Summer Training Project On Non Performing Assets

Non Performing Assets
CHAPTER: 1 EXECUTIVE SUMMARY
B.M. Collage of Business Administration
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Non Performing Assets Executive Summary

A project has been prepared under the title of Non Performing Assets in Surat. First of all the information regarding the banking industry is given. In that various facts regarding the bank industry is being provided. Also the various types of non performing assets. The brief introduction of non performing assets is given. In this the definition, various benefits, objective, limitation etc. are mentioned. Then a analysis of data is made. Then the objective of doing the project is mentioned. After that analysis comes. At the last me find Conclusion & Suggestion. Then comes facts and finding part. In this part first of all the details about the non performing assets by me is given. Then a comparison is made among the three companies selected by me on various parameters.
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CHAPTER: 2 RESEARCH METHODOLOGY
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RESEARCH METHODOLOGY
Research is a one kind of process to get knowledge about some topic. Research is done so that systematic analysis can be done and problem can also be solved. TITLE OF STUDY Here it is NON-PERFORMING ASSETS BENEFITS FROM THE STUDY . It helps me to know more about NPA and the situation of NPA in bank. . It helps me to know the strategies adopted by banks to reduce the NPA level and to understand the NPA provisions norms in bank. RESEARCH PROBLEM NPA always affect the profit of bank and also the prestige of bank. So here the research problem is to identify the causes for the NPA and to identify the action plan to reduce the NPA. RESEARCH DESIGN Here the research design is exploratory which helps me to explore the NPA problem of bank.
RESEARCH INSTRUMENT As a research instrument I have taken guidance from the CEO of City bank and also my faculty of college. DATA COLLECTION Primary Data B.M. Collage of Business Administration Page 4

Secondary Data Hence it is an exploratory research their is not any dependence on primary data. Sources of secondary data 1. Annual report 2. Journals 3. Websites 4. Books ANALYSIS AND REPORT WRITING Here I have done ratio analysis and used various charts for analysis purpose. And also I have written report on it.
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CHAPTER: 3 OBJECTIVE OF PROJECT
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Some objectives for the selection of this project are as follows
. To study and understand the concept of NPA
. To analyze the banks policy to recover the level of NPA
. To understand the effect of NPA on banks profit and its prestige
. To understand how corrective measures taken by bank for NPA
. To understand RBIS rules and regulations for the control of NPA
. To understand the credit appraisal policy and NPA recovery policy of bank
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CHAPTER: 4 LIMITATION
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LIMITATION OF PROJECT Some times bank officer was hesitant to give all data on NPA. I have selected only one bank for NPA which is very small sample size. I face difficulty in doing proper analysis as I dont have prior experience for making project report.
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CHAPTER: 5 INTRODUCTION OF BANKING INDUSTRY
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CHAPTER: 7 INTRODUCTION OF NON-PERFORMING ASSETS
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NON-PERFORMING ASSETS
. MEANING An asset becomes non-performing when it ceases to generate income for the bank. Earlier an asset was considered as non performing asset based on the concept of past due.
. DEFINITION A NPA was defined as credit in respect of which interest and/or installment of principal has remained past due for a specific period of time. The specific period of time was reduced in a phased manner as under:
Year ended March,31 1993 1994 1995 2004
Specific Period 4 Quarters 3 Quarters 2 Quarters 1 Quarters
An amount is considered as past due, when it remains outstanding for 30 days beyond the due date. However, with effect from March31, 2001 the past due concept has been dispensed with and the period is reckoned from the due date of payment.
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. NORMS FOR IDENTIFICATION OF NPA With an intense to use the international best practice and to ensure greater transparency, 90 days overdue norms are accepted for the identification of NPA from the year ended March 31, 2004. With effect from March 31, 2004, a NPA shall be counted on loan and advances where: A. Interest and / or installment of principal remain overdue for a period of more than 90 days in respect of a term loan. B. The account remains out of order for a period of 90 days, in respect of an Overdraft/ Cash Credit (OD/CC). C. The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted. D. Any amount to be received remains overdue for a period of more than 90 days in respect of any other accounts.
FACTORS RESPONSIBLE FOR NPA

. Improper selection of borrowers activities B.M. Collage of Business Administration Page 13

. Weak credit appraisal system . Industrial problem . Inefficiency in management of borrower . Slackness in credit management & monitoring . Lack of proper follow up by bank . Recession in the market . Due to natural calamities and other uncertainties
ASSETS CLASSIFICATION
. CHART OF ASSETS CLASSIFICATION
ASSETS
PERFORMING ASSETS OR STANDERED ASSETS
NON-PERFORMING ASSETS
SUB-STANDERED ASSETS
DOUBTFUL ASSETS
LOSS ASSETS
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LESS THAN 1 YEAR
1 TO 3 YEARS
ABOVE 3 YEARS
MANAGEMENT OF NPA
t is very necessary for bank to keep the level of NPA as low as possible. Because NPA is one kind of obstacle in the success of bank so, for that the management of NPA in bank is necessary. And this management can be done by following way: . Framing reasonably well documented loan policy and rules. . Sound credit appraisal on well-settled banking norms. . Emphasizing reduction in Gross NPAs rather then Net NPAs . Pasting of sale notice/ wall posters on the house pledged as security. . Recovery effort starts from the month of default itself. Prompt legal action should be taken. . Position of overdue accounts is reviewed on a weekly basis to arrest slippage of fresh account to NPA. . Half yearly balance confirmation certificates are obtained from the borrowers regularly. . A committee is constituted at Head Office, to review irregular accounts. . Due to lower credit risk and consequent higher profitability, greater encouragement is given to small borrowers. . Recovery competition system is extended among the staff members. The recovering highest amount is felicitated. B.M. Collage of Business Administration Page 15

. Adopting the system of market intelligence for deciding the credibility of the borrowers . Creation of a separate Recovery Department with Special Recovery Officer appointed by the RCS
RECOVERY OF NPA
. IMPORTANCE OF RECOVERY: 1. Increase in the income of bank. 2. Increase in the trust of share holder in bank. 3. Level of NPA reduces as the recovery done. 4. Decrease in provisioning requirements.
. STEPS TAKEN BY GOVERNMENT TO RECOVERING NPA: 1. SECURITIZATION ACT @. Now this act is also applicable to all Urban Co-Operative Banks. @. According to this act Bank can take direct possession of the movable and immovable property mortgages against loans and sell out the same for such recovery, without depending on legal process in the court. 2. Gujarat state has also by amending under co-op soc, act empower co-op bank to appoint their staff as recovery officer on getting order from the board of nominees. B.M. Collage of Business Administration Page 16
Above both act are benefited to bank for the recovery of NPA.
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CHAPTER: 8 CITY BANK & NON-PERFORMING ASSETS
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CHAPTER: 9 ANALYSIS OF DATA
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YEAR WISE NPA AT CITY BANK

. YEAR 2003 (RS. IN LACS) Details STANDARD ASSETS SUB-STANDARD ASSETS DOUBTFUL ASSETS LOSS ASSETS TOTAL Amount 5912.67 189.75 316.69 14.64 6433.75 %of Total 91.90084 2.949291 4.922324 0.22755 100
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N P A OF 2003
LO S S A S S E TS 2755 0.2 D O U B TF U L A S S E TS 4.9223 24 % of Total S U B -S TA N D A R D A S S E TS 2 .94929 1 S TA N D A R D A S S E TS 0 20 40 60 91.9008 4 80 100
ASSETS-->
V A L U ES -->
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N P A O F YE AR 2004
LO S S A S S E TS.1 5 0 D O U B TF U L A S S E TS.9 5 3 % o f To ta l S U B -S TA N D A R D A S S E TS5 1 .9 S TA N D A R D A S S E TS 0 20 40 60 9 3 .9 5 80 100
ASSETS-->
V A L U E S -->
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N P A O F YE A R 2 0 0 5
LO S S A S S E TS 0.01 D O U B TF UL A S S E TS 3.61 % of Total S U B -S TA N D A RD A S S E TS 2.03 S TA ND A R D A S S E TS 0 20 40 60 80 94.28 100
ASSETS-->
V A L UES -->
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N P A OF YE AR 2006
L O S S A S S E TS 0 D O U B TF U L A S S E 3 .0 1 TS % o f To ta l S U B -S TA N D A R D A S S0 .1 7 E TS S TA N D A R D A S S E TS 0 9 6 .8 2
ASSETS-->
20 40 60 80 100 120 V A L U E S -->
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N P A O F YE A R 2 0 0 7
LO S S A S S E TS1.5 4 D O U B TF U L A S S E TS.5 2 % of To ta l S U B -S TA N D A R D A S S E1.16 TS S TA N D A R D A S S E TS 0 20 40 60 94.78 80 1 00
ASSETS-->
V A L U ES -->
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SEGMENTWISE CLASSIFICATION OF NPA
(RS. IN LACS)
2005 SEGMENT NO OF A/C 267 AMOUNT TOTAL ADVANCES 752.63 NPA 17.69 NO OF A/C 248
2006 AMOUNT TOTAL ADVANCES 641.90 NPA 20.21 NO OF A/C 343
2007 AMOUNT TOTAL ADVANCES 802.03 NPA 76.81
RETAIL TRADE
SMALL BUSINESS
31
46.48
4.38
25
44.17
20.15
122
88.02
50.93
SMALL SCALE IND
582
4021.55
210.74
642
3832.29
44.88
975
6323.86
180.86
CONSTRUCTION & REPAIRS
246
323.43
21.02
231
343.86
2.70
345
459.76
22.43
AGRICULTURE
3.72
0.00
0.00
0.00
517
115.64
0.12
SMALL ROAD & TRANSPORTATION
10
5.23
0.00
0.00
0.00
34
8.18
1.90
PROFESSIONAL
84
89.81
5.00
7.33
0.00
80
72.52
3.10
EDUCATION OTHER PRIORITY SECTOR OTHE NON PRIORITY SECTOR TOTAL
10.71
0.00
3.41
0.00
7.26
0.00
0 375 1599
0.00 2454.16 7707.72
0.00 177.26 436.09
55 285 1496
41.82 2178.85 7093.63
3.47 134.41 225.82
326 310 3055
68.05 2394.94 10340.26
16.42 186.20 538.77
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RATIO ANALYSIS To analyzed the NPA situation in bank and from that to know about the banks credit appraisal system and level of risk in bank I have done the ratio analysis. Ratio analysis is the tool which will help us to do financial analysis of bank. Some names of ratio are as follows:
1. GROSS NPA RATIO. 2. NET NPA RATIO. 3. PROBLEM ASSETS RATIO. 4. SHAREHOLDERS RISK RATIO. 5. PROVISION RATIO. 6. SUB-STANDARD ASSETS RATIO. 7. DOUBTFUL ASSETS RATIO. 8. LOSS ASSETS RATIO.
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1. GROSS NPA RATIO Gross NPA is the sum of the total assets which are classified as the NPA by bank at the end of every year. Gross NPA is the ratio of Gross NPA to Gross Advances. It is expressed in percentage form. Gross NPA Ratio = Gross NPA Gross Advances (RS. IN LACS) GROSS NPA RATIO (%) 8.10% 6.04% 5.68% 3.18% 5.21% * 100
YEAR 2003 2004 2005 2006 2007
GROSS NPA 521.08 445.44 436.09 225.82 538.77
GROSS ADVANCES 6433.75 7369.18 7707.72 7093.63 10340.26
G R O SS NPA R AT IO 9 .0 0 % 8 .0 0 % 7 .0 0 % 6 .0 0 % 5 .0 0 % 4 .0 0 % 3 .0 0 % 2 .0 0 % 1 .0 0 % 0 .0 0 % 8 .1 0% 6.0 4 % 5 .68 % 3 .18 %
PERCENTAGES-->
5 .2 1% R AT IO
2 0 03
20 0 4
2 00 5 Y EAR -->
2 0 06
20 0 7
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. ANALYSIS
Gross NPA ratio shows the banks credit appraisal policy. High Gross NPA ratio means bank have liberal appraisal policy and vice-versa. In city bank this ratio was 8.10% in March-2003 and it has been decreased from year 2003 to 2006 from 8.10% to 3.18%. But again in March-2007 this ratio reach at 5.21%. This variation was come because City bank has merged with Baroda dist. Co-op. bank in the financial year 2006-2007. However it is revels from the chart that banks Gross NPA ratio is continuously decreasing which is positive trend for bank and we can say that bank have good appraisal system.
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2. NET NPA RATIO The Net NPA Ratio is the ratio of net NPA to Net Advances. This ratio shows the degree of risk in banks portfolio. Net NPA ratio can be obtain by Gross NPA minus the NPA provisions divided by Net advances. Net NPA Ratio = Net NPA Net Advances (RS. IN LACS) NET NPA RATIO (%) 4.82% 0.00% 0.00% 0.00% 0.00% *100
YEAR 2003 2004 2005 2006 2007
NET NPA 299.13 0.00 0.00 0.00 0.00
NET ADVANCES 6211.80 6888.84 7236.74 6622.57 9733.62
Net NPA = Gross NPA Provision for NPA Net Advances = Gross NPA Provision for NPA
NET NPA RATIO 6.00% PERECNTAGE--> 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2003 0.00% 2004 0.00% 2005 YEAR--> 0.00% 2006 0.00% 2007 NET NPA RATIO 4.82%
. ANALYSIS
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Net NPA ratio shows the degree of risk in portfolio of bank. High net NPA ratio means banks dont have enough fund to do provision against the Gross NPA. In City Bank Net NPA ratio was 4.82% in year March-2003 which shows that in that year bank had not enough fund for provisions. But after that from March-2004 to March2007 Net NPA ratio is 0.00% which shows that bank has now enough provision capacity. So, here the degree of risk is less. City bank has done more provision every year which is good at one side but at other side it also reduces the profit of bank. And shareholder will get fewer dividends. When all bank will do provision then Net NPA will become zero but if we want to know the true and fair situation of bank we must consider the Gross NPA of bank.
3. PROBLEM ASSETS RATIO This ratio is also known as the Gross NPA to Total Assets ratio. This ratio shows the percentage of risk on the total assets of the bank. High ratio means high risk for bank. Problem Assets Ratio = Gross NPA Total Assets (RS. IN LACS) PROBLEM YEAR 2003 2004 GROSS NPA 521.08 445.44 TOTAL ASSETS 13381.91 15935.97 ASSETS RATIO (%) 3.89% 2.80% Page 31 *100

2005 2006 2007 436.09 225.82 538.77 16337.35 18675.05 24202.77 2.69% 1.21% 2.23%
PROBLEM ASSETS RATIO 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
3.89% 2.80% 2.69% 2.23% 1.21% PROBLEM ASSETS RATIO
PERCENTAGE-->
2003
2004
2005 YEAR-->
2006
2007
. ANALYSIS This ratio shows the percentage of risk on the assets of bank. It shows the level of risk on banks assets. High ratio shows the high risk on liquidity. In City Bank this ratio was 3.89% in March-2003 and after that it has been decreased from 3.89% to 1.21% in March-2006. But again it increase to 2.23% in March-2007 because in that year City Bank was merged with Baroda dist. Co-op. bank in the financial year 2006-2007. This ratio is continuously decreasing in bank except in March-2007. But overall this ratio is good for bank which indicates the level of risk is low in bank.
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4. SHAREHOLDERS RISK RATIO

It is the ratio of Net NPA to Total capital and reserve of bank.
Shareholders risk Ratio =
Net NPA Total Capital & Reserve
*100
YEAR 2003 2004
NET NPA 299.13 0.00
TOTAL CAPITAL & RESERVE 1793.76 2075.06
(RS. IN LACS) SHAREHOLDERS RISK RATIO (%) 16.68% 0.00%
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2005 2006 2007 0.00 0.00 0.00 2262.39 2551.64 3014.58 0.00% 0.00% 0.00%
S HARE HOLDERS RIS K RA TIO 18.00% 16.68% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2003 2004 2005 2006 2007 YEAR-->
PERCENTAGE-->
S HAREHOLDERS RISK RA TIO
. ANALYSIS This ratio shows the degree of risk with share holders investment. High ratio means high ratio with the investment. In City Bank this ratio was 16.68% in year March-2003 which shows that in that year risk on share holders investment was quite high but after that this ratio is 0.00% up to year March-2007, which shows that Bank have enough capacity for provision and the risk on investment is nil. As we know that this ratio is 0.00% show the risk is nil but on the other side because of more provision the profit will decrease and the shareholder will get less dividends. B.M. Collage of Business Administration Page 34
5. PROVISION RATIO
Provisions are to be made against the Gross NPA of bank. As bank make provision for NPA it directly affects the profit of bank. This ratio shows the relation of total provision to Gross NPA. Provision Ratio = Total Provision Gross NPA (RS. IN LACS) YEAR TOTAL PROVISION PROVISION GROSS NPA RATIO (%) *100
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2003 2004 2005 2006 2007 221.95 480.34 470.98 471.06 606.64 521.08 445.44 436.09 225.82 538.77 42.59% 107.83% 108.00% 208.59% 112.60%
PROVISION RATIO 250.00% PERCENTAGE--> 200.00% 150.00% 100.00% 50.00% 0.00% 2003 2004 2005 YEAR--> 2006 2007 42.59% 112.60%
208.59%
107.83%108.00%
PROVISION RATIO
. ANALYSIS
Provision ratio shows the degree of provision that is made against the Gross NPA of bank. As bank made the provision it directly affect the profit of bank and also the dividend payout ratio of bank too. If Provision ratio is less then it means that bank has make under provision and if provision is more then it means that it is over provision. In City Bank they have made 42.59% provision in March-2003 which shows that it was under provision but after that in March-2004 and March-2005 it is 107.83% and 108% respectively which indicate that provision was nearer to total amount of Gross NPA but in B.M. Collage of Business Administration Page 36

March-2006 the provision ratio reach at 208.59% which indicate that it is the very over provision. And again in March-2007 it is 112.60% which is fair ratio. City bank should make the provision in the range of 100% to 115%. The provision in March-2006 which is 208.59% is very high and it is not necessary to do that.
6. SUB-STANDARD ASSETS RATIO
Sub-standard Assets Ratio = Total Sub-standard Assets Gross NPA
*100 (RS. IN LACS) SUB-STANDARD ASSETS RATIO (%) 36.41% 32.24% 35.92%
YEAR 2003 2004 2005
SUB-STANDARD ASSETS 189.75 143.60 156.65
GROSS NPA 521.08 445.44 436.06
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2006 2007 12.24 120.12 225.82 538.77 5.42% 22.30%
S UB -S TA NDA RD A S S E TS RA TIO 40.00% 36.41% 35.00% PERCENTAGE--> 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2003 2004 2005 YEAR--> 2006 2007 5.42% 22.30% S UB -S TA NDA RD A S S E TS RA TIO 32.24% 35.92%
. ANALYSIS This ratio shows the percentage of Sub-Standard assets in the Gross NPA of bank. High Sub-Standard ratio means more proportion of Sub-Standard asset in the Gross NPA. High ratio shows that there is a chance of recovery of assets is high. In City bank this ratio was 36.41% in March-2003 which is good for bank and it is 5.42% in year March-2006 which is not good for bank. As the level of Sub-Standard assets are more the chances of recovery of NPA are high.
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7. DOUBTFUL ASSETS RATIO

It is the ratio of total doubtful assets to Gross NPA of the bank. Doubtful Asset Ratio = TOTAL DOUBTFUL ASSETS 316.69 291.00 278.40 Total Doubtful Assets *100 Gross NPA (RS. IN LACS) DOUBTFUL GROSS NPA ASSETS RATIO (%) 521.08 445.44 436.09 60.78% 65.33% 63.84% Page 39
YEAR 2003 2004 2005

2006 2007 213.58 258.80 225.82 538.77 94.58% 48.03%
DO UB TF UL A S S E TS RA TIO 94.58% 100.00% 90.00% 80.00% 65.33% 63.84% 70.00% 60.78% 60.00% 48.03% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2003 2004 2005 2006 2007 YEAR-->
. ANALYSIS This ratio shows the percentage of Doubtful assets in the Gross NPA of bank. High Doubtful assets ratio means more proportion of Doubtful asset in the Gross NPA. More Doubtful assets means Bank should take action through recovery policy to reduce the level of Doubtful assets. As the Doubtful assets ratio is high which shows that bank should take quick action to reduce that level. This ratio should be less for the bank. B.M. Collage of Business Administration Page 40
PERCENTAGE-->
DO UB TF UL A S S E TS RA TIO
In City Co. Bank this ratio is in between from 60.00% to 65.00% in year from March-2003 to March-2005 but in March-2006 this ratio reach at 94.58% which indicate that bank must take some necessary action to recover it. And again in March-2007 this ratio decrease to 48.03% which is good for bank.
8. LOSS ASSETS RATIO

It is the ratio of Total loss assets to Gross NPA of bank.
Loss Assets Ratio =
Total loss Assets Gross NPA
*100 (RS. IN LACS) LOSS ASSETS RATIO (%) 2.81% 2.43% 0.24% 0.00% 29.67%
YEAR 2003 2004 2005 2006 2007
TOTAL LOSS ASSETS 14.64 10.84 1.04 0.00 159.85
GROSS NPA 521.08 445.44 436.09 225.82 538.77
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LOS S ASS ETS RATIO 35.00% 30.00% PERCENTAGE--> 25.00% 20.00% 15.00% 10.00% 5.00% 2.81% 2.43% 0.00% 0.24% 0.00% LOSS A SSE TS RA TIO
29.67%
2003 2004 2005 2006 2007 YEAR-->
. ANALYSIS This ratio shows the percentage of loss assets in the Gross NPA of bank. High loss assets ratio means more proportion of loss asset in the Gross NPA. This should be less in bank. The high ratio indicates that bank has more fraudulent account and it is bad for bank. The bank must take necessary action to reduce the level of loss assets. In City Co. Bank this ratio is 2.81% in March-2003 and from it reach at 0.00% in the year March-2006. This ratio is decreasing in bank which is good for bank but again in March2007 this ratio reaches at 29.67% which is the very high increase and it is very bad for bank. But the increase in the ratio of March-2007 is because bank was merged with Baroda dist. Co-op. bank in that year. Hence, bank should take some action to reduce the level of loss assets from the total NPA.
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FINDINGS FROM RATIO

As I have already analyze the ratio and from that I can say that banks financial condition is good. Hence, there is correction in the ratio of year 2007. And this correction is because of City bank was merged with Baroda Industrial co-op bank in year 2007. So, this effect of merging can be showing from the ratio of year 2007. From ratio I am able to find the following findings 1. The Gross NPA ratio of bank is 8.10% in the year 2003 after then it reaches to 5.21% in the year 2007. Hence, the idle gross NPA ratio is 5.00% and bank have 5.21%. So, we can say that banks financial condition is good. 2. Banks Net NPA ratio is 4.82% in the year 2003 and from 2004 to 2007 it remains 0.00% which is positive for bank. 3. The Problem assets ratio was 3.89% in the year 2003 which was the highest ratio and from that year it is decrease to 1.21% in the year 2006 which is good for bank. And this ratio is 2.23% in the year 2007.
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4. Provision ratio for the year 2003 is 42.59% which show that their was under provision in that year but in year 2007 this ratio is 112.60% which shows that bank have enough profit for the provision. 5. It will be considered good if the Sub-standard assets ratio is high. For City bank this ratio is 36.41% in the year 2003 which is good but it reaches to 5.42% in the year 2006 which is very bad for banks health. 6. Doubtful assets ratio should be low for the good health of bank and in City bank this ratio is 94.58% in the year 2006 which is very bad but in year 2007 this ratio decrease to 48.03% which is positive for bank. 7. Loss assets ratio should be zero and bank have 0.00% in the year 2006 which is good but in year 2007 this ratio reaches to 29.67% which is very rapid change with in a one year. And it is also bad for bank.
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CLASSIFICATION OF TOTAL NPA

(RS. IN LACS)
YEAR
SUBSTANDARD ASSETS DOUBTFUL ASSETS LOSS ASSETS TOTAL NPA
2005
156.65 278.40 1.04 436.09
2006
12.24 213.58 0.00 225.82
2007
120.12 258.80 159.85 538.77
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CLASSIFICATION OF NPA
600 500 400 300 200 100 0 2003 2004 2005 2006 2007 YEAR--> PERCENTAGE-->
SUB-STANDARD ASSETS DOUBTFUL ASSETS LOSS ASSETS TOTAL NPA
CLASSIFICATION OF TOTAL ADVANCES

(RS. IN LACS)
YEAR
TOTAL NPA STANDARD ASSETS TOTAL ADVANCES
2003
521.08 5912.67 6433.75
2004
445.44 6923.74 7369.18
2005
436.09 7266.63 7707.72
2006
225.82 6867.81 7093.63
2007
538.77 9801.49 10340.26
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C L A S S IF IC A T IO N O F T O T A L A D V A N C E S
1200 0 1000 0 RS IN LACS--> 800 0 600 0 400 0 200 0 0 200 3 200 4 2005 200 6 200 7 YEA R --> TO TA L N P A S TA N D A R D A S S E TS TO TA L A D V A N C E S
CHAPTER: 10
B.M. Collage of Business Administration Page 47
CONCLUSION & SUGGESTION
CONCLUSION
Now as we know that NON-PERFORMING ASSETS is like a black spot on diamond. They affect the profit of bank and also the financial health of bank. This NPA have number of effects on banks working. During my training in bank I gathered as much as possible information about NPA from bank and on the basis my experience I conclude the following points: City Co. banks NPA level is decreasing year by year which good for bank.
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In year 2007 City banks own NPA is very low but because of merger with Baroda industrial co-op bank the level of NPA was increase. The Gross NPA ratio of bank is 8.10% in the year 2003 after then it reaches to 5.21% in the year 2007. Hence, the idle gross NPA ratio is 5.00% and bank have 5.21%. So, we can say that banks financial condition is good. Banks Net NPA ratio is 4.82% in the year 2003 and from 2004 to 2007 it remains 0.00% which is positive for bank. Loss assets ratio should be zero and bank have 0.00% in the year 2006 which is good but in year 2007 this ratio reaches to 29.67% which is very rapid change with in a one year. And it is also bad for bank. City Co. Bank has sound credit appraisal system and also sound recovery policy. City Co. Banks NPA level is decreasing year by year and because of that City Co. Bank is being considered very good bank by citizens of Surat. Hence in present time the position of NPA in bank is much better then the past position. In year 1997 in India the Gross NPA was 15.7% but now it is 3.00% in the year 2007. This is very favorable to Indian economy and also banking sector of India. Governments act and also the Narsimhan committee on NPA are very useful to reduce the level of NPA. So, I can conclude that level NPA in any bank is important parameter to analyze the health of bank.
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SUGGSTIONS
1. City Co. banks NPA level is decreasing year by year which good for bank but bank should follow the recovery policy strictly. 2. In year 2007 City Co. banks own NPA is very low but because of merger with Baroda industrial co-op bank the level of NPA increase so City Co. bank should have consider the NPA situation of that bank before merger. 3. In City Co. bank there is no any special recovery department so bank should develop the department for the fastest recovery of NPA. 4. Bank should motivate the staff to do fast recovery NPA. 5. Bank have more NPA in Small Scale Industry so, they should try to reduce that level of NPA.
CHAPTER: 11
B.M. Collage of Business Administration Page 50
BIBILIOGRAPHY
JOURNALS
Co-Operative Bankers Diary 2008 -by John Dsalve Annual Report of City Co-Operative Bank -year, 2003, 2004,2005,2006,2007 Periodical circular and statement of RBI regarding to NPA managing and UCBs
WEBSITES
http://finance.indiamart.com/investment_in_india/banking_in_india.html Page 51

http://www.rbi.org.in/Home.aspx http://www.banknetindia.com/banking/cintro.htm http://www.investorwords.com/ http://www.indiabankassociation.com/
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Summer Training Project On Non Performing Assets

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Summer Training Project On Non Performing Assets

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Non Performing Assets

CHAPTER: 1 EXECUTIVE SUMMARY

B.M. Collage of Business Administration

Non Performing Assets Executive Summary

B.M. Collage of Business Administration

Non Performing Assets

CHAPTER: 2 RESEARCH METHODOLOGY

B.M. Collage of Business Administration

Non Performing Assets

Non Performing Assets

B.M. Collage of Business Administration

Non Performing Assets

CHAPTER: 3 OBJECTIVE OF PROJECT

B.M. Collage of Business Administration

Non Performing Assets

. To analyze the banks policy to recover the level of NPA

. To understand the effect of NPA on banks profit and its prestige

. To understand how corrective measures taken by bank for NPA

. To understand RBIS rules and regulations for the control of NPA

B.M. Collage of Business Administration

Non Performing Assets

B.M. Collage of Business Administration

Non Performing Assets

B.M. Collage of Business Administration

Non Performing Assets

CHAPTER: 5 INTRODUCTION OF BANKING INDUSTRY

B.M. Collage of Business Administration

Non Performing Assets

CHAPTER: 7 INTRODUCTION OF NON-PERFORMING ASSETS

B.M. Collage of Business Administration

Non Performing Assets

Year ended March,31 1993 1994 1995 2004

Specific Period 4 Quarters 3 Quarters 2 Quarters 1 Quarters

B.M. Collage of Business Administration

Non Performing Assets

FACTORS RESPONSIBLE FOR NPA

Non Performing Assets

PERFORMING ASSETS OR STANDERED ASSETS

B.M. Collage of Business Administration

Non Performing Assets

LESS THAN 1 YEAR

Non Performing Assets

Non Performing Assets

B.M. Collage of Business Administration

Non Performing Assets

CHAPTER: 8 CITY BANK & NON-PERFORMING ASSETS

B.M. Collage of Business Administration

Non Performing Assets

CHAPTER: 9 ANALYSIS OF DATA

B.M. Collage of Business Administration

Non Performing Assets

YEAR WISE NPA AT CITY BANK

B.M. Collage of Business Administration

Non Performing Assets

B.M. Collage of Business Administration

Non Performing Assets

B.M. Collage of Business Administration

Non Performing Assets

B.M. Collage of Business Administration

Non Performing Assets

20 40 60 80 100 120 V A L U E S -->

B.M. Collage of Business Administration