apex bank project report

A STUDY ON NON-PERFORMING ASSETS

EXECUTIVE SUMMARY

Indian banks are struggling to come out of the ‘net’ of Non-Performing Assets.

Banks are in the risk business. In the process of providing financial services, they assume

various kinds of risks viz. Credit Risk, Market Risk, Operational Risk, Interest Risk,

Forex Risk and Country Risk. Among these different types of risk, credit constitutes the

most dominant asset in the balance sheet, accounting for about 60% of total assets. The

credit risk is generally made up of Transaction Risk (default risk) and Portfolio Risk. The

risk management is a complex function and requires specialized skills and expertise. As a

result managing credit risk efficiently assumes greater significance.

Some of the NPA’s are excess holding of cash balance, bad and doubtful debts,

deteriorating assets and interest on loans and advances that are doubtful to be realized.

The Gross NPA of the apex bank is a percentage to the gross advances total assets

of apex bank is less when compared to other banks.

Recovery mechanism of NPA includes regular follow-up, rephasement of loan,

rehabilitation of potentially viable unit, acquisition of sick units by healthy units,

recovery of advances given under government sponsored schemes and settlement of

claims.

Recovery mechanism of NPA includes calling up to advances and filing of civil

suits, approaching to debt recovery tribunals, establishment of asset recovery branches,

lok adalats and one- time settlement scheme by RBI.

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The analysis conducted in this project consists of following aspects:

The functions performed by the banking industry a general study in industry

profile.

Overviews of the functioning of Indian bank that is the company profile of

the bank.

Another aspect of the study is the problem area that involves the study and

analysis of NPA’s at apex bank.

The study of non- performing asset management at Apex bank gives details of the

Gross NPA and Net NPA of the bank, which is least among the present co-operative

banks. The strategies of reducing non performing assets including prevention through

better appraisals, prevention through better follow up, rephasement of loans, merger

or acquisition of sick units by healthy units, recycling of funds, filing of civil suits,

debt recovery tribunals and recovery of advances given under government sponsored

programs or schemes.

Banks should take advantage of mergers and acquisition of sick units in order to

reduce the NPA’s. a large number of compromise proposals are being approved by

the institutions with the view of reducing NPA’s and recycling of funds instead of

restoring to expensive recovery proceedings spread over a long period of time.



1.1INDUSTRY PROFILE

Banking is as old as civilization itself, initially banking meant money lending.

The business of banking existed in Babylonia as early as 2000 BC. The Babylonians

developed a banking system where money was lent in temples against the security of

Gold and Silver left with them for safe custody.

In ancient Greece around the same time, there existed banking business. Even

then temples were used as depositories for the surplus funds of the people and were also

used as centers of the money lending business. The priests acted as financial agents of the

money lending business.

The practice of granting credit existed in ancient Rome. The Romans adopted

Greek system of banking. The banking business had a set back after the death of the

emperor JUSTINIAN in 565A.D. With the advent of trade and commerce in the middle

age, the banking business was mostly confined to only money lending. The JEWS and

LAMBARDY dominated the money lending business in the medieval period. The

Christians were forbidden by their religion to indulge in money lending. However in the

course of time with the weakening of the hold of religion and with the development of

trade and commerce around the 13th century, the Christians also entered the field of

money lending.

Banking business originated in England during the reign of Queen Elizabeth I.

Goldsmiths mainly did banking business. They accepted the valuables and the funds of

their customers for safe custody and issued receipts against the valuable lest for safe

custody. But in the course of time their receipts became payable to barrier on demand.



The banking business suffered a set back during the reign of Charles II in 1640

who declined to return the funds and valuables deposited by the Goldsmiths with the

exchequer under the case of government. This led to the growth of private banking and

also the establishment of the Bank of England in 1694.

Money banking system developed only after the industry resolution.

1. Banking business in ancient times.

The ancient Hindu Scripture refers to the prevalence of money lending activities

in the Vedic period. The epics Ramayana and Mahabharata refer banking business as full

fledged activity. During the Smriti period, which followed the Vedic period the members

of the Vaish community largely carried on banking business. In ancient times banking

business was mainly in the form of money lending. It laid a strong foundation for

banking industry.

2. Banking in pre-independence period

During the pre-independence period, Indigenous Banking and Money Lenders

primarily carried on banking business. Farmer’s main sources of loans were indigenous

bankers and money lenders, even to the present times especially in rural and urban areas.

Indigenous bankers have been operating in India since the ancient times mainly in

small towns, semi urban areas and rural areas. Indigenous banking is carried on by all

castes of people, but it is generally monopoly/ed by certain banking caste such as Shroffs

in Maharashtra, Seths in West Bengal, Baniyas in Uttar Pradesh, Sahukars in Punjab,

Chettiars in Tamil Nadu, Marwaries and Jains in Rajasthan and Gujarat.

3. Development of Indian banking industry in the post independence period

During the pre-independence era Indian banking industry had to pass through

several economic crisis and bank failures. But with India attaining independence the

banking situation has completely changed. Some of the developments during the post

independence period until today are:

The nationalization of Reserve Bank of India on 1st January 1949.

The passing of the banking regulation act in 1949.



The nationalization and conversion of the Imperial Bank of India into the State

Bank of India on 11th July 1955.

The nationalization of 14 major commercial banks on 19th July 1969 and the

future nationalization of 6 commercial banks on 15th April 1980.

Establishment of Regional Rural Banks to cater to the needs of rural areas. About

196 rural banks are catering to the needs of rural people.

Setting up of Land Development Banks to cater to the long-term credit needs of

agriculturists.

Setting up of special financial institutions for meeting the specialized need of

certain sectors of the economy. Some of the specialized institutions are:

Industrial Development Bank of India (IDBI).

Industrial Credit and Investment Corporation of India (ICICI).

State Financial Corporation (SFC).

Industrial Development Corporation (IDC).

Small Industries Development Bank of India (SIDBI).

Industrial Bank for Reconstruction and Development (IBRD).

National Bank for Agriculture and Rural Development (NABARD).

Export Import Bank of India (EXIM).

Export Credit Guarantee Corporation of India.

The National Housing Bank.

Present Banking Scenario

The Indian Banking System of today can be compared with finest banking system

in the whole world. Today the Indian banking system is on very sound lines with a

network of branch spread all over the country and serving all sections of the society with

innovative banking programs.

Today’s Indian banking system comprises of 27 public sector banks, 30 private

sector non schedule commercial banks, several private sector new commercial banks, 27

foreign schedule banks, 196 regional rural banks, several thousands co-operative banks



and several land development banks. Institutions like Life Insurance Corporation of India

and Unit Trust Bank of India also plays an important role in Indian banking system.

With the liberalization of the economy in 1991 the banking sector has undergone

a revolution. Foreign banks are based in India and this has led to further improvement and

sophistication of banking service due to competition.

Definition:

The Indian banking regulation act of 1949 has aptly defined the term ‘Banking’ in

section 5(1) (B) as “accepting for the purpose of lending or investments of deposits of

money from the public, repayable on demand or otherwise and withdraw able by cheque,

draft, order or otherwise”

Banking Structure or Banking System in India

The constituents in the banking sector of India are

1. The Reserve Bank of India

2. The State Bank of India and its Subsidiaries

3. The Nationalized and the Private Sector Indian Commercial Banks.

4. The Private Sector Foreign Exchange Banks in India

5. The Co-operative Banks and the Land Development Banks

6. The Regional Rural Banks.

Indian Commercial Banks

Banks that carry on commercial banking operation such as acceptance of deposits

from the public, repayable on demand or alter a short period and the granting of short

term credit mainly to trade, commerce and industry with a wide network of branches

throughout the country.

Commercial banks can be classified as

1. Public Sector Banks



2. Private Sector Banks

Co-Operative Bank Structure




National Bank of Agriculture and Rural Development

Short term Lending

RBI

Urban Credit Co-Operative Banks

STATE CO-OPERATIVE APEX BANK

Agricultural Credit Co-Operative Banks

Non Agriculture Credit Co-Operative Banks

Long term Lending

State Level State Land Bank

District Central Co-operative

FSS MP Co-Operative Bank

Grain Bank

Primary Land Development Bank

Land Mortgages Bank

Credit

Housing BanksUrban BanksEmployee’s Credit SocietiesSpecialized Co-Operatives

Industrial Co-Operative

Consumer Co-Operative

Non-Credit

Primary Co-Operative Bank


1.2COMPANY PROFILE

The Karnataka State Co-Operative Apex Bank Limited has been playing a very

significant role in the dispensation of production, credit to the farmers. It is to the credit

of Karnataka, that the first co-operative credit institution in the entire country was

established way back in the year 1904 in a village called Kanaginahal now at Gadag

district. Primary Agricultural Credit Society (PACS) at the village level federated later to

District Central Co-Operative Banks (DCCBs) at the district level. These DCC banks

federated themselves at the state level to form Apex Bank.

The Karnataka State Co-operative Bank was established in the year 1915 and the

late Varadaraja Iyengar has been its founder president. It made a humble beginning with

a working capital of Rs.1.80 lakh comprising of Rs.1.26 lakhs as deposits. Over 90 years,

the institution has grown by leaps and bounds and today it’s working capital is

Rs.4718.28 crores with deposit level of Rs.2264.14 crores and own fund of Rs.265.91

crores. The bank has earned Rs.13.35 crores.

Apex bank is a pioneer in agriculture finance and allied activities. Apex bank is

ranked as one of the premier state co-operative banks in the country. The main objectives

of the bank are to serve the farmers in the state by providing short term and long term

agricultural loans, general banking business and function as a leader of the co-operative

banks in the state.

NATURE OF BUSINESS

The business carried by the bank is generally related with providing short term

and long term agricultural loans. It also accepts deposits from the public. Apex bank also

provides cash credit loans to processing, marketing and consumer co-operatives as well

as sugar factories in Karnataka and working capital loans to state level and national level

institutions.



Quality Objectives:

To serve as a state co-operative bank and as a balancing center in the state of

Karnataka for registered co-operative societies.

To raise funds by way of deposits, loans, grants, donations, subscriptions,

subsidies etc for financing the members by way of loans, cash credits, overdrafts

and advances.

To develop, assist and co-ordinate the member DCCBs and other co-operative

societies and secure financial assistance for them.

To arrange/hold periodical co-operative conferences of the DCCBs and other

members of the bank and to take action for the growth and development of the co-

operative credit movement.

BANK’S OPERATION

Apex bank works in the regional level only. It does not work in national level.

The area of operation covers the entire Bangalore. It has 31 branches in Bangalore and

head quarters is situated in Chamarajpet. The branch offices of bank are adequately

delegated with power of sanction of disbursements. If the loans are to be provided up to

10 lakhs then it is handled by concerned branch offices but if it is more than 10 lakhs

then it is handled by main branch.

BRANCHES AT BANGALORE:

Head Office Branch-Chamarajpet

Ashoka Pillar

Banashankari

Basaveshwara nagar

Girinagar

Gokula

Gandhinagar

Agara-HSR layout



Indiranagar

Jayanagar Market Complex

J.P Nagar

Kalpatharu Super Bazaar

Koramangala

Kengeri Satellite Town

Lakkasandra

Magadi Road

Ganganagar

Padmanabha Nagar

Public Utility Building

Rajajinagar

R.P.C Layout

Vijayanagar

Vidhana Soudha

Legislators’ Home

M.S Building

Mahalakshmipuram

Vyalikaval

Chandra layout

Vivekananda College (Ext. Counter)

R.T Nagar

OWNERSHIP PATTERN

Apex bank is state co-operative bank established by the state government in the

year 1915 under the organization of Primary Agricultural Co-operatives Credit societies

(PACS)

The Karnataka State Co-operative Apex Bank Ltd has shares worth Rs.65.66

Crores. The share capital consisting of Co-operative institutions to the extent of Rs

58.62 Crores and other than co-operative institutions of Rs 7 Crores and some part by the

Government of Karnataka.



Sources of funds:

1. The bank obtains its funds from

2. Shares

3. Deposits

4. Borrowings from NABARD, RBI, SBI, IDBI, ICICI and IFC.

5. Contribution from co-operative societies

6. Other sources subject to approval to Board and the Registrar.

Service to customers

The Karnataka State Co-Operative Apex Bank Limited provides following services to

the societies:

Financing of short term loans

Financing of medium term loans

Financing of Kisan credit card scheme/loan

Credit facilities to self help groups, Advancing medium term loans for economic

development and providing cash credit loans

Advancing workshop capital loans

Collection of Cheques and drafts

Loans through various schemes

Personal banking

1) Financing of short term loans:

Financing of short term loans for seasonal agricultural operations and for

marketing of crops. These loans are repayable within one year.

2) Financing of medium term loans:

These loans are sanctioned for agricultural purpose and non-agricultural purpose.

3) Financing of Kisan credit card schemes/loan:

Kisan credit card aims at providing timely and adequate credit support to farmers

for their cultivation including investment credit needs in a flexible and cost



effective manner. All DCC banks in the state have implemented the kisan credit

scheme.

4) Credit facilities to self help groups:

All the DCCBs have taken keen interest in the formation of self help groups in

co-ordination with PACS. Self help groups mobilize their savings and avail credit

facilities from DCCBs and PACS.

5) Advancing medium term loans with economic development

These loans are advanced for the agricultural infrastructures such as lift irrigation,

diary, poultry, plantation, gobar gas etc that constitutes schematic lending.

6) Providing cash credit loans:

Providing cash credit loans to processing marketing and consumer co-operatives

as well as sugar factories in Karnataka and also term loans to sugar factories under

consortium agreement.

7) Advancing working capital loans:

Advancing working capital loans to state level co-operatives like MARKFED,

KCCF and to the national level co-operatives like IFFCO and KRIBHCO. The bank

provide similar facilities to public sector undertakings like Karnataka Silk

Marketing Board, Karnataka Handloom Development Corporation, Karnataka

Small Scale Industries Development Corporations, Food Corporations of India

directly and also through consortium arrangements with commercial banks

8) Collection of Cheques and Drafts:

The bank extends finance to the non-farm sector and to the development of

cottage industries, small scale industries and rural artisan and weavers. It is a

scheduled bank in all aspects including remittance of funds, demand drafts, mail

transfers, collection of Cheques and drafts.

9) Loans through various schemes:

Such as:

Vehicle loans



Housing loans

Mortgage loans

Installment loans

Jewel loans

10) Personal Banking:

Apex bank provides the following deposit schemes to the customers:

11) Fixed Deposits:

In this account, the customer deposits the deposit money period up to 10 years

12) Current Deposits:

In this type, the individuals or businessmen operate. This account is kept open

for the entire day. The customer can make any number of deposits and

withdrawals in a day during business hour.

13) Saving Bank Deposits:

In this deposits, the low income class groups and marginal customers deposits

the money.



2.1 THEORETICAL BACKGROUND OF THE STUDY

The theoretical study provides the background and the tools for the NPA. It

explains the method of analysis, advantages and disadvantages, scope and limitations of

the various tools used to analyze the Company’s financial position.

The focus of the financial analysis is on key figures in the financial statements

and the significant relationships that exist between them. The analysis of financial

statements is a process of evaluating relationship between component parts of financial

statements to obtain a better understanding of the Company’s position and performance.

The first task of the financial analyst is to select the information relevant to the decision

under consideration from the total information contained in the financial statement. The

second step involved in financial analysis is to arrange the information in a way to

highlight significant relationships. The final step is interpretation and drawings of

inferences and conclusions. In brief, financial analysis is the process of selection,

relation and evaluation.

The present data is devoted to an in depth analysis of financial statements use for

decision-making. The present data is mainly focused on NPA as the most widely used

technique of financial statement analysis, importance of NPA and limitations of NPA.

In Today banks have become a part and parcel of our life. Now banks offer

access even a common and their activities extend to areas which are untouched. Apart

from their traditional business oriented functions they have now come out to fulfill

national responsibilities. They accelerate the economic growth of a country and steer the

wheels of the economy towards its goal of “self reliance in all fields”.

VISION,MISSION AND QUALITY POLICY

VISION:



As a state co-operative bank, Apex bank shall be a dominant financial

institution in the state, leading the state to economic prosperity.

They shall be the model of an effective, protective, dynamic and financial sound

organization, respectively to state goals and aspiration.

They shall maintain highly trained and motivated professionals committed to the highest

standards of ethics and excellence.

They shall contribute to building progressive and standard of co-operative societies in the

service of farmers and rural areas

MISSION:

Ensuring the best quality of life and success of their farmers, agricultural co-

operative societies, district central co-operative banks, clients and employees who

are the reasons for their being.

OUALITY POLICY

For their Farmers:

They shall continue to improve their socio-economic status through timely

financial and technical support.

For their PACS and DCC banks

They shall ensure mutual co-operation and compliment action to achieve optimum

gains in an achievement of confidence and trust.

For their Employees

They shall ensure a work atmosphere of mutual respect and team work

within a system of recognition and regards. They shall continue to provide

appropriate training and value enhancement to ensure the highest degree of

professionalism and integrity.

For the People of Karnataka:

They commit their unvarying loyalty and dedicated service in the pursuit of

state farmer’s interest.



Schedule As at

31.03.2008

(Rs. 00’000)

As at

31.03.2009

(Rs. 00’000)



(NON-PERFORMING ASSETS)

Definition

A loan or lease that is not meeting its stated principal and interest payments.

Banks usually classify as nonperforming assets any commercial loans which are more

than 90 days overdue and any consumer loans which are more than 180 days overdue.

More generally, an asset which is not producing income.

In India, an asset is classified as a Non-Performing Asset (NPA) if interest or

installments of principal due remain unpaid for more than 180 days. However, with effect

from March 2004, default status would be given to a borrower if dues are not paid for 90

days. If any advance or credit facilities granted by a bank to a borrower become non-

performing, then the bank will have to treat all the advances/credit facilities granted to

that borrower as non-performing without having any regard to the fact that there may still

exist certain advances/credit facilities having performing status.

What is a NPA?

Action for enforcement of security interest can be initiated only if the secured

asset is classified as Non Performing Asset.

Non Performing Asset means an asset or account of borrower, which has been

classified by a bank or financial institution as sub-standard, doubtful or loss asset, in

accordance with the directions or guidelines relating to asset classification issued by RBI.

An amount due under any credit facility is treated as "past due" when it has not

been paid within 30 days from the due date. Due to the improvement in the payment and

settlement systems, recovery climate, up gradation of technology in the banking system,

etc., it was decided to dispense with 'past due' concept, with effect from March 31, 2001.

Accordingly, as from that date, a Non performing asset (NPA) shell be an advance where


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i. Interest and /or installment of principal remain overdue for a period of more than

180 days in respect of a Term Loan,

ii. The account remains 'out of order' for a period of more than 180 days, in respect

of an overdraft/ cash Credit(OD/CC),

iii. The bill remains overdue for a period of more than 180 days in the case of bills

purchased and discounted,

iv. Interest and/ or installment of principal remains overdue for two harvest seasons

but for a period not exceeding two half years in the case of an advance granted for

agricultural purpose, and

v. Any amount to be received remains overdue for a period of more than 180 days in

respect of other accounts.

Overdue

Any amount due to the bank under any credit facility is 'overdue' if it is not paid

on the due date fixed by the bank.

Difficulties with the non-performing assets:

1. Owners do not receive a market return on their capital. In the worst case, if the bank

fails, owners lose their assets. In modern times, this may affect a broad pool of

shareholders.

2. Depositors do not receive a market return on savings. In the worst case if the bank

fails, depositors lose their assets or uninsured balance. Banks also redistribute losses to

other borrowers by charging higher interest rates. Lower deposit rates and higher lending

rates repress savings and financial markets, which hampers economic growth.

3. Non-Performing loans epitomize bad investment. They misallocate credit from good

projects, which do not receive funding, to failed projects. Bad investment ends up in



misallocation of capital and, by extension, labor and natural resources. The economy

performs below its production potential.

4. Non-performing loans may spill over the banking system and contract the money

stock, which may lead to economic contraction. This spillover effect can channelize

through illiquidity or bank insolvency; (a) when many borrowers fail to pay interest,

banks may experience liquidity shortages. These shortages can jam payments across the

country, (b) illiquidity constraints bank in paying depositors e.g. cashing their paychecks.

Banking panic follows. A run on banks by depositors as part of the national money stock

become inoperative. The money stock contracts and economic contraction follows (c)

undercapitalized banks exceeds the bank’s capital base.

Lending by banks has been highly politicized. It is common knowledge that loans

are given to various industrial houses not on commercial considerations and viability of

project but on political considerations; some politician would ask the bank to extend the

loan to a particular corporate and the bank would oblige. In normal circumstances banks,

before extending any loan, would make a thorough study of the actual need of the party

concerned, the prospects of the business in which it is engaged, its track record, the

quality of management and so on. Since this is not looked into, many of the loans become

NPAs.

The loans for the weaker sections of the society and the waiving of the loans to

farmers are another dimension of the politicization of bank lending.

Most of the depositor’s money has been frittered away by the banks at the

instance of politicians, while the same depositors are being made to pay through taxes to

cover the losses of the bank.

The effects of NPA are:-

1. They decrease profitability.

2. They reduce capital assets and lending limits.



3. They increase loan loss reserves.

4. They bring unwanted attention from government regulators.

An analysis of factors contributing to NPAs

An analysis of the contributory factors resulting in the emergence of NPAs on a large

scale amongst commercial banks and financial institutions would lead to the following

conceptualization:

1. PSBs performed creditably in respect of all parameters set for them. However, in

the early 1990s, it emerged that PSBs were suffering from acute capital

inadequacy and many of them had negative profitability. This is because the

parameters set for their functioning were deficient and they did not project the

paramount need for these corporate goals. Incorrect goal perception and

identification led them to the wrong destination.

2. The pre-reform era witnessed directed banking for PSBs which functioned under

the overall control and direction of the Finance Ministry, which along with the

Reserve Bank of India (RBI), decided/directed all aspects of the working of the

banks, leaving little freedom to price their products in competition with each

other, cater their products to segments of their choice, or invest their funds in their

best interest as they determined.

3. Since the 1970s, the SCBs of India functioned totally as captive capsule units cut

off from international banking and unable to participate in the structural

transformations, the sweeping changes, and the new types of lending products

emerging in global banking institutions. Their personnel lacked needed training

and knowledge resources required to compete with international players.



4. Major policy decisions were taken externally by the Finance Ministry/RBI. The

environment of receiving decisions from a political background as distinguished

from a professional outfit prevented the best talents coming to occupy key

positions.

5 The quantum of credit extended by the PSBs increased by about 160 times in the

three decades after nationalization (from around 3000 crore in 1970 to 475 113

Crore on 31 March 2000). The Banks were not sufficiently developed in terms of

skills and expertise to regulate such growth and manage the diverse risks that

emerged in the process.

6 The need for organizing an effective mechanism to gather and disseminate credit

information amongst the commercial banks was never felt or implemented. The

archaic laws of secrecy of customer information prevented banks from publishing

names of defaulters for common knowledge of the other banks in the system.

7 Effective recovery from defaulting and overdue borrowers was hampered on

account of a sizeable overhang component arising from infirmities in the existing

process of debt recovery, inadequate legal provisions on foreclosure and

bankruptcy and difficulties in the execution of court decrees. Legal remedies were

beset with too many formalities and were very time-consuming.

8 Effective corporate management was an alien concept. In respect of PSBs, the

boards were ineffective and the only/main shareholder was the government of

India. The government exercised multiple roles and concerns, and the instinct to

act as a watchful shareholder and increase shareholders value of banks and

financial institutions was never felt or experienced.

9 Credit management on the part of the lenders to the borrowers to secure their

genuine and bonafide interests was not based on pragmatically calculated

anticipated cash flows of the borrower’s concern, while recovery of installments

of term loans was not out of profits and surplus generated but through recourse to

the corpus of working capital of the borrowing concerns.



10 Functional inefficiency was also caused due to overstaffing, manual processing of

bloated operations and a failure to computerize the banks in India, when elsewhere

Throughout the world the system switched over to computerization of operations.

Impacts of NPAs on the working of cooperative banks

NPAs affected the profitability, liquidity and competitive functioning of public

and private sector banks, and finally the psychology of the bankers in respect of their

disposition towards credit delivery and credit expansion.

Impact on profitability

Cooperative banks incurred a total amount of Rs. 31 251 crore towards

provisioning NPAs from 1 April 1993 to 31 March 2001. This has brought net NPAs to

Rs.32 632 crore or 6.2% of net advances. The enormous provisioning of NPAs together

with the holding cost of such non-productive assets over the years has acted as a severe

drain on the profitability of the PSBs. Equity issues of nationalised banks that have

already tapped the market are now quoted at a discount in the secondary market. This has

alternatively forced PSBs to borrow heavily from the debt market to build Tier II capital

to meet capital adequacy norms, thus putting severe pressure on their profit margins. It is

worthwhile to compare the aggregate figures of the 19 nationalised banks for the year

ended March 2001, as published by RBI in its Report on Trends and Progress of Banking

in India

Current status of NPAs and Indian banks: A statistical introspection

Indian banking in 2002 represents a sea change from where it was in the

preceding decade. There has been a decade of professional banking moving towards

global standards. Banks, in general, performed extremely well in 2001-2002 and

onwards.



In 1992-1993, the profitability of the PSBs as a group turned negative with as

many as twelve nationalized banks reporting net losses. By March 1996, the outer time

limit prescribed for attaining capital adequacy of 8%, eight public sector banks were still

short of the prescribed limit.

The public sector banks which suffered losses of Rs.3 293 crore in 1992-1993 and

Rs.4349 crore in 1993-1994, i.e. in the initial years of introduction of prudential norms,

ended the year 1997-1998 with a net profit of Rs.5 027 crore. Net NPAs of public sector

banks formed 8.2% of the net advances and 3.3% of the total assets as at the end of

March 1998. Corresponding figures as at 31 March 2002 are 5.82% and 2.42%. PSBs

recorded an aggregate net profit of Rs.8 301 crore in 2001-2002.

Measures taken to deal with NPAs

Dismantling of controls and deregulation of working of commercial banks,

permitting entry of new private sector banks and permission for foreign banks to

open more branches. This had the effect of opening Indian banking to global

standards by making them function efficiently in a competitive environment. This

was the initial step to create a structural framework for the PSBs to enable them to

adjust to the new environment and turn into dynamic and self-reliant operating

units.

The process of deregulation freed the banks from the control of the Finance

Ministry and RBI. The RBI, hereafter, acts as a regulator. In the year 1994, RBI

further fine-tuned the process by constituting a separate Board of Financial

Supervision (BFS) with the objective of segregating the supervisory role from the

regulatory functions of RBI. Banks now operate independently in a competitive

financial market, but have to comply with prudential norms and safeguards

essential for their wellbeing.



RBI made prudential norms, as conveyed by the Basel Accord of 1988,

applicable to Indian banks. These included standards relating to capital adequacy,

income recognition, asset classification and provisioning for non-performing

assets. This had the effect of providing much-needed transparency about the state

of affairs of each bank and enabled instant corrective measures to be executed.

Banks were permitted to seek infusions of fresh equity from the public with

the government retaining a 51% share of equity capital. A number of PSBs

entered the market and raised Tier I and Tier II capital accordingly. This has

created a new class of stakeholder (albeit shareholders) vitally interested in the

wellbeing of the banks and qualified/empowered to question the Board of

Directors at the appropriate forum.

Governance: RBI emphasized the paramount importance of accepting norms of

good corporate governance by banks. While the Securities Exchange Board of

India (SEBI) has introduced a general set of norms applicable to all companies

including banking companies, RBI has further covered the special needs of

banking companies by bringing out an appropriate set of standards.

The Credit Information Bureau (India) Ltd.: In order to expedite credit and

investment decisions by banks and financial institutions, and curb the accretion of

fresh NPAs, the Credit Information Bureau (India) Ltd., (CIBIL) was set up by

the State Bank of India in association with HDFC in August 2000. CIBIL was to

be technology driven to ensure speedy processing, periodic updating and

availability of error-free data at all times in the system. As a first step towards

activating the CIBIL, it was decided to initiate the process of collection and

dissemination of some relevant information within the existing legal framework.

The RBI accordingly decided to constitute a group drawing representation from

CIBIL, the Indian Banks' Association (IBA), select banks and FIs to examine the



possibility of the CIBIL performing the role of collecting and disseminating

information on the list of suit-filed accounts and the list of defaulters, including

willful defaulters, which is presently handled by the Reserve Bank. The group is

also expected to examine other aspects of information collection and

dissemination, such as the extent, periodicity and coverage, and the feasibility of

supplying information on-line to members in the future.

Norms of lenders' liability: RBI has come out with broad guidelines for framing

the Fair Practices Code with regard to lenders' liability to be followed by

commercial banks and financial institutions, emphasizing transparency and proper

assessment of borrowers' credit requirements. RBI has issued a draft of the model

code and has advised the individual banks to adopt model guidelines for framing

their respective Fair Practices Codes with the approval of their Boards. This is a

balancing measure. It imposes self-discipline on the part of the banks, which will

only indirectly prevent accounts turning into NPAs on account of the bank's own

failures or wrong actions.

Risk assessment and risk management: Since the year 1998, the RBI has been

making serious efforts towards evolving a suitable and comprehensive model for

risk-management by the banks and to integrate this new discipline in the working

systems of banks. The RBI has identified risk-prone areas in asset-liability

management, credit management, changes in market conditions and counter-party

and country risks and has evolved suitable models for managing all such risks.

RBI has also evolved a system of Risk-based Supervision of Banks. It also

advised banks on a parallel scheme for carrying out internal audit based on risk

perception.

E-banking and VRS: The influence of these areas of banking reforms may not

appear directly relevant to a reduction of NPAs. However, computerization

provides for data-accuracy and operational efficiency and results in a better



Management Information Service (MIS). VRS rationalizes the work force, which

in turn results in better productivity and operational efficiency.

RBI Guidelines on Fair Practices Code for Lenders are applicable to

SCBs/AIFIs (excluding RRBs and LABS): According to the Fair Practices Code,

which is at the core of lender liability, the lenders must treat their borrowers

fairly, and when they do not, they can be subject to litigation by the borrower for

a variety of reasons, inter alia, breach of contract, breach of fiduciary duty, fraud

and misrepresentation, and negligent loan processing and administration.

Compromise settlement schemes: Banks are free to design and implement their

own policies for recovery and write-off incorporating compromise and negotiated

settlements with the approval of their Boards, particularly for old and unresolved

cases falling under the NPA category. The policy framework suggested by RBI

provides for setting up of independent Settlement Advisory Committees headed

by a retired judge of the High Court to scrutinize and recommend compromise

proposals. Specific guidelines were issued in May 1999 to PSBs for one time non-

discretionary and non-discriminatory settlement (OTS) of NPAs of the small

enterprise sector. The scheme was operative up to September 30, 2000. (Public

sector banks recovered Rs. 668 crore through compromise settlement under this

scheme). Guidelines were modified in July 2000 for recovery of the stock of

NPAs of Rs. 5 crore and less, as on 31 March 1997. (The above guidelines which

were valid up to 30 June 2001, helped the public sector banks to recover Rs. 2 600

crore by September 2001). An OTS scheme covering advances of Rs. 25 000 and

below continues to be in operation and guidelines in pursuance to the budget

announcement of the Honorable Finance Minister providing for OTS for advances

up to Rs.50 000 in respect of NPAs of small/marginal farmers are being drawn up.

Circulation of information on defaulters: The RBI has put in place a system for

periodic circulation of details of willful defaults of borrowers of banks and



financial institutions. This serves as a cautionary list while considering requests

for new or additional credit limits from defaulting borrowing units and also from

the directors/proprietors/partners of these entities. RBI also publishes a list of

borrowers (with aggregate outstanding of Rs. 1 crore and above) against whom

banks and FIs have filed suits for recovery of their funds, as on 31 March every

year. These measures serve as a negative basket of steps shutting off fresh loans

to these defaulters.

Recovery action against large NPAs: RBI advised public sector banks to

examine all cases of willful default of Rs. 1 crore and above and file suits in such

cases, and file criminal cases in regard to willful defaults. Boards of Directors are

required to review NPA accounts of Rs.1 crore and above with special reference

to fixing of staff accountability.

Special mention accounts: In a recent circular, RBI has suggested to the banks to

have a new asset category or “special mention accounts” for early identification of

bad debts. This would be strictly for internal monitoring. Loans and advances

overdue for less than one quarter and two quarters would come under this

category. Data regarding such accounts will have to be submitted by banks to the

RBI. However, special mention assets would not require provisioning, as they are

not classified as NPAs. An asset may be transferred to this category once the

earliest signs of sickness/irregularities are identified. This will help banks look at

accounts with potential problems in a focused manner right from the onset of the

problem, so that monitoring and remedial actions can be more effective. Once

these accounts are categorized and reported as such, proper top management

attention would also be ensured. Borrowers having genuine problems due to a

temporary mismatch in funds flow or sudden requirements of additional funds

may be entertained at the branch level and for this purpose, a special limit to tide

over such contingencies may be built into the sanction process itself.



2.2Title of the project

“A report on Non-performing assets at Apex bank, head office Bangalore”

2.3Statement of problem

This project is conducted to analyze the non-performing assets level of apex bank

and its impact on the performance of the bank.

Non- performing assets is a major bane for the banks in India, so as in the case of

apex bank the study has been undertaken to know the status, practices and impact of

NPA’s on the profitability of the bank. The problem lies in understanding and analyzing

the NPA’s.

2.4 Objectives of study

To have an overview of history, growth and development, functioning, schemes

and facilities available at Apex bank.

Analyzing the prudential norms an asset classification and income recognition.

Understanding the concept of non-performing assets and to intimate timely steps

to identify it.

To know the policies, procedures followed by the Apex bank with respect to non-

performing assets management.



Understanding the need and nature of various strategies for reducing NPA level

through recovery mechanisms.

2.5 Scope of study

The study of non-performing asset is a well-researched area and contributes

constructively to the benefit of the banks, financial institution and other interested people.

The study shows the developments and stability in earnings.

2.6 Methodology

Introduction

The quality of the project work depends on the methodology adopted for the

study. Methodology, in turn, depends on the nature of the project work. The use of proper

methodology is an essential part of any research. In order to conduct the study

scientifically, suitable methods & measures are to be followed.

Research Design

The type of research used for the collection & analysis of the data is “Historical

Research Method”.

The main source of data for this study is the past records prepared by the bank.

The focus of the study is to determine the non-performing assets of the bank since its

inception & to identify the ways in which the performance especially the non-performing

assets of the Apex Bank can be improved.

The data regarding bank history & profile are collected through “Exploratory

Research Design” particularly through the study of secondary sources and discussions

with individuals.



Data Collection Method

By taking guidance from bank guide & departmental guide.

Secondary Data

Collection of data through bank annual reports, bank manuals and other relevant

documents.

Collection of data through the literature provided by the bank.

2.7 Limitations of the study

Though sincere effort has been made during the study, certain limitations cannot be

avoided. They are as follows:-

Difference in definitions

Nonperforming assets is based on NPA statement of the bank

Prepared as per accounting practices.

This practice in some cases may lead to window dressing to cover up bad

financial position.

This study is based only on 3 years NPA statement.

NPA statement suffers from inherent weakness of accounting practices, such as

their historical nature of matching principle etc.



ANALYSIS AND INTERPRETATIONTABLE NO.1

The table showing the percentage change in NPA at the KSCAB Ltd.YEAR NPA(Rs.in Lakhs) NPA in %2007-08 20895.25 -14.682008-09 19201.99 -8.102009-10 14602.61 -4.64

The chart showing the percentage change in NPA at the KSCAB Ltd.

Inference:The above charts show in the financial year 2007-08 NPA is -14.68

from the financial year 2008-09 to 2009-10 NPA is increased.This enhances the small amount of the NPA increased of the bank. The

reduction in NPA can attribute to the positive strategies undertaken by Apex bank.



TABLE NO.2The table showing the percentage of NPA in different sector in

the financial year 31.03.2007.

SECTOR % of NPA NPA in degreeAgriculture 18.48 67

Sugar 67.82 244Others 13.20 49Total 100 360

The chart showing the percentage of NPA in different sector.

Inference:The above chart shows total NPA in different sector in the year 2007 Sugar

sector has increasing trend 67.82% from sugar sector 18.48% from the agriculture sector and 13.2% from the other sector.


67.8

13.2018.48


Table 1: Table showing gross NPA of the bank (in lakhs) from 2006 to 2008

As at Gross NPA (Rs in lakhs)

2006 3831.36

2007 2679.22

2008 898.49

Analysis:

The table shows the gross NPA of Apex Bank from 2006 to 2008. It is clearly

evident from the table that the gross NPA has come down from Rs. 3831.36 lakhs to Rs.

898.49 lakhs as on 2008 this is appreciable, as the gross NPA has gradually reduced

during the period.



Chart 1: Chart showing gross NPA of the bank (in lakhs) in the last three years

Inference:

Every best possible effort is taken by the bank to curb the growth of NPA. The

bank has been focusing its attention on the recovery of the NPAs and as a result it has

been able to reduce the NPA’s during the last years. Since the gross NPA is an indicator

of inherent quality of the banks credit appraisal capabilities, the banks focuses to a large

extent in reduction of its gross NPA



Table 2: Table showing the percentage of gross NPA of Apex Bank

Year Percentage of gross NPA (%)

2006 14.65%

2007 10.94%

2008 4.3%

Analysis:

The percentage of net NPA as on 2006 was 14.65%, where as in 2007 it was

10.94% this is the period where NPA level has drastically come down, and in the 2008 it

is 4.3%, from this we can infer that the situation is under effective control.

Chart 2: Chart showing percentage of gross NPA of Apex Bank from 2006 to 2008

Inference:



The analysis of the three years shows a gradual decrease in the percentage of the

gross NPA to the loans and advances. This is appreciable to the growth of the

profitability of the bank. This is achieved by adopting the various recovery measures

adopted by the bank.

Table 3: Table showing the net NPA of the Apex Bank from 200 to 2008

As at Net NPA (in lakhs )

2006 2944.78

2007 1388.59

2008 658.20

Analysis:

The table shows the analysis of the net NPA of apex bank there is a gradual

decrease in the net NPA from 2944.78 in2006 to Rs. 1388.59 lakhs in 2007 and

Rs. 658.20 lakhs in the year 2008.

Chart 3: Chart showing net NPA of apex bank from 2006 to 2008

Inference:



The chart shows the analysis of the net NPA where it is decreasing continuously.

The decrease in NPA is due to the strict recovery strategies laid by the bank and proper

classification of assets and timely recovery of the loans and advances. The decrease in the

net NPA enriches the strengths of the financial position of the company by decreasing the

credit loss and increasing the asset.

Table 4: Table showing the percentage of net NPA of Apex Bank.

Year Percentage of net NPA

2008 3.15%

2009 1.70%

2010 1.13%

Analysis:

The three years analysis of % of net NPA states that there is decrease in the

percentage of NPA from 3.15% in 2008 to 1.70% in the year 2009 and 1.13% in the year

2010. This decrease in %of net NPA is appreciable.



Chart 4: Chart showing the percentage of net NPA of Apex Bank

Inference:

The decrease in the percentage of the net NPA is due to the proper asset

classification and the appropriate recovery measures, which are taken for enhancing the

profitability of the bank.

The bank has successfully reduced its net NPA from 3.15% in 2008 to 1.13% in

2010. Steps are taken on a continuous basis to control the level of NPAs and ensure

recovery of the existing bad debts. The bank has formulated a recovery policy with built

in mechanism to settle NPAs by compromise as well.



Table 5: Table showing the gross and net NPA position of the Apex Bank

(Amount in lakhs of Rs)

Year Gross npa Net NPA

2006 3831.36 2944.78

2007 2679.22 1388.59

2008 898.49 658.20

Analysis:

The table shows the amount of gross NPA and net NPA during 2006 to 2008.

There has been a continuous reduction in GNPA and NNPA.

Chart: 5 Chart showing the gross NPA and net NPA



Inference

Efficient management of NPAs and close monitoring or follow up has resulted in

the reduction of absolute NPA amounts over the period of 200 to 2008.

Table 6: Table showing the percentage of gross NPA and net NPA.

As at % of GNPA % of NNPA

2006 14.65% 11.26%

2007 10.94% 5.67%

2008 4.3% 3.15%

Analysis:



The table shows the percentages of GNPA and NNPA from 2006 to 2008 the

GNPA has come down from 14.65% to 4.3%. Similarly the NNPA has also reduced from

11.26% to 3.15%.

Chart 6: Chart showing the percentage of GNPA and NNPA of Apex Bank from 200 to 2008

Inference:



The bank is focusing its attention on the recovery of NPAs and also taking several

measures to reduce the NPAs and as a result of which it is reducing from past three years.

The net NPA has declined from 11.26% to 3.15% from 200 to 2008 and the gross NPA

has declined from 14.65% to 4.3% in 2006 to 2008.

The bank is striving hard to reduce NPA and increase the profitability of bank. It

has started recovery wings at its regional offices.

Table 7: Table showing the cash recovery from 2006 to 2008

Year Recovery (in %)

2006 58.3%

2007 69.96%.

2008 73.49%

Analysis:

The table percentage of cash recovery for the period 200 to 2008. The bank has

recovered 58.3% in the year 2006 and 69.96%. In 2007 and 73.49% in 2008



Chart 7: Chart showing the recovery of cash from 2006-2008

Inference:

Under the cash recovery, the bank has recorded an all time high in the year 2008

of 73.49% compared to last two years i.e., 58.3% and 69.96%.

Table 8: Table showing the classification of assets at Apex bank.

Category of assets 2006 2007 2008

Sub-standard 16956.75 15491.72 9074.82

Doubtful 927.85 8342.68 11273.68

Loss 8268.03 655.81 546.77

Analysis:



The table shows the classification of assets into different categories. The

substandard assets are decreasing year after year. It has decreased from Rs. 16956.75

lakhs in2006 to Rs. 9074.82 lakhs in2008.

Doubtful assets have been increasing from Rs. 927.85 lakhs to Rs. 11273.68 lakhs in

2008.

Loss assets show a drastic decrease in its value i.e. from Rs. 8268.03 lakhs in

2006 to Rs. 546.77 lakhs in 2008.

Chart 8: Chart showing the classification of assets in the Apex bank



Inference:

The decrease in the sub standard assets in the past three years shows the

development in the banks performance. The doubtful assets are gradually decreasing. The

loss assets are decreasing year after year. The decrease in the sub-standard assets and

doubtful assets are due to the strict recovery policy of the bank. The loss assets show an

irregular pattern for strict recovery measures are to be followed.

The bank is taking action in large number of cases for recovery of its NPA’s

under the SARFAESI act 2002. This has helped the bank to recover its NPAs and lower

the level of NPA’s and it is striving hard to decrease it to fuller extent.



Table 9: Table showing the performance of sub standard assets during the

last three years.

Year Sub standard asset

2006 16956.75

2007 15491.72

2008 9074.82

Analysis:

The table shows performance of sub-standard assets. The performance of

substandard assets is decreasing continuously. The substandard assets are reduced from

Rs. 16956.75 lakhs to Rs. 15491.72 lakhs in 2007 and further it has reduced to Rs.

9074.82 lakhs in the year 2008.



Chart 9: Chart showing the performance of substandard assets.

Inference:

The sub standard assets are decreasing year after year. This shows the

improvement in the performance of the bank. The bank is taking several steps to increase

the performance of standard asset, which shows the credit appraisal capabilities of the

bank. It also enriches the strength of the balance sheet.

The bank has adopted the strategy of identifying slippage of assets to NPA

category and timely recognition of NPA and action to that helps in reducing sub standard

assets.



Table 10: Table showing the performance of bad and doubtful assets during

the last three financial years.

(In lakhs)

Year Doubtful assets

2006 927.85

2007 8342.68

2008 11273.68

Analysis:

The table shows the performance of doubtful assets the performance of doubtful

assets is increasing continuously. The amount was Rs. 927.85 lakhs in the year 2006 it

has increased to Rs. 8342.68 lakhs in the year 2007 and in the year 2008 it has further

still increased to Rs. 11273.68 lakhs.



Chart 10: Chart showing the performance of doubtful assets.

Inference:

The doubtful assets are increasing year after year. The bank is taking several steps

to curb the level of doubtful assets but it is not successful in its steps. The bank is closely

monitoring NPAs and has put in place NPA management plan for efficient recovery,

which has helped in the increase in the doubtful asset.



Table 11: Table showing the performance of the loss assets during the last

three financial years

Year Loss assets

2006 8268.03

2007 655.81

2008 546.77

Analysis:

The table shows the performance of loss assets. The loss assets have decreased in

the year 2007 from Rs. 8268.03 lakhs in the year 2006 to Rs. 655.81 lakhs and later due

to strict recovery measures it has decreased to Rs. 546.77 lakhs in the year 2008



Chart 11: Chart showing the performance of loss assets for the last three

financial years from 2006 to 2008

Inference:

The loss assets show an irregular pattern initially it was increased and later the

management took steps to reduce the loss assets and it was reduced to a large extent. The

bank has adopted SARFAESI act to reduce the loss assets. The SARFAESI act has

strengthened the ability of lenders to resolve non-performing assets by granting them

greater rights as to enforcement of security and recovery of dues from borrowers

including removal of reference to BIFR and stay there to.



Table 12: Table showing the deposits growth in Apex Bank

Year Deposits (in crores )

2006 4090.31

2007 4396.91

2008 5141.93

Analysis:

From the table it can be observed that the total deposits have increased from

Rs.4090.31 crores in 2006 to Rs. 4396.91 crores this shows that there is substantial

growth in deposits growth rate.



Chart 12: Chart showing the deposits growth in Apex Bank

Inference:

The deposits have increased from 4090.31 crores to 5141.93 cores i.e. from 2006 to 2008



Table 13: Table showing the growth of reserves at the Indian bank from 2006

to 2008

Year Reserves ( in cores )

2006 179.20

2007 210.18

2008 233.52

Analysis:

From the above data it is noticed that there was a substantial increase in the

reserves from Rs.179.20 cores in 2006 to Rs. 210.18 cores in 2007 and further to Rs.

233.52 cores in 2008.



Chart 13: Chart showing the growth of reserves

Inference:

The reserves have increased every quarter during the period 2006 to 2008 from

Rs179.20 crores in the year 2006 to Rs233.52 crores by the year 2008. This shows that

the banks growth rate has increased due to better management of NPAs.



SUMMARY OF FINDINGS

The operations of Apex Bank have been increasing steadily over the past three

years.

The study confines that there is continuous decrease in the Non-Performing

Assets from 14.65% in 2006 to 4.3% in the year 2007.

The bank is adopting various strategies in minimizing NPA.

The NPA plays a major role in assessing the performance of the bank and it also

contributes to net profits of the bank. Hence, bank has taken several steps for

recovery of NPA’S

The one time settlement policy and its implementation on a phased manner was

an important issue was a good exit policy to chronic defaulters.

The loans and advances are increasing year after year in spite of the % 0f NPA is

decreasing. The banks performance has improved showing a steady decrease in

the sub standard assets. This is enclave through continuous inspection and timely

classification of assets.

There is large number of scattered accounts in the bank, which makes the bank

difficult in realizing the accounts.

The bank is facing difficulty in controlling NPA’S because of lack of adequate

staff for the recovery.

The NPA is important because it enhances the growth of the bank.NPA has a

significant impact on the profit and loss account and balance account of the bank.

The cash recovery of the bank has increased due to the various strategies used and

by implementing SARFAESI act.

Apex bank has considerably less percentage of gross NPA when compared with

various other scheduled banks.



SUGGESTIONS

NPA has affected the profitability, liquidity and competitive functioning of the

bank to reduce the level of NPA of the bank the following suggestions can be considered

Total estimation of NPA is not possible in banking business due to externalities

but their occurrence and incidence may be minimized by following the proper

timely asset classification.

Banks should take advantage of mergers and acquisitions of sick units in order to

reduce the NPAs.

Banks should take full advantage of the tribunals by taking necessary steps it is

hoped that establishment of few more Debt Recovery Tribunals (DRT) and Asset

Recovery Corporations (ARC) will help the banks.

Recovery performance should become part of the corporate goal and branch

employee performance should be linked to it.

Regular review of loan account to make sure that the borderlines do not slip in to

NPA category.

The corporation should concentrate on the recovery of principal and interest of

loans and advances that are lent to it clients.

Focus on high value NPA accounts can be done by improving quality of credit

appraisals and prompt action on credit audit reports should be undertaken.

Head offices and regional offices should be proactive in having ‘industry watch’

and provide timely information to branches, about difficulties faced by specific

industry, to strengthen follow up of such accounts.

Conducting and launching massive recovery campaign in each zone and branch

offices by making up to date information on the assets with greater consideration

towards the assets, which are on the verge of becoming loss assets.



Proper pre-sanction appraisal of the loan proposals by taking multiple scenarios to

arrive potentiality of the project.

Lending policy to various industries has to be studied thoroughly by the

corporation, corporation, so that they are in a position to raise the level of

business to new clients.

The bad debts which are unrecoverable, should be written off from the financial

institutions balance sheet because maintenance of this dead weight in the long run

is very expensive, as 100% provisioning should be done.

DRT and ARC facilitate quick decisions but also induce borrowers to enter in to

settlements of assets recovery branches; critical centers for undertaking recovery

targets and drawing time bound action programs will help to reduce the NPA’s to

certain extent.

Physical verification of hypothecated, mortgaged properties and ensuring

collateral security for all the loans given.



CONCLUSION

To conclude, it can be stated that the Apex Bank has been following well-

established systems, policies, and procedures with respect to NPA and recovery. The

Bank has recovered the loans in a systematic manner, disbursement of loans/ advances to

all the priority sectors and has crossed the total business targets for 2006 and 2007.

However, as suggested, the Bank should consider some additional strategies and policies

to face challenges of the competitors in future, to improve the quality of its service of

lending and recovery.

In sum the present, NPA assignment has been very useful in getting firsthand

experience with respect to the management of NPA in the Banks, with an insight into one

of the important segments of recovery.


apex bank project report

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