 2 years 2
(B) 2 to 4 years 13
(C) More than 4 years 15


80% of the respondent says that more than 4 years of time is given by bank to payback
Q6. Which types of installment is best?

s.no. Options No.of respondent

(A) Monthly 15
(B) Quarterly 7
(C) Half year 7
(D) yearly 1


50% of the respondent says that monthly installment types of installment are best.

Q7. How is EMI of loan?

s.no. Options No.of respondent
(A) Affordable 30
(B) affordable 0


100% of the respondent says that EMI of loan is affordable.

Q8. Which types of securities do they ask usually?

s.no. Options No.of respondent
(A) In the form of Jewelry 1
(B) Fixture 10
(C) Fixed deposit 19


63% of the respondent says that types of securities do they ask usually is fixed deposit.
Q9. Are you Satisfy with the rate of interest charged by Allahabad bank?

s.no. Options No.of respondent

(A) Satisfy 29
(B) Dissatisfy 1


97% of the respondent says that they are Satisfy with the rate of interest
charged by Allahabad bank
Q10. Do your loans provide benefit of Zero percent interest?

S.no. Options No.of respondent

(A) Agree 29
(B) Disagree 1


97% of the respondent says that loans provide benefit of Zero percent interest.
Q11. Is the facility of providing loan is better than other bank?

S.no. Options No.of respondent

(A) Yes 30
(B) No 0


100% of the respondent says that the facility of providing loan is better than other bank
Q12. Do you get timely loan for your benefit?

No .of
s.no. options respondent
(A) Agree 11
(B) Disagree 11
(C) can’t say 8


37% of the respondent says that they are agreeing get timely loan for your benefit.
Q13. Are you Satisfy with the rate of interest changed?

S.no. Options No.of respondent

(A) Ok 10
(B) Less than competitor 1
(C) More than competitor 11
(D) No idea 0


50% of the respondent says that they more than competitor satisfy with the rate of interest
Q14. Do you get any relaxation in getting the loan?

s.no. options no. of respondent

(A) Agree 22
(B) Disagree 2
(C) can’t say 6


73% of the respondent says that they are get any relaxation in getting the loan
Q15. Are you Satisfy with the down payment system of the bank?

s.no. options no.of respondent

(A) Satisfy 30
(B) Dissatisfy 0


73% of the respondent says that they are Satisfy with the down payment system of the
Q16. According to your view it is easy to pay down payment with out any

s.no. options no.of respondent

(A) Agree 28
(B) Disagree 2


93% of the respondent says that According to their view it is easy to pay down payment
without any Complication
Q17. Are you Satisfy with the loan demonstration by the bank?

S.no. Options No.of respondent

(A) Satisfy 30
(B) Dissatisfy 0


100% of the respondent says that they are Satisfy with the loan demonstration by the
Q18. Do you agree with the repayment facility of loan is simple in Allahabad bank?

S.no. Options No.of respondent

(A) Agree 30
(B) Disagree 0


100% of the respondent says that they are agree with the repayment facility of loan is
simple in Allahabad bank
Q19. Do you find this bank in superior over other banks in providing loan facility?

S.no. Options No.of respondent

(A) Agree 29
(B) Disagree 1


100% of the respondent says that they are found this bank in superior over other banks in
providing loan facility.
Q20. Do you fully agree with the terms & condition of Allahabad bank?

S.no. Options No.of respondent

(A) Strongly agree 5
(B) Agree 23
(C) Disagree 0
(D) Can’t say 2


77% of the respondent says that they are agreeing with the terms & condition of
Allahabad bank.


The following findings have been interprets from the above graph
73% of the respondent loans have taken education loan.

70% of the respondent loans have preferred education loan.

70% of the respondent loans have preferred education loan.

80% of the respondent have taken loans for more than 3years which is provided

by the bank

80% of the respondent says that more than 4 years of time is given by bank to

payback loan

50% of the respondent says that monthly installment types of installment are best.

100% of the respondent says that EMI of loan is affordable.

63% of the respondent says that types of securities do they ask usually is fixed


97% of the respondent says that they are Satisfy with the rate of interest charged

by Allahabad bank

97% of the respondent says that loans provide benefit of Zero percent interest.

100% of the respondent says that the facility of providing loan is better than other


37% of the respondent says that they are agreeing get timely loan for your benefit.

50% of the respondent says that they more than competitor satisfy with the rate of

interest changed.
73% of the respondent says that they are get any relaxation in getting the loan

73% of the respondent says that they are Satisfy with the down payment system of

the bank.

93% of the respondent says that According to their view it is easy to pay down

payment without any Complication

100% of the respondent says that they are Satisfy with the loan demonstration by

the bank.

100% of the respondent says that they are agree with the repayment facility of

loan is simple in Allahabad bank

100% of the respondent says that they are found this bank in superior over other

banks in providing loan facility.

77% of the respondent says that they are agreeing with the terms & condition of

Allahabad bank.

 According to banking officials the brochures and pamphlets are not

for the general public and are published only for the staff members of the
Allahabad Bank As all the other banks including their own diversified business
unit keeps brochures for the general public so even they should start providing
brochures. as it is when all the information is also available on the net there is no
point hiding such information from public.
 According to the banking ombudsman scheme every bank must have a customer
grievances cell within their organization, but still this is not strictly practiced in
most of the organizations, if the ALLAHABAD BANK can handle the customer
queries efficiently then they can take an edge over their competitors.
 The formalities involved in acquiring educational loan are very lengthy and time
consuming so certain changes should be brought about in the documentation part
to make it more simpler and user friendly.
 Although a separate cell for providing information regarding the loans is their
within an organization still the information which they provide to the individuals
is not satisfactory as they neither have the brochure with them nor do they give
proper guidelines to the individuals as from where they can be obtained.
 The loan recovery pattern followed by Allahabad Bank is very harsh and is
generally not liked by the customers.
 Instead of keeping the brochures and pamphlets in the locked almirahs inside the
store rooms They should keep the brochures and pamphlets at a place from where
they are easily within the reach of the visitors, so that as and when any individual
comes to seek any information related to loans he can first take a look over a
brochure and still if he is not satisfied and holds any further queries which need to
be sorted out then he should avail the help from the person sitting at the desk.
 Instead of making an individual run every time to the notary shop to get the
notary work done, they should hire a person who would do this on the behalf of
an applicant for the bank, and a sum of money should be charged from the
applicant so that both the bank and the applicant are not bound with such time
consuming formalities. This will be a kind of additional service extended by the
bank to the applicant, through which a bank can avail the benefits of the word of
mouth publicity in future.
 The basic requirements like fresh drinking water and toilets should be their not
only for the employees but also for the general public who visits the bank.
 One time information should be given to the applicant so that he is not asked to
come again and again to fulfill the obligations of the bank.

Believe it or not, buying a car is still considered a status symbol in India. Though the
advent of the small car has created a huge dent in this reputation, but the fact still remains
that a car is a cherished dream of every Indian. Owning a car is made simpler by the
fabulous offers by various banks and car finance companies in India on almost every car
model. Now, you don't need to book a car ( most of the models) in advance, there is no
requirement that you pay entire cost of the car in cash, just have a part of the total cost,
add some creditworthiness and rest is filled up by a decent car loan. Almost every car be
it used or new is financed and acessible to all those who inspire confidence in banks and
car finance companies.

With the car loan taking so much importance and lots and lots of information bombarded
on the average consumer by different media, it is very easy to get lured into a trap. To
know the intricacies of car loans is the only way one can avoid getting into an unwanted
situation and later repent in leisure. Here Are a few such things, which can save a lot for
every car loan customer.
Earlier it was very difficult for an individual to buy a his dream car because of the
financial constraints.. The boom in the banking sector has led to release of large
amount of funds for car loan. Now, car loans are easily available from various
banks in India and this change is encouraging more and more people to owe
luxurious and as per comfort cars despite of their financial shortcomings. Many
nationalized banks have come up with various car loan schemes that people can
benefit from.
Loans from Indian Banks are easily available and the other loans that you can get include
the Auto loans, Commercial loans, equipment loans, travel and real estate loans. Some of
the Indian banks which offer loans are United Bank of India, IDBI bank, Punjab National
Bank, State Bank of India and Oriental bank of commerce etc.The maximum amount of
loan offered for car in India is Rs.10 lacs. Different banks have different set of formalities
and EMI pattern followed
ALLAHABAD BANK is better than other banks in many respects as it offers Good
healthy infrastructure, strong heirarchial pattern, proper mix of the youth and the wel
experienced staff in their hierarchy, core banking solutions, net banking facility, SMS
facility, ATM facility, e-banking facility etc. There are many banks in Bhopal which do
not extend education loan in Bhopal like standard chartered bank, IDBI bank etc.

This chapter focuses on examining the impact of
NPAs in ALLAHABAD BANK. As the NPA from year to year keep on
increasing, It is a difficult task for the banks, especially public sector banks
to tackle the high level of NPAs.

But over the years the position of net NPAs of

ALLAHABAD BANK has improved as can be seen from the sharp decline
of 7.08% to 2.37% to 1.28% in 2007. This is due to time bound
implementation of prudential accounting norms and liberal infusion of
capital by the government to meet the capital adequacy requirements besides
strenuous recovery efforts by banks. If other netting items like recoveries
and pending adjustments, interest charged to the borrower accounts but not
taken to income accounts etc., for which data are not available, are taken in
to account of the net NPA position, perhaps may further come down below
to 1.5% mark.
The second phase of reforms lays thrust on
improvement in the organizational efficiency of banks. The most crucial
factor being the improvement of profitability of banks in the reduction of
NPAs. This issue is closely connected with the overall stability of the
financial system and needs to be recognized as such for undertaking multi
pronged efforts. Apart from internal facts such preponderance of certain
traditional industries in the credit portfolio of certain banks, majority of
which are suffering from serious inherent operational problems, natural
calamities, policy and technological changes which increase the incidence of
sickness, labour problems and non-availability of the raw materials and other
such factors which are not with in the control of banks.

While banks cannot be blamed for advances becoming non-

performing due to external factors, there is an urgent need that the banks
address the problems arising out of internal factors and this may call for
organizations restructuring of banks, a change in the approach of banks
towards legal action which is generally the last step and not the first step, no
sooner the account becomes bad and a clear thrust on improving the skill of
officials for proper assessment of credit proposal, risk factor and repayment

The following are the figures of gross and net NPAs of ALLAHABAD
BANK from the period 2005-2007.

End- Gross % To % To Net % To net %To total

March NPAs Gross total NPAs advances assets
advances assets
2005 1,841.50 13.65 4.15 2,125 7.08 3.33
2006 1,418.46 8.66 3.02 450.33 2.37 3.10

2007 1,284.27 5.80 1.22 508.44 1.28 3.00

Drastic measures should be taken for reducing the mounting level of

NPAs in terms of both ‘gross’ and ‘net’. Though there are problems in
effecting recoveries and write off and in compromise settlements for making
recovery process more smooth and less time consuming and also create other
alternative channels/agencies for recovery of debt/reduction of NPAs.
Government and other authorities should devise policies having a bearing on
the industrial sector, agriculture and trade with a long term perspective to
avoid sickness in the industry and adverse impact on borrowers because of
sudden shift in the policy.

Arresting of non-performing assets is fast turning out to be a myth.

Despite an aggressive recovery drive, the ALLAHABAD BANK has failed
to arrest the growth in NPAs. As shown in the table the gross and net NPAs
went on increasing, but most of the banks have been able to pave the growth
of NPAs because of the expansion in their asset portfolio.
The fresh accretion of NPAs during the financial year 2006-05 has
outpaced recovery of bad loans. This has come to light for the first time,
following the RBI’s directive to disclose the movement of NPAs.


In 31st march 2006 it was noticed that as many as 14,36,739 suit file
cases were pending for an amount of Rs. 21,824.92 crs. This procedure for
recovery of bad debts due to public sector banks has resulted in blocking of
a significant portion of their funds in un productive assets, the value of hich
deteriorates with the passage of time.

The multiple litigation opportunities available to the borrowers for

delaying the verdicts/enforcement, courts being burdened, as they are, with
heavy work load, coupled with the tardy decision making process in the
banks, rendered legal process less useful. The recovery made though the
legal measures/courts process indicated above is self-revealing. Statements
collected from public sector banks visited during the study regarding the
recovery process, revealed that significant portion of the suits were pending
for more than a decade. In some cases there were legal cases which were
pending for 15 to 20 years, but no progress were made in the suit.

It was observed during the perusal of filed cases in public sector banks
that it took many years, in many cases more than a decade, for the courts to
settle the cases even after passing of the orders/decree, due to the multiple
litigation opportunities, eg., referring to appellate courts, higher courts, full
benches etc, long time is taken for the settlement of the cases. Difficulties
are also faced and delay is occurring in the execution of decree.
A part from the suit filing and legal measures the govt. and RBI has
suggested other vehicles to address the problem of NPAs recovery.

Among these are –

i. Debt recovery tribunals

ii. Debt settlement tribunals
iv. Lok adalats
v. Asset Reconstruction company
vi. Revenue recovery act
vii. Settlement advisory committee
viii. One time settlement scheme
ix. And other means for the recovery of NPAs in ALLAHABAD BANK.
But at the end, data suggests that the working of all these ‘other vehicles’
had fallen short of the expectations by not creating a fast track system for
recovery of bank dues.

In a bid to speed up recovery efforts of the banks, debt recovery tribunals

(DRT) were set up in 1993 by an act of parliament. This was welcomed by
both banks and borrowers alike. Finally, it was hoped there would be a non-
confrontationist middle path where both banks and borrowers could meet.
Seven years on both sides agree that a lot still needs to be done to make the
DRTs an effective recovery tool for the Indian banking sector.

At the end of June 2007, out of the total numbers of 11,700 cases filed and
transferred to debt recovery tribunal (DRT) involving Rs. 8,866.67 crs. Only
1045 cases have been decided and meager amount of Rs. 178.08 crs was
Taking a serious note of this situation, the central board of RBI in
2007 reviewed the effectiveness of DRTs. RBI therefore decided to set up a
working group under the chairman ship of N.V. Deshpande, former legal
advisor to RBI, comprising officials from the govt. banking divisions, some
bankers and RBI officials to look into the various issues and to suggest
measures for their effective functioning.

The terms of reference of the working group were mainly –

1 To look into various issues and problems confronting the functions of

DRTs and to suggest measures to make them more effective.

2 The group was also to examine the existing statutory provisions and
suggest necessary amendments to the 1993 act with a view to improving the
efficiency of the legal machinery.

By august 2007 the working group submitted its final suggestions –

1 First it was noticed that once an application had been made to DRT, the
branch managers and staff of the banks did not take any interest in the

2 In many cases, bank officials themselves were unaware of even the

execution of loan documents and names of the borrowers.

3 The working group suggested that the banks and FIs should impress upon
their officers and staff to take a keen interest in the proceeding.

4 The group also said that the recovery officers should be given assistance
of agencies like police and professional debt recovery agencies and the act
be amended to provide licensing and regulating professional recovery
5 One of the most important recommendations was that not only should
there be a tribunal in every state, there should be more than one DRT in the
same state if the workload of the tribunals so justified. The presiding officers
of DRTs should not have more than 30 cases on the board on any given data
and there should not be more than 800 cases pending before it at any given
point of time.

The center on march 9th ,2000 introduced the recovery of debts due
to banks (amendment ) bill 2000. the aim was to correct the legal
anomalies pointed out by the supreme court such as the stipulation that
tribunals would continue to function not with standing court stay or
transfer of petitions. The amendments, first brought into force through
the ordinance from 17th January,2000 addresses many of the other
lacunae. It empowers DRTs to attaché the property of the borrower on
filing of the applications to that effect.

The new concepts of income recognition, asset classification
and provisioning have been introduced in phases with effect from 1992-93.
The impact of implementation of these prudential guidelines on the
commercial banks has been so strong that out of 20 nationalized banks, one
had to be merged and out of the remaining 19 banks excepting 6, all others
were in red, showing net losses aggregating to a staggering level of 3573.13
crores. In march 1993 and still a higher level of Rs.4705.01 crores in march
1994. Further, due to staggering net loss revealed by the Indian bank, the
aggregate net loss of the 19 nationalized banks even in march 1996 was rs.
1153.96 crores. However the aggregate net profit of 19 nationalized banks,
as on 31st march 1997 was Rs.1445.48 crores.

This drastic change of profitability scenario of banks in India since

2005-05 was mainly due to recognition of income based on record of
recovery rather than on accrual basis, due to implementation of new
prudential norms.

The message is now very loud and clear. If a bank wants to survive
and grow, it has no option but to actually recover the interest and principal in
accordance with the terms of sanction. If it fails to recover, the bank branch
can not recognize the interest debited to the account as income. In case
income is not received as per prudential norms, the loan will become a NPA
with all its necessary consequences.
The NPA effects adversely the health of the bank in several ways as follows:

I. Potential interests income is derecognized since it can not be booked as

income, profit of the bank depletes.

II. Depending up on the categorization of NPA, that is sub-standard,

doubtful (D1,D2,D3) or loss assets bank will have to make provision against
such loan ranging from 10% to 50% or even 100% in case of some of assets.
Banks profitability is thus doubly hurt. First income accruing on NPA is not
recognized and secondly bank has to make provision for it.

III.In case bank fails to upgrade the NPAs into the performing assets, it may
be forced to incur legal expenses by going to court or recovery tribunals.

IV. As a consequence profit and profitability of the bank is depleted and it

may face problem in maintaining the required capital adequacy norm of 8%
or more.

V. Inadequate capital adequacy may downgrade banks rating and effect its
growth and survival.

Management of NPAs would have the following objectives: -

1. Improving the quality of NPAs to the performing status so that income of

such assets could be recognized.

2. Upgrading the status of the asset so as to reduce the provisioning


3. Cleansing the balance sheet of bank of loss assets and also of unsecured
portion of doubtuful assets, ultimately leading to improvement in the capital
adequacy ratio of the bank.
The above objectives can be achieved by adopting the following
strategies as a measure of reduction in the level out standing Non performing

Various steps for reducing NPAs

1 Studying the problem of NPAs – branch wise, amount wise and age wise.

2 Preparation of a loan recovery policy and strategies for reducing NPAs.

3 Creation of special recovery calls at head/regional level

4 Identifying critical branches for recovery

5 Fixing targets of recovery and draw the time bound action program

6 Selecting proper techniques for solving the problem of each NPA

7 Monitoring implementation of the time bound action plan

8 Taking corrective steps when ever found necessary while monitoring the
action plan make changes in the original plan if necessary.


1 Very careful selection of new borrowers based on their credit worthiness
and risk analysis. Similarly, for high credit rated existing borrowers, need
based credit requirement should be promptly met.

2 Post-sanction follow-up must be done meticulously at all levels, ie.,

branches, regional offices, zonal offices and head offices. All prescribed
operational information system such as annual reviews/renewal, quarterly
information system. Quarterly review sheets, monthly stock statements, etc.,
must be received and meaningfully analyzed and required follow-up action
taken on time.
3 All big borrower accounts (Rs.50 lakhs and above) falling in the category
of “standard assets” must be reviewed on quarterly basis and prompt action
taken if any adverse feature is noted, with a view to ensure that they do not
slip back to a lower category i.e., sub standard.

4 Those borrower accounts which are at the lower-end of the list of

“standard assets” deserve special attention and the moment they show any
sign of weakness to “slip-back”, immediate pro-active steps, for lower end
of list of sub-standard assets should be taken to prevent this happening.


Main action points in regard to existing NPAs may be summed up as under:

I. The borrowal accounts lying at the top-end of the list of “sub standard
assets” are likely to be NPA of less than 1-year i.e., they must have
slipped back to this category only recently. All-out efforts should be
made to upgrade these accounts and make them performing (standard
assets) by recovering the derecognized interest of all four quarters of
last year and at least three quarters of the current year or taking other
relevant measures which are necessary to make their performing assets.

II. Top priority should be given to upgrade progressively the quality of

all NPAs to next higher category of better-quality loan assets e.g., D3
may progressively upgraded to D2 and D1 then to “sub-standard” and
ultimately to “standard” category over a period through persuasion,
nursing and rehabilitation based on major contribution from the
promoters. [Here D1 –upto 1year, D2 – 1year to 3 years, D3 –more than
3 years].

I. All the securities charged to the bank should be “re-valued” on realistic

basis through approved values and provisions should be made strictly on
this basis.

II. In case upgradation on NPA appears difficult and value of security is

adequate to cover bank’s loan and charge on the same is validly created in
bank’s favor, serious efforts at senior level should be made through a “high
power” compromise committee to enter into one-time settlement with the
party in a manner that results into maximum recovery and lease write-off in
conformity with the available security level as far as possible. This may
involve some sacrifice in the form of “write-off” on the part of bank also.

I. In case where steps (ii) and(iv) do not succeed, bank has no option
but to resort to legal action within the limitations period either by going
to debt recovery tribunals (or) judicial courts. In case of agricultural and
other smaller loans banks may file recovery certificates under state acts
or approach lok adalats, if necessary for amicable settlement.

I. Tackling NPA, is a massive and intricate job, where involvement of

concerned staff at all relevant levels is a must and should be done by
forming “compromise committees” at regional, zonal and head office
levels. This is also in terms of RBI guidelines.

I. Specialized recovery branches should be set up at selected centers,

keeping in view concentration of banks NPAs and presence of DRT in
that area for expeditious recovery of bank dues.

I. Top priority should be accorded for effective follow-up of pending suits

of execution of the decrees.
II. Zones should be asked to submit a ‘monthly progress report’ in a
prescribed format in regard to NPA account.

III. All the BIFR cases under rehabilitation program or under banks own
nursing program should be closely monitored so as to ensure that the
rehabilitation is on right course.



Careful selection of Selection of top end of sub-


New borrowers assets< 1year & take efforts to

↓ recover interest.

Post sanction follow up ↓

↓ Classification of assets in to:

Classification of assets and D1 up to 1 year

Quarterly review D2 1 year to 3 years

↓ D3 > 3 years

Proactive steps for lower level ↓

Of sub-standard assets Revalue of collateral securities for

such advances and make provisions

Value of securities is adequate to given loan

If difficult One Time Settlement

Form compromise committees

Special recovery branches follow up

Submission of monthly progress report

Close monitoring of BIFR cases


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, managers should make it amply clear to
quality lending and profitability, managers should make it amply clear to
potential borrowers that banks resources are scarce and these are meant to
finance viable ventures so that these are repaid on time and relent to other
needy borrowers for improving the economic lot of maximum number of

Hence, selection of right borrowers, viable economic activity,

adequate finance, and timely disbursement, correct endues of funds and
timely recovery of loans is absolutely necessary preconditions for preventing
or minimizing the incidence of new NPAs. Besides functioning as bankers,
they have to work as a friend, philosopher and guide of borrowers, develop
mutual trust so as to maximize recovery in case of new loans.


These are as follows:

1 Frequent recovery camps should be organized on periodicities

synchronizing with harvesting seasons in case of agricultural loans and at
monthly/bimonthly intervals in other cases, so as to recover the bank dues
from the sale proceeds on due dates.

2 Cash recovery of some minimum installments (25%) of smaller loans has

now become a pre-condition for lodging claims with the DI and CGC.
Hence, branches must build genuine pressure on borrowers to repay the
installments whenever due, without exception. For this purpose even clerical
and subordinate staff member may also be involved for effecting recovery
through personnel contacts. To motivate the staff; managers may issue
appreciation letters to good performers.

3 Disposal of recovery certificates (RCs) cases, whenever pending in large

numbers should be taken up suitably by the regional/zonal managers with
the district magistrate, who is laso chairman of the district consultative
committee (DCC).

4 Suitable colored printed post card in local languages may be supplied for
issuing notices of recovery camps and such camps may be attended by
regional managers or other senior officers of the regional office.
5 Bank may also try recovery peons (in bank uniforms) who may visit
borrowers before 9 am or after 5pm for meeting the borrowers for recovery
of bank dues.

6 “No default certificate” or “Best borrower certificate” should be given to

such borrowers in a borrowers meeting specially organized for the purpose,
in the presence of gram pradhan. This is likely to encourage others to repay
bank dues in time and create healthy recovery climate in the area.

7 Where recovery is not forthcoming despite due efforts, compromise

proposals should be mobilized by concerned region committee and sent to
zonal officer for necessary action.

8 Head office and zonal offices should also take advantage of lok adalats.
Where available, for striking instant compromise judgements in the presence
of both parties. But ,this will require necessary home work by the zonal
heads in advance so that large number of cases are mobilized and
concurrence taken from competent authority, before attending the pre-
determined dates of lok adalats.

9 In all those cases where recovery chances are bleak and there is neither
any operation in the account nor any recovery has been effected during the
last 2-3 years, but the cases are eligible for lodgment in terms of latest D1
and CGC guidelines, branches should be advised to prepare all such cases
correctly and send to nodal center of the bank for prompt lodgement of
claims with D1 and CGC, Mumbai. Subsequently, there should be close
effective follow-up by the bank with DI and CGC, Mumbai for prompt

10 After settlement of those cases, the eligible portion can be written-off by

the competent authority as per banks rule so as to reduce the amount of “loss
assets” from the books of the bank.

11 In cases where adequate security is available, activity is continuing, but

the repayment is not coming, but bank may opt for legal action, after giving
due notice to borrowers.

12 There should be close follow-up with banks lawyers having large number
of un disposed cases and their selection or future assignment of cases to
them should be based on merit and performances.

One of the main reasons of low profitability of ALLAHABAD BANK

is the incidence of very high non-performing assets. But the level of NPA
varies significantly among different banks. (Range being as wide as 4% in
case of best bank to more than 40% in case of worst bank).

Significantly, variation in the relative sizes of NPA is not related to the

size of the bank in terms of business or branch network. Variation exist
between banks of comparable size, whether small or large, suggesting that
organizational culture and quality of management have played a crucial role
in determining the quality of loan assets or banks over all performance.

Thus, there is need to improve the quality of leadership and

management at various levels in the mean time, improvement in recovery
performance must be accorded top priority in banks corporate plans. The
maintenance of recovery discipline requires that books vigorously pursue
recovery even for advances that have been provisioned against.

“ Loan is not a charity and it has to be repaid on the due date come
what may.” Should be the slogan of a good banker.

Frequent recovery camps should be organized at monthly/bimonthly


Cash recovery of some minimum installments

Disposal of recovery certificates should be taken up

Issuing notices of recovery camps

Recovery peons may visit borrowers

Default certificate/ best borrower certificate should be given

Compromise proposals should be mobilized

Head office and zonal office take advantage of lok adalats

Lodgment of claims with DT and CGC

After settlement reduce the amount of loss assets from bank books

Opt for legal action

Close follow up with banks lawyers having large number of un disposed




The government of India has appointed a high level committee under the
chairmanship of Mr. M. Narasimham, the former chairman of SBI, to
examin all aspects relating to the structure, organization, functions and
procedures of the Indian financial system. The committee was appointed on
August 14, 1991 which submitted its report on 30th November 1991.

Major recommendations of the committee relating to NPAs :

1. SLR to be reduced from 38.5% to 25% over next five years and CRR to
be brought down to 3%.

2. Directed credit-loans to priority sector, different interest schemes, IRDP,

IREP etc. should be phased out the committee was of the view that easy
availability of credit was more important than subsidized credit to the rural

3. Not more than 10% of the aggregate bank credit should be earmarked for
the redefined priority sector.

4. Capital adequacy requirement (CAR) should take into account market

risks in addition to credit risk.

5. Minimum capital to risk assets ratio be increased from 8% to 10% by

2004 in a phased manner.

6. An asset be classified as doubtful if it is in the substandard category for

18 months in the first instances and eventually for 12 months and loss if it
has been identified but not written off. These norms should be regarded as
minimum and brought into force in a phased manner.

7. For evaluating the quality of asset portfolio, advances covered by

government guarantees, which have turned sticky, be treated as NPAs.

8. Asset reconstruction fund (ARF) should be constituted to take over the

NPAs of public sector banks at a discount.

9. For banks with a high NPA portfolio, two alternative approaches could be
adopted. One approach can be that all loan assets in the doubtful and loss
categories, should be identified and their realizable value should be
determined. These assets could be transferred to asset Reconstruction
Company which would issue NPA swap bonds.

10.Introduction of general provision of 1% on standard assets in a phased

manner be considered by RBI.

11.An incentive to make specific provision, they may be made tax


12.Adoption of income recognition of asset classification and provisioning

norms to be compulsory.

13.Special tribunals should be set up for speedy recovery of the bank loan

14.There should be an independent loan review mechanism especially for

large borrowal accounts and systems to identify potential NPAs.

15.The minimum share of government holding/RBI holding in the equity of

nationalized banks should be brought down to 33%.


The committee which was headed by Mr. M.S. Verma, Former
chairman of SBI, identified the specific ailments prevailing in the banking
sector and come out with a panacea prescription.
The following are the recommendations of Verma panel :
The panel identified 3 weak PSBs and recommended a conditional
bail out package of 5000crs., out of which 3000crs., will be used for the
recapitalization of weak banks.

The most significant suggestion, however is the formation of a private

sector asset management company presided over by some of the most
talented professionals of the business. It will do away with the bureaucratic
hurdles like delayed decision making in disposing off the assets grabbed by
asset reconstruction fund.

The report also said about setting up of financial reconstruction

authority of statutory status will mark the beginning of a serious effort to
bring back the banking sector into a healthy state.


In view of the time factor involved in recovering NPAs by legal
means, the RBI has come out with simplified non-discretionary guidelines
for compromise settlement of bad debts upto 5 crs for uniform
implementation by them.


The guidelines issued by RBI covers all outstanding, doubtful and loss
assets of Rs.5 crores or less as on March 31st , 1997 and which had turned
into doubtful or loss assets subsequently also would be covered, according to
a statement issued by the IBA. The RBI said these guidelines, which would
be operative up to 31st March, 2003, would cover NPAs relating to all sectors
including small sector. Cases pending in courts/debt recovery tribunals/BIFR
are covered under the guidelines subject to the consent decree being
obtained, the apex bank averred and added cases of willful default or
malfeasance would not be covered. The amount of settlement arrived at
should preferably be paid in one lump sum. If not, at least 25% down
payment and balance in settlements with in a period of one year together
with interest at the existing PLR from the date of settlement upto the date of
final payment.



To achieve maximum realization of public sector banks the RBI

simplified the guidelines for the recovery of NPAs.
The revised guidelines will cover NPAs relating to all sectors
including the small sector, but will not cover cases of willful default, fraud
and malfeasance. The banks should give notice to the defaulting borrowers
to avail of the opportunity for “one-time settlement” of outstanding dues.
Under the new guidelines, the minimum amount that should be
recovered under compromise settlement of NPAs classified as doubtful (or)
loss, which would be 100% of the outstanding balance in the account. This
would be as on the date of transfer to the protested bills account or the
amount outstanding as on the date on which the account was categorized as
doubtful NPAs whichever happened earlier.
The guidelines have been circulated to all public sector banks. The
RBI move comes in the wake of complaints by such banks that the
guidelines are inflexible of retarded the progress in the recovery of NPAs.


1. The % of NPAs of private sector banks is less as compared to the public
sector banks like ALLAHABAD BANK.
2. The % of net NPAs to net advances of ALLAHABAD BANK is less than
the % of gross NPAs to total advances (More provisioning).
3. “Gross” &”Net” terms exist only in India.

 www.Allahabad Bank.com
 www.eassytown.com
 www.google.com
 www.valueresearchonline.com


 BERI, G.C. (1999) Marketing Research, Tata McgrawHill.

 BHALLA,V.K. (2003) Mgt. Of Financial Services, Anmol publication.
 Kothari, C.R. (1996) Research Methodology, Wishwa Prakashan.
 Kotler, Philip (1999) Marketing Mgt. Tata McGrawHill
 RAO, RAMESH, K.S. (1989) Fundamentals of Financial Management, Macmilan
 Fact Sheet of Allahabad Bank Ltd.
 Fact Sheet of ICICI Bank Ltd.


 Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1994), "Reassessment of

expectations as a comparison standard in measuring service quality: implications
for future research", Journal of Marketing, Vol. 58, pp. 111-124.
 Interrogating SERVQUAL: a critical assessment of service quality measurement
in a high street retail bank, Karin
 Newman, Professor, Middlesex University Business School, London, UK

Q1. How do you come to know about Allahabad Bank, when you appeared for your
interview at Allahabad Bank?
Through friends working in company

Q2. Through which of the following modes were you recruited?

Campus Placement
Employee Referrals

Q3. Are these kind of employment tests are used in the organization for recruitment
Intelligence test
Aptitude test
Psychometric test
Any other, please specify

Q4. Which kind of interviews are used for recruitment at Allahabad Bank?
Preliminary Interview
Stress Interview
Discussion Interview
Any Other, Please specify

Q 5. Does the qualification or knowledge or skills matches with job specification?

a) Yes b) No
Q 6. What is the duration of probation for a new joined at Allahabad Bank?
6 month
1 year
2 year

Q 7. Is it mandatory to sign a bond before joining the organization?

a) Yes b) No

Q8. Are employees in HR department are satisfied with their salary package?
a) Yes b) No

Q9. Does the organization pays attention on medical examination before offering the
a) Yes b) No

Q.10 Do you think that the selection process in the company is quite lengthy?
a)Yes b)No