Non defined as credit facility in respect of the

Non Performing Assets in CommercialBank·      IntroductionNon Performing assets (NPAs) is affecting the execution of the creditinstitutions both financially and psychological. Non performing assets (NPAs)is not only non-performance but also makes the banker and non-bankingperforming as it;1.       Prevent recycling of funds.2.       Reject income from assets byinterest.3.       Making profit by provision.

NPAs come-out in non-performance of apart of loan where no recovery or less recovery of income to the lender. Itsplays disaster on the mental make-up of the banker where in the banker try togo slow on lending , fearing future NPAs , it may direction to delay of creditresult in lay off- take of lendable funds. NPAs are in indispensable burden onthe banking industry, Hence the success of a bank depends upon method ofmanaging NPA and keeping them within tolerance power.The various feature of wellfunctioning of financial system , maintenance of NPAs by commercial banksclassified as a important one, NPAs after a certain level are cause for concernfor all entrepreneur involved, because credit is important for economicdevelopment. Banks raise tools not just on new deposits, also by reduplicatethe fund getting from present borrowers. Thus, a loan becomes non-performing,it recycling of credit and in turn credit creation power of banks. Apart fromthis, NPAs shows profitability , since higher NPAs wants higher provisioningwhich say a large part of profit require to be kept aside as provision againstloans.

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Since 1992, the banking sector ruleswere introduced which faced new dares in ever changing scenario. The vitalchallenges were “4 Cs” that is credit, customer, computer and capitalrestructuring.Objective and MethodologyStudy of Non-performing Assets ofCommercial Banks in India with the following objective,·        Todiscuss the conceptual framework of non-performing assets in banking.·        Toexamine the nature and the problem of the non-performing and effect on theperformance of commercial banks in India.·        Tohighlights the trend Gross NPA and Net NPA in commercial banks in India.·        Toloan valuation.·        Tostrategy for speedy recovery f NPA in commercial banks in India.

·        Torecovery from big corporate houses with new mechanism.Non-Performing Asset (NPA)A “Non-Performing Assets” was definedas credit facility in respect of the interest with or installment of principalhas yet to ‘past due’ for a specified time period. The specific time periodreduced in four quarters during year ending 31st March 1993, threequarters during year ending 31st March 1994, two quarters duringyear ending 31st March 1995. One quarter the year 31stMarch 2004.

     due to improvementin the payment and settlement systems recovery climate, up-gradation oftechnology in       the banking system.It was decided by RBI to dispense with ‘past due’ or NPA since date conceptwith effect from 31st March 2001.1.

      Interestand installment of principal remain over due for a period of more than 180 days( 90 days 31st march 2004) in respect of term loan.2.      Theaccount remains out of order for a period more than 180 days (90 days 31stmarch 2004) in respect of an overdraft and cash credit.3.      Thebill remains over due for a period more than 180 days (90 days 31stmarch 2004) in respect of biils purchased and discounted.

4.      Interestand installment of principal remains over due for two harvest season but for aperiod not extending two half year in case of prepaid granted for agriculturepurposeAnd amount received remains overdue for period more than 180days (90 days 31st march 2004) in respect of other account.Loan Assets for Assets ClassificationLOAN ASSETS Performing Assets (PA) Assets (NPA) Non-Performing 1.       Standard Assets 1.

       Sub-Standard Assets 2.       Doubtful Assets    Reasons for NPAs in BanksINTERNAL FACTORS·        Takingup new projects·        Helping/ promoting.·        Costovercome during the plan implementation.·        Inefficientmanagement.

·        Distortedlabour relation.·        Technicalproblems.·        Productobsolescencs.·        Poorcredit Appraisals.

   EXTERNAL FACTORS·        Recession·        Powershortage·        Priceexacerbation·        Exchangerate fluctuation·        Changein government policy TOP 10 BORROWERS LOAN NOT REPAYMENTS Borrowers Loan not repayments 1.       Kingfishar Airline 2673 2.       Winsome Diamond and Jewellary Co. Ltd 2660 3.       Electrothem India Ltd. 2211 4.       Zoom Developers Pvt. Ldt.

1810 5.       Sterling Bio-Tech Ltd. 1732 6.       S Kumar Nationwide Ldt. 1692 7.       Surya Vinayak Industries Ldt. 1448 8.

       Corporate Ispat Alloys Ldt. 1360 9.       Forever Precious Jewellary and Diamond 1254 10.    Verum Indudtries Ldt. 1197   BANK WISE WILLFUL DEFAULTERSAACOUNTS Bank Willful defaulters accounts 1.

       State Bank Of India 1625 2.       Bank Of India 643 3.       Canara Bank 612 4.       Punjab National Bank 410 5.       Oriental Bank Of Commerce 382 6.       Uco Bank 594 NET NPAs OUTSTANDING AS PERCENTAGE TONET ADVANCES Year Net Advances Net NPAs(Rs) Net NPAs(%) 2010 34,970 387 1.

10 2011 43,106 418 1.10 2012 50,842 649 1.4 2013 58,797 986 1.70 2014 67,352 1426 2.10  Showing NPA recovered by commercial banks of India throughOne time Settlements and compromise  ( Rs in Crore ) Item 2010 2011 2012 2013 2014 No of Cases Referred 7,78,833 6,16,018 4,76,073 8,40,691 16,36,957 Amount involved 7,235 5,254 1700 6,600 23200 Amount recovered 112 151 200 400 1400 % of Rs recovered 1.55 2.

87 11.80 6.10 6.

20  NPAs Recovered byCommercial Bank Of India through DRTs(Rs in Crore) Item 2010 2011 2012 2013 2014 No of Cases Referred 6,019 12,872 13,365 13,408 28,258 Amount involved 9,797 14,092 24,100 31,000 55,300 Amount recovered 3,133 3,930 4,100 4,400 5,300 % of Rs recovered 32.00 27.89 17.00 14.10 9.50  NPAs Recovered by Commercial Bank OfIndia through SARFAESI(Rs in Crore) Item 2010 2011 2012 2013 2014 No of cases referred 78,366 1,18,642 1,40,991 1,19,537 1,94,700 Amount involved 14,249 30,604 35,300 68,100 94,600 Amount recovered 4,269 11,561 10,100 18,500 24,400 % of Rs recovered 30.00 37.

78 28.60 27.10 25.

80  Impact Of NPANarasimham committee that mandate identification and reduceNPAs to b treated as national priority because NPA directly towards credit riskthat bank may face and their efficiency in allocating resources. Earning andprofitability of banks were affected due to NPA no. of accounts. The mostimpact of NPA is change in credit growth to bank performance.

1.      Higher provisioning wants on mountingNPAs adversely affect on capital adequacy ratio and profitability.2.      The economic value additions (EVA) bybanks get upset because EVA is equal to net operating profit deducted cost ofcapital.3.      NPAs tend to decrease the value ofshare sometimes below their book value in capital market.4.      NPAs affects risk facing ability ofbanks   Gross and NET NPAs ScheduledCommercial Banks(Rs in Billion)   Advances                                        Non-Performing Assets Year(end march) gross Net Amount Gross as % of gross advances As % of total assets Amount Net %of net advances As % of total assets 1996-97 3016.

98 2764.21 473.00 15.70 7.00 223.40 8.10 3.30 1997-98 3526.

96 3255.22 508.15 14.

40 6.40 237.61 7.30 3.00 1998-99 3994.

36 3670.12 587.22 14.70 6.20 280.20 7.

60 2.90 1999-00 4751.13 4442.92 604.08 12.70 5.50 300.

73 6.80 2.70 2000-01 5587.66 5263.28 637.41 11.

40 4.90 325.61 6.20 2.50 2001-02 6809.58 6458.59 708.61 10.

40 4.60 355.54 5.

50 2.30 2002-03 7780.43 7404.73 687.

17 8.80 4.10 296.92 4.00 1.

80 2003-04 9020.26 8626.43 648.12 7.

20 3.30 243.96 2.

80 1.20 2004-05 11526.82 11156.63 593.73 5.

20 2.50 217.54 2.00 0.

90 2005-06 15513.78 15168.11 510.97 3.30 1.80 185.

43 1.20 0.70 2006-07 20125.10 19812.37 504.86 2.50 1.50 201.

01 1.20 0.60 2007-08 25078.85 24769.36 563.09 2.30 1.

30 247.30 1.00 0.60 2008-09 30382.54 29999.

25 683.28 2.30 1.30 315.64 1.10 0.60 2009-10 35449.

65 34970.91 846.98 2.40 1.40 387.23 1.

10 0.60 2010-11 40120.79 42987.04 979.00 2.

50 1.40 417.00 1.10 0.60 2011-12 46655.

44 50746.00 1423.0 3.

10 1.70 649.00 1.40 0.80      The Gross and NET NPAs ScheduledPublic Sector Banks(Rs in Billion)   Advances                                        Non-Performing Assets Year(end march) gross Net Amount Gross as % of gross advances As % of total assets Amount Net %of net advances As % of total assets 1996-97 2442.

14 2209.22 435.77 17.

8 7.8 202.85 9.

2 3.6 1997-98 2849.71 2604.59 456.53 16.0 7.0 212.

32 8.2 3.3 1998-99 3253.28 2977.89 517.10 15.9 6.

7 242.11 8.1 3.1 1999-00 379461 3527.14 530.33 14.0 6.0 261.

87 7.4 2.9 2000-01 4421.

34 4152.07 546.72 12.4 5.3 279.77 6.7 2.7 2001-02 5093.68 4806.81 564.73 11.1 4.9 279.58 5.8 2.4 2002-03 5778.13 5493.51 540.90 9.4 4.2 248.77 4.5 1.9 2003-04 6619.75 6313.83 515.37 7.8 3.5 193.35 3.1 1.3 2004-05 8778.25 8489.12 483.99 5.5 2.7 169.04 2.1 1.0 2005-06 11347.24 11062.88 413.58 3.6 2.1 145.66 1.3 0.7 2006-07 14644.93 14401.46 389.68 2.7 1.6 151.45 1.1 0.6 2007-08 18190.74 17974.01 404.52 2.2 1.3 178.36 1.0 0.6 2008-09 22834.73 22592.12 449.57 2.0 1.2 211.55 0.9 0.6 2009-10 27334.58 27013.00 599.26 2.2 1.3 293.75 1.1 0.7 2010-11 30798.04 3056.32 746.00 2.4 1.4 360.00 1.2 0.7 2011-12 35003.89 38783.00 1172.00 3.3 1.9 591.00 1.7 1.0        Finding and recommendation of NPAs management .For the sake of convenience of the recommendation are groupsas recommendation of Commercial Banks of India.Findings·        1.Gross NPAs of Commercial Bank Of India increased from Rs 35,449 Cr In 2010 toRs 68,757Cr in 2014.·        NetNPAs of Commercial  Bank Of Indiaincreased  from Rs 34,970 Cr in 2010 toRs 67,352 Cr in 2014·        NAsas percentage of Net advance that is lowest 1.10% in 2010 and highest 2.10% in2014, and average % of 2.10% in 2010-2014 during the time of study. ·        No.of cases referred at one time settlements and compromise were 7,78,833 in 2010and in 2014 that was 16,36,957.·        Rs2,263 Cr of NPAs of Commercial Bank Of India through one time settlement during2010 to 2014.·        Rs20,863 Cr of NPAs of Commercial Bank Of India through DRTs during 2010 to 2014.·        Rs68,830 Cr of NPAs of Commercial Bank Of India through SARFAESI Act 2010 to2014.·        Poorrecovery and defective lending process is the important factor that isresponsible for the rise of NPAs in Banks.·        Writeoff is part of legal mechanism to reduce NPAs. That reports less profit on onehand but reduce the no of BPAs amount on the other hand.