Non-Performing Asset Management

Mumbai University, Mumbai
R.M.C.E.T., AMBAV 1 MMS Project
A
Project Report
On
“A Study of Non – Performing Asset Management with Reference To
Rajapur Urban Cooperative Bank Ltd.”
Submitted To
Mumbai University, Mumbai.
In Partial Fulfilment of the Award of the Degree Of
Master of Management Studies
Submitted By
Miss. Prathvi A. Samant.
(B.Com)
Under The Guidance Of
Miss. Masooma M. Pagarkar.
(BMS, MMS)
Through
The Principal,
Rajendra Mane College of Engineering and Technology,
Ambav, Devrukh.
Department of Master of Management Studies.
2018-2019

Institute Recommendation
This is to certify that, Miss. Prathvi A. Samant is a bonafied student admitted for M.M.S
in academic year 2018-19. She has completed summer project entitled “A Study of Non
– Performing Asset Management with Reference To Rajapur Urban Cooperative Bank
Ltd.” under the guidance of Miss. Pagarkar M. M satisfactorily and submitted to Mumbai
University, Mumbai for the partial fulfilment of the requirement of the award of the
degree of Master of Management Studies. The matter presented in the summer project
has not been submitted earlier.
Place: - Ambav
Date: - 03/11/2018
Dr. M. M. Bhagwat.
Principal
R.M.C.E.T., Ambav

Guide Certificate
This is to certify that the summer project titled as “A Study of Non – Performing Asset
Management With Reference To Rajapur Urban Cooperative Bank Ltd.”Which is being
submitted here with for the award of the Degree of Master of Management Studies.
I hereby declare that the project entitled “A Study of Non – Performing Asset
Management with Reference To Rajapur Urban Cooperative Bank Ltd.” under the
faculty of Management of Mumbai university, Mumbai is the result of the original
research work completed by Miss. Prathvi A. Samant.
Under my supervision and guidance and to the best of my knowledge and belief the work
embodied in this project has not formed earlier the basis for the award of any degree or
similar title of this or any other university or examining body.
Place: Ambav
Date: 03/11/2018
Miss. Masooma M. Pagarkar.
Research Guide
Assistant Professor
R.M.C.E.T.,Ambav

Declaration
I, the undersigned Miss. Prathvi A. Samant. Hereby declare that the project report
entitled “A Study of Non – Performing Asset Management with Reference To Rajapur
Urban Cooperative Bank Ltd.” written and submitted to Rajendra Mane College of
Engineering and Technology, Ambav this year by me under the guidance lecturer Miss.
Masooma M. Pagarkar is my original work.
The empirical findings and data collected by me are to the best of my knowledge. I have
not copied it from any report submitted to any of the university / institutions.
I understand that any copying is liable to be punishable by the authorities.
Place : Ambav
Date : 03/11/2018
Prathvi A. Samant.
(MMS/MBA 2018-2019)

Acknowledgment
It is a profound privilege for me the record here my deep sense of gratitude to the
"Rajapur Urban Co-op Bank Ltd. Rajapur (Ratnagiri)", for allowing me to conduct an “A
Study of Non – Performing Asset Management with Reference To Rajapur Urban
Cooperative Bank Ltd.” in this organization.
I would like to express my genuine thanks Mr. Shekharkumar U. Ahire (CEO) and all the
other Director. I am also gratified to Mr. Lakshaman Mhatre (Recovery Officer), and Mr.
Prasanna Malpekar (Assistant Manager) without their guidance and co-operation this
project effort would have been incomplete.
I would like to express my gratitude to Miss. Masooma Pagarkar Madam whose
guidance, support, and keen observation helped me to make this report in a logical order.
I offer my special thanks to Course Coordinator and all the other faculty members of
Rajendra Mane College for their guidance and support.
I am greatly indebted to my family members and friends without their support and
inspiration it would have been difficult to get this report to this stage.
Prathvi A. Samant.
(MMS/MBA 2018-2019)

Executive Summary
The developments in the Indian banking sector since 1991 is considered mostly in terms
of the significant measures that were implemented in order to develop a more exciting,
healthy, stable and efficient banking sector in India. The conclusion of a highly
structured banking environment on asset value, production, and performance of banks
required the change process and resulted in the incorporation of practical ethics for
revenue recognition, asset classification and provisioning and capital capability
standards, in line with worldwide best practices.
The developments in asset quality and a decrease in non-performing assets were the main
objective certain in the change processes. The non-performing assets is not a purpose of
loan/advance only, but is partial by other bank performance needles and also by the
macroeconomic variables. In addition to explaining the trend in the movement of Non-
performing Assets.
First of all the information regarding the banking industry is given. In those various
particulars regarding the bank, the industry is being provided. Also the many types of
non-performing assets. The short-term introduction of non-performing assets is given. In
this the definition, various benefits, objective, limitation etc. are stated. Then an analysis
of data is prepared.
To achieve the identified objectives, both secondary and primary data are applied. In
order to verify the interpretations made from the secondary data analysis, primary data
are obtained on the occurrence, effect, and management of NPA with special reference to
Rajapur Urban Coop. Bank Rajapur.

Table of Contents
Sr. No. Particulars Page No.
1. Chapter No.1 – Introduction of the Study
1.1 Introduction
1.2 Research Problem
1.3 Statement of Research Problem
1.4 Objectives of the Study
1.5 Importance of the Study
1.6 Scope of the Study
1.7 Research Methodology
1.8 Limitations of the Study
1
2
2
2
2
2-3
3-4
4
2. Chapter No.2 – Organizational Profile
2.1 Name of the Bank
2.2 Location & Address of the Bank
2.3 History of the Bank
2.4 Financial Position of the Bank
2.5 Awards
2.6 Product / Services of the Bank
2.7 Future Plan of the Bank
2.8 Organizational chart
5
5
5-7
7
8
8-9
9-10
11-12
3. Chapter No.3 – Conceptual Framework
3.1 Introduction of the NPA
3.2 Meaning
3.3 Definitions
3.4 Factors Contributing to NPA
3.5 Reasons for NPA
3.6 Impact of NPA on Banking Operations
3.7 Management of NPA
3.8 Types of NPA
3.9 Recommendations of the Narasimham Committee
3.10 RBI Guidelines for NPA Recognitions
3.11 Treatment of Account as NPA
13-14
14
14-15
15-16
16
17
17
18
18-20
20-21
22

3.12 Provisioning Norms
3.13 Rajapur Urban Bank & NPA
3.14 Conclusion
22-23
23-28
28
4. Chapter No.4 – Data Analysis & Interpretation
4.1 Introduction
4.2 Data Analysis & Interpretation
29
29-38
5. Chapter No.5– Findings, Suggestions & Conclusion
5.1 Introduction
5.2 Findings
5.3 Suggestions
5.4 Conclusion
39
39-41
41
41
6. Bibliography 42-43
7. Appendices

List of Tables
1.1 Introduction to the Study 1
2.4 Financial Position of Bank 7
2.8 Board of Directors of Bank 11
3.1 Classification of NPA 14
3.13.9.1 Classification of NPA Norms 27
3.13.9.2 Provisions of NPA Norms 27
4.2.1 Total Deposits & Loans 30
4.2.2 Total Assets and Capital & Reserve 31
4.2.3 Total Gross & Net NPA 32
4.2.4 Total Gross & Net Advances 33
4.2.5 Total Gross NPA Ratio 34
4.2.6 Total Net NPA Ratio 35
4.2.7 Problem Assets Ratio 36
4.2.8 Shareholders Risk Ratio 37
4.2.9 Provision Ratio 38

List of Graphs
4.2.1 Total Deposits & Loans 30
4.2.2 Total Assets and Capital & Reserve 31
4.2.3 Total Gross & Net NPA 32
4.2.4 Total Gross & Net Advances 33
4.2.5 Total Gross NPA Ratio 34
4.2.6 Total Net NPA Ratio 35
4.2.7 Problem Assets Ratio 36
4.2.8 Shareholders Risk Ratio 37
4.2.9 Provision Ratio 38

Chapter No. 1
Introduction to the Study
1.1 Introduction
1.2 Research Problem
1.3 Statement of Research Problem
1.4 Objectives of the Study
1.5 Importance Of the Study
1.6 Scope of the Study
1.7 Research Methodology
1.8 Limitations of the Study

Chapter No. 1
Introduction to the Study
1.1 Introduction :-
The banking sector plays an important role in the economic growth of a country.
Through its intermediate activities, the banking sector promotes the manufacture, supply,
exchange and consumption processes in the financial system. In the post-independence
era, the banking sector has played a compound and worthy role in supporting the
government to achieve its social and economic objectives through deposit deployment,
mass branch networking and priority sector lending, employment generation etc.
The asset value is a crucial concern and belongings several performances require
viability, intermediation costs, liquidity and honesty, income creating ability and
complete operation of banks. The decrease in asset quality results in a gathering of Non-
Performing Assets (NPAs). Non-performing assets specify an advance for which interest
or repayment of primary or both remains overdue for a period of 90 days or more. An
advance/loan is treated as non-performing when it fails to satisfy its repayment
obligations.
NPAs signify a real economic cost in present days as they replicate the application of
rare capital and credit funds to unproductive use. It similarly affects the advancing
capability since resources are blocked and the refund is bothered and has also resulted in
extra cost for intermediation and understanding the NPAs.
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. A NPA was define as credit in respect of which interest and/or installment of
principal has remain past due for a specific period of time. The specific period of time
was reduce in a phased manner as under.
Year Ended 31st
March Specific Period
1993 4 Quarters
1994 3 Quarters
1995 2 Quarters
2004 1 Quarters
Table No.1.1: Introduction to the Study

1.2 Research Problem :-
NPA continuously affect the profit of bank and also the esteem of bank. So here there
research problem is to identify the causes for the NPA and to identify the action plan to
reduce the NPA.
1.3 Statement of Research Problem :-
A Statement of research problem is “A Comprehensive Study of Non-Performing Assets
(N.P.A.) with special reference to Rajapur urban co-op bank ltd. Rajapur (Ratnagiri)
1.4 Objectives of the Study :-
1. To study various ratios of NPA.
2. To analyse the bank’s policy to recover the level of NPA.
3. To understand the effect of NPA on banks profit.
4. To make suggestions based on the finding of the study.
1.5 Importance of the Study :-
1.5.1 Importance to the Organization :-
It helps the organization to know the actual rate of Net NPA & Gross NPA. It helps the
organization how to recover the NPA level. It helps the organization to know the actual
reason for assets becoming non-performing asset.
1.5.2 Importance to the Researcher :-
It helps the researcher to know more about NPA and the situation of NPA in the bank. It
helps the researcher to know the policies approved by banks to decrease the NPA level.
It helps the researcher to understand the NPA requirements rules in the bank.
1.6 Scope of the Study :-
1.6.1 Geographic Scope :-
The study was conducted in Rajapur taluka, Ratnagiri District, Maharashtra state, India.
This geographical study is limited to Ratnagiri District.
1.6.2 Conceptual Scope :-
“A Comprehensive Study of Non-Performing Assets (N.P.A.) With Special Reference to
Rajapur Urban Co-Op Bank Ltd. Rajapur (Ratnagiri)”

A study of this nature is essential at present when banks are facing various challenges in
the face of far-reaching reforms in the changing environment. The study seeks to offer
specific suggestions to resolve the problems faced by commercial banks, which are
highlighted in the present study so as to improve their performance.
1.6.3 Analytical Scope :-
Data has been analysed with the help of MS Excel and it is analysed with the help of Bar
Chart and Pie chart.
1.6.4 Periodic Scope :-
Data has been collected by researcher in 50 days duration. The study has been conducted
in Rajapur city. Study has focused on various parameters which is affect the profitability
of bank.
1.7 Research Methodology :-
Though several research studies on NPA in Indian banking sector are obtainable, the
studies on a nearby aspect authenticated NPA problem using minor data and most often
rest on ratio analysis to classify whether NPA is managed capably. The methodology for
this research is designed considering the above features; to estimate asset quality of
public sector banks clarified using the tendency to movement non-performing assets.
1.7.1 Type of Research :-
The projects also considered as an exploratory research. Exploratory research does not
aim to provide the final and conclusive answers to the research questions, but merely
explores the research topic with varying levels of depth. It has been noted that
exploratory research is the initial research, which forms the basis of more conclusive
research. It can even help in determining the research design, sampling methodology and
data collection method.
1.7.2 Data Required :-
The researcher has collected information from both the sources i.e.primary and
secondary. The primary data was collected from the recordsavailable at the bank. The
secondary data is collected by referring guidelines issued by Reserve Bank of India on
the subject as well as the directives, instructions, strategy conveyed by the officer of the

bank. Apart from this the researcher has collected information through text books,
articles, research papers published in various journals/magazines or seminar
1.7.3 Data Sources :-
Secondary data refers to data which is collected by someone who is someone other than
the user. Common sources of secondary data for social science include censuses,
information collected by government departments, organizational records and data that
was originally collected for other research purposes.
1.7.4 Data Analysis :-
The collected data are duly edited, classified and analysed using all type of relevant
statistical techniques and employing the most appropriate parametric and non-parametric
test. There are many techniques, which may be, used for analysing the financial position.
1.7.5 Research Concepts :-
This research has made an attempt to study the various NPA factors that affect the
banking sector. The Researcher very well 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. Government’s act and also the
Narasimham committee on NPA are very useful to reduce the level of NPA. So
Researcher can conclude that level of NPA in any bank is important parameter to analyse
the health of bank.
1.8 Limitations of the Study :-
1. Sometimes the bank officer was hesitant to give all data on NPA.
2. The basis for identifying non-performing assets is taken from the Reserve Bank of
India circulars& the basis do change as per RBI guidelines which can’t be
considered for a permanent record.
3. Due to confidentiality some important information, which required for the project
could not be collected.
4. The project is based on theoretical guidelines and as per situation prevalent at the
time of practical, hence it may not apply to different situation.

Chapter No. 2
Organizational Profile
2.1 Name of the Bank
2.2 Location & Address of the Bank
2.3 History of the Bank
2.4 Financial Position of the Bank
2.5 Awards
2.6 Product / Services of the Bank
2.7 Future Plan of the Bank
2.8 Organizational chart

Chapter No. 2
Organizational Profile
2.1 Name of the Bank :-
Rajapur Urban Co-Op Bank Ltd., Rajapur (Ratnagiri)
2.2 Address of the Bank :-
The Royal Plaza, 1st Floor, Mumbai - Goa Highway, Near ST. Depot Rajapur.
Tal - Rajapur Dist. - Ratnagiri 416702.
Contact No. - (02353) 222451, 222651. Fax No. - (02353) 222851.
Customer Care No. - 7798326622. Website - rajapururbanbank.com
Email - rjpurban@rediffmail.com / Rjpurban@yahoo.co.in
2.3 History of the Bank :-
Rajapur Urban Co-op Bank Ltd. Rajapur, the friendly and affectionate bank of the
Rajapur, today started the 97th year by establishing a successful crusade for the Century
Festival, Rajapur Urban Credit Co-op. The famous advocate of Rajapur, Shri. Vishnu
Ramchandra Pitre, his associate advocate Ramkrishna Anant Sakhalkar, Dr. VS
Sarakhot, V.P., Vaman Mohdaksh, Mahadev Na. Abhyankar, Mr. V. Bhagwat, and
Krishna. The people of Lele gathered in the city. On 01/10/1921 it was made.
Registration number 363 of the organization has been registered and the first general
meeting is held. It was on 15/10/1922. Later on, in the 18/05/1926 period, the report
reviewing the work of the report was published in the form of request sheet. Thereafter,
the first report on the transaction of 1929-30. Printed 01/06/1930. Then another report
was published in the year 1932-33.

Presently Bank has 10 Branches & Head Office in own Premises (Approx. owned area
5000 Sq.). All Branches and Head Office are implementing CBS system with own Data
Centre. It has provided SMS Alert, Mobile Banking System since last 5 years and ATM
facility at Rajapur, S.Nate, Pachal, Lanja, Ratnagiri, Vaibhavwadi, Kudal and Padel
Branch connected with National Financial Switch (NFS) and even now Bank has started
facility to our customers Immediate Money Payment System and point of sale facility to
our ATM RuPay Debit Card Holder.
Bank has Statutory Audit Class as “A” for last Seven years and presently RBI awarded A
Grade also. Since Inspection till today Bank has not fined Penalty by RBI or other
Bodies. Almost at all the above parameters Bank has achieved about 50% performance
i.e. not only increasing Deposit, Loan, Net Profit & Working Capital, but also decreasing
Overdue Loans and Gross NPAs.
All Branches and Head Office has been under CCTV surveillance and have arrangement
of Alarm System and UPS/Generator Back up. Adoption of such Technology to upgrade
to CBS, ATM etc. considering Bank's Budget based on its Profitability size.
As small size Bank with operating in remote area, cost and its impact on Balance sheet is
first thing in mind CBS Project has been visualized. Team is formed analysis of each
small thing from Data Centre rental to own Data Centre, operating cost to software cost,
telecommunication requirement to availability, obtaining approvals and logistics is done
on combination and mean of cost and latest and future technology.
Adopt such Hardware and Software that it will full fill all future programs and facilities
and capabilities. Everything is judged with onsite visits of other Banks and decision has
taken that with the Own Data Centre and Disaster Recovery Centre with Present
Software Vendor. Bank has ready to face all difficulties towards the advance digital and
cashless banking and adopted new things. Bank has achieved good performance.
Social Obligation
Although Rajapur urban co-op bank working on the lines of sound cooperative banks,
banks are very much focused on social obligations. As a responsible socio-economics
bank of the region. The bank is taking care of socials causes by catering to the needs of
weaker section and middle class by granting marriage loans for girl’s loans for education
to underprivileged student at very low rate and loans for medical expenses etc.
Senior citizens enjoy special status in the bank for deposit scheme with very special rate
of interest and door services on request In order to motivate and encourage every year

bank felicitates brilliants student children of banks shareholder members with prize
money in the form of deposit and memento for their excellence in education and
academics. Bank also help to the many trusts from the Charity fund was taking from the
bank every year profit. And help to the fluid effected people from Member welfare fund.
2.4 Financial Position :-
Sr. No. Particulars Rs.
1. Paid up Share Capital 418.00
2. Statutory Reserve & Other Funds 1092.02
3. Borrowings -
4. Deposits 18966.71
5. Loans & Advances 10675.80
6. Investments 8421.00
7. Profit /Loss +80.72
8. Working Capital 20867.00
9. Total Branches 10+H.O
10. Total Employees 42
11. Overdue 2.12%
12. Gross N.P.A. 1.16%
13. Net N.P.A. 0.00%
14. CRAR 13.30%
15. Percent of recovery 97.88%
16. Net worth 860.64
17. Management Cost 1.94%
18. Audit Class A
Table No.2.4: Financial Position

2.5 Awards :-
1. Best NPA Management Award from Banking Frontiers continuously 2 years
2. Best CEO Award from Banking Frontiers
3. Certificates of “Excellence of India’s top 100 Cooperative Bank’s 2015” From
Bristim Media Works Organization
4. Banko Technology Award 2016
5. Banko Award Continuously 5 years
6. “Padmbhushan Kai Vasant Dada Patil Utkrusht Nagari Sahakari Bank” Award
Continuously 4 year
2.6 Products / Services of the Bank :-
2.6.1 Deposit :-
Rajapur Urban bank Offer wide verity of deposit products to suit your requirements.
They are namely –
a) Saving Account
b) Current Account
c) Fixed Deposit Account
d) Recurring Deposit Account
e) Pigmy Account
2.6.2 Loans :-
Loan in simplest terms can be explained as a thing that is borrowed, especially a sum of
money that is expected to be paid back with Interest. The act of giving money, property
or other material goods to a another party in exchange for future repayment of the
principal amount along with interest or other finance charges is called loan.
a) Term Loan
b) Personal Loan
c) Vehicle Loan
d) Gold Loan
e) Property Loan
f) Policy Loan
g) Home Loan
h) Business Loan

2.6.3 Insurance :-
Insurance is a contract, represented by a policy, in which an individual or entity receives
financial protection or reimbursement against losses from an insurance company. The
company pools clients' risks to make payments more affordable for the insured.
a) Life Insurance
b) General Insurance
2.6.4 Services :-
The various ways in which a bank can help a customer, such as operating accounts,
making transfers, paying standing orders and selling foreign currency.
a) Internet Banking
b) RTGS / NEFT Scheme
c) Telebanking
d) Mobile Banking
e) SMS / Miss Call Alerts
f) Locker Service
2.7 Future Plans :-
2.7.1 Be Social :-
Find out which social media platform is popular in our area and join. This is the place to
share pictures of our employees, show off PR opportunities in our area, tips to make the
right financial decisions and get local support.
2.7.2 Compete with competitors online :-
If our competitors have a strong local presence, compete with them online. Use digital
marketing practices like SEO, PPC, social media and email marketing to be the
prominent option.
2.7.3 Offer features no one else has :-
Technology is always changing. Today we can buy new equipment that makes it easier
for our customers to handle their financial transactions, we can build online tools that
meet their needs and make their lives easier. Adopt the opportunities that technology
presents and create a marketing campaign out of it.

2.7.4 Approach new markets :-
One way to stay ahead of the competition is to pursue markets they aren’t pursuing.
Every bank or financial institution has particular groups of customers they serve
extremely well. Know what groups these are for ourselves and our competitors, once
we’ve perfected our approach in one area, seek a new group to help. These groups don’t
need to be huge to make a big impact on our business; we just have to offer the best
solution.

2.8 Organization Chart :-
Present Board of Directors of the Bank:-
Sr. No. Name Designation
1. Mr. Ibrahim Gafar Balbale. Chairman
2. Mr. Vijay Shriram Padhye. Vice Chairman
3. Mr. Shekharkumar Uttam Ahire. General Manager / C.E.O
4. Mr. Prasanna Vinayak Malpekar. Assistant Manager
5. Mr. Lakshaman Ganu Mhatre. Loan Recovery Officer
6. Mr. Prasanna Krishna Khambe. IT IN charge Officer
7. Mr. Shailendra Shrikant Sansare. Director
8. Mr. Jayant Hanmant Abhyankar. Director
9. Mr. Sanjay Pandurang Ogale. Director
10. Mr. Anilkumar Shridhar Karangutkar. Director
11. Mr. Hanif Musa Kazi. Director
12. Mr. Rajendra Shriram Kushe. Director
13. Mrs. Anamika Saurab Jadhav. Director
14. Mr. Sunil Bhikaji Jadhav. Director
15. Mr. A. Razzak A. Ajij Dosani. Director
16. Mrs. Dhanashri Dattaram More. Director
17. Mr. Prasad Narayan Moharakar. Director
18. Mr. Altaf Zafar Sangmeshvari. Director
19. Mr. Suresh Dattaram Gavas. Director
20. AD. Mr. Shashikant Ganapat Sutar. Director
21. Mr. Ramesh Bhairu Kale. Director
22. Mr. Dilip Bhalachandra Divate. Director
Table No. 2.8: Present Board of Director

Organization Structure:-
Chairman
Voice - Chairman
Loan / Recovery Officer
Assistant Manager
Accounts Manager
C.E.O
Branch Manager
Officer
Clerks

Chapter No. 3
Conceptual Framework
3.1 Introduction of the NPA
3.2 Meaning
3.3 Definitions
3.4 Factors Contributing to NPA
3.5 Reasons for NPA
3.6 Impact of NPA on Banking Operations
3.7 Management of NPA
3.8 Types of NPA
3.9 Recommendations of the Narasimham Committee
3.10 RBI Guidelines for NPA Recognitions
3.11 Treatment of Account as NPA
3.12 Provisioning Norms
3.13 Rajapur Urban Bank & NPA
3.14 Conclusion

Chapter No. 3
Conceptual Framework
3.1 Introduction :-
The word NPA is not something new to the bankers. It is regular but hidden loan asset.
As everyone knows, a portion of assets may become NPA. An asset becomes non-
performing when it ceases to generate income for the bank. The quietness of the
incidence of non-performing assets in Indian public sector banks, noted in the early
1990s, raised a severe hue and cry in various quarters. In fact the problem started much
earlier, which became evident from continued recapitalization of many PSBs since 1985-
86 charterer by the root cause, malfunctioning of the PSBs increased by the end of the
1980s. This led to the setting up of the Narasimham Committee (1991) which in fact
identified NPA as one of the possible cause of the malfunctioning of the PSBs. In order
to quantify the NPA problem, Narasimham committee (1991) made it mandatory on the
part of the banks to publish annually the magnitude of NPA. NPA are those categories of
assets (advances, bills discounted, overdraft, cash credit etc.) For which any amount
remains due for a period of 180 days. Accordingly, as from the march, 31st 2004, NPA is
an advance where:
1. Interest and/or instalment of principal remain overdue for a period of more than 90
days in respect of term loans.
2. The account remains out of order for a period or more than 90 days, in respect of an
overdraft/ cash credit (OD/CC).
3. The bill remains overdue for a period of more than 90 days ,in case of bills purchased
and disco Interest and/or instalment of principal remain overdue for two harvest
seasons but for a period not exceeding two half years in the case of an advance
granted for agricultural purpose.
4. Any amount to be received remains overdue for a period of more than 90 days.

3.2 Meaning:-
In a simple word, an asset which, ceases to generate income for the bank is called a non-
performing asset (NPA). When a borrower could not pay interest and/or instalment on a
loan, which remain overdue for more than 180 days then it becomes non- performing.
The basic factor to determine whether an account is NPA or the record of recovery and
not the availability of security. The period of non- performance of 180 days has been
reduced to 90 days with effect from March 31st, 2004.
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 guidance relating to asset classification issued by The Reserve
Banks of India.
3.3 Definition:-
According to S. Ramaswami (Accounting world Feb. 2008) “Non- Performing Assets
(NPA) have been a great worry for Indian Banks, with the countdown started for the
adoption of Based 2 norms, fear of breaching the minimum level of capital adequacy
emerges large for some of banks.”
According to Dr.Ch. Rajesham and Dr.K.Rajender, “Non-Performing Assets are those
assets that cease to generate income for banks.”
In line with the international practices and as per the recommendations made by the
committee on Financial System (Chairman Shri M. Narasimham), the Reserve Bank of
India has introduced, in a phased manner, prudential norms for income recognition, asset
Overview of NPA classification in India
Standard Asset
It does not create any problem while paying interest/
installments of the principal. It usually carries more than
normal risk attached to the business.
Sub- standard asset NPA for a period less than or equal to 12 months.
Doubtful Asset NPA for a period exceeding 12 months.
Loss Asset
An asset where loss has been identified by the bank or
internal or external auditors or by the RBI inspection.
Table No.3.1: Classification of NPA

classification and provisioning for the advances portfolio of the banks so as to move
towards greater consistency and transparency in the published accounts.
The securitization and Reconstruction of Financial Assets and Reconstruction of
Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 defined
non-performing assets as, “an asset or account of a borrower, which has been classified
by a bank or financial institution as substandard, doubtful or loss assets in accordance
with the direction and guidelines relating to asset classification issued by the RBI.”
3.4 Factors Contributing to NPA :-
According to a recent study conducted by the RBI, the underlying reasons for NPA in
India can be classified into two heads, namely-
3.4.1 Internal Factors :-
The following internal factors contribute to NPA in the order of prominence:
a) The following internal factors contribute to NPA in the order of prominence:
b) No satisfaction regarding credit worthiness of borrowers
c) Non- compliance to lending norms
d) Lack of post credit supervision
e) Lack of appropriate margins
3.4.2 External Factors :-
The external factors that contribute to NPA’s are the following:
a) Recession in the economy as a whole
b) Input or power shortage
c) Price escalation of inputs
d) Exchange rate fluctuation
e) Accidents and natural calamities
3.4.3 Other Factors :-
Apart from the above factors, there are certain other factors which are responsible for
standard assets becoming NPA. They are the following:
a) Liberalization of the economy and the consequent pressures from Liberalization like
severe competition, reduction of tariffs, removal of restriction, etc.

b) Poor monitoring of credits and the failure to recognize early warning signals shown
by standard assets
c) Promoters’ over optimism in setting up large projects.
d) Sudden crashing of capital markets and the failure to raise adequate funds
e) Granting of loans for certain sectors on the basis of government’s directives rather
than commercial imperatives.
3.5 Reasons for NPA :-
3.5.1 In priority Sector Advances:
1. Directed and preapproved natures of loans sanctioned under sponsored programs.
2. Miss- utilization of loan and subsidies.
3. Diversion of funds.
4. Absence of security.
5. Lack of effective follow – up (post- sanction supervision & control)
6. Absence of bankruptcy and fore - closure laws.
7. Decrepit legal system.
8. Cost in effective legal recovery measures.
9. Difficulty in execution of decrees obtained.
10. Lack of marketing support.
3.5.2 In Non- priority Sector Advances:
1. Demand recession.
2. Frequent changes in govt. policies.
3. Industrial sickness and Labour problems.
4. Antiquated legal & judicial system.
5. Lack of legal reform (bankruptcy, foreclosure laws.)
6. Diversion of funds wilful default.
7. Technology obsolescence.
8. Incompetence- management failure(s).
9. Fear psychosis among banks and lack of effective follow up Political compulsion
and corruption.

3.6 Impact of NPA on Banking Operations :-
The efficiency of a bank is not reflected only by the size of its balance sheet but also by
the level of return on its assets. The NPA do not generate interest income for banks. At
the same time, banks are required to provide provisions for NPA from their current
profits. The NPA have deleterious impact on the return on assets in the following ways:
1. The interest income of banks will fall and it is to be accounted only on receipt
basis
2. Banks profitability is affected adversely because of the providing of doubtful
debts and consequent to writing it off as bad debts
3. Return on investments (ROI) is reduced.
4. The capital adequacy ratio is disturbed as NPA enter into its calculation.
5. The cost of capital will go up.
3.7 Management of NPA :-
The size of the NPA portfolio in the Indian banking industry was increase .However, due
to the active steps taken by the regulatory authorities and the banks, the gross NPA level
has reduced. To ensure long-term profitability, banks have to manage NPA effectively
by adopting the following techniques:
1. Ensuring that loans are diversified across several customer segments.
2. Introducing robust risk scoring techniques to ensure better quality of loans.
3. Improving the quality of credit monitoring system by designating a separate
credit manager or relationship manager for that purpose.
4. Raising the share of non- fund income by increasing service product offering by
better use of technology.
5. Reducing operating expenses by upgrading the banking technology.
6. Monitoring early warning signals and taking immediate appropriate action.
7. Adopting credit rating system to identify, measure and monitor the credit rate of
individual proposal.
8. Reducing the impact of operational risks by measure them and mitigating
insuring them.

3.8 Types of NPA :-
3.8.1 Gross NPA:-
Gross NPAs are the sum total of loan assets that are classified as NPAs as per RBI
guidelines as on Balance Sheet date. Gross NPA reflects the quality of the loans made by
banks. It consists of all the non-standard, doubtful and loss assets.
It can be calculated with the help of following ratio
Gross NPAs Ratio = Gross NPAs × 100
Gross Advances
3.8.2 Net NPA:-
Net NPAs are those type of NPAs in which the bank has deducted the provision
regarding NPAs. Net NPA shows the actual burden of banks. Since in India, bank
Balance Sheet contain a huge amount of recovery and write off of loans is very time
consuming, the provisions the banks have to make against the NPAs according to the
central bank guidelines, are quite significant. That is why difference between gross and
net NPA is quite high.
It can be calculated by following
Net NPAs Ratio = Gross NPAs – Provision × 100
Gross Advances - Provision
3.9 Recommendation of Narasimham Committee :-
Institutions would be given a period of three years to move towards the above In regard
to income recognition the committee recommends that in respect of banks and financial
institutions which are the following the accrual system of accounting, no income should
be recognized in the accounts in respect of non-performing assets. An asset would be
considered non- performing if interest on such assets remains past due for a period
exceeding 180 days at the balance sheet date. The committee further recommends that
banks and financial norms in a phased manner beginning with that current year.

Provisioning / Asset Management:
1. For the purpose of provisioning, the Committee recommends that, using the health
code classification which is already in vogue in banks and financial institutions, the
assets should be classified into four categories namely, Standard, Sub- standard,
Doubtful and Loss Assets. In regard to Sub-Standard Assets, a general provision
should be created equal to 10 percent of the total outstanding under this category.
2. In respect of Doubtful Debts, provision should be created to the extent of 100 percent
of the security shortfall. In respect of the secured portion of some Doubtful Debts,
further provision should be created, ranging from 20 percent to 50 percent,
depending on the period for which such assets remain in the doubtful category. Loss
Assets should either be fully written off or provision is created to the extent of 100
percent.
3. The Committee is of the view that a period of four years should be given to the banks
and financial institution to conform to these provisioning requirements. The
movement towards these norms should be done in a phased manner beginning with
the current year. However, it is necessary for banks and financial institutions to
ensure that in respect of doubtful debts 100 percent of the security shortfall is fully
provided fir in the shortest possible time.
4. The Committee believes that the balance sheets of banks and financial institutions
should be made transparent and full disclosures made in the balance sheets as
recommended by the International Accounting Standards Committee. This should be
done in a phased manner commencing with the current year. The Reserve Bank,
however, may defer implementation of such parts of the standards as it considers
appropriate during the transitional period until the norms regarding income
recognition and provisioning are fully implemented.
5. The Committee suggests that the criteria recommended for non-performing assets
and provisioning requirements should be given due recognition by the tax authorities.
For this purpose, the Committee recommends that the guidelines to be issued by the
Reserve Bank of India under Section 43 D of the Income Tax Act should be in line
with our recommendations for determination of non- performing assets.
6. Also, the specific provisions made by the banks and institutions in line with our
recommendations should be made permissible deductions under the Income Tax Act
7. The Committee further suggests that in regard to general provisions, instead of
deductions under Section 36 (1) (VIII) being restricted to 5 percent of total income

and 2 percent of the aggregate average advances by rural branches, it should be
restricted to 0.5 percent of the aggregate average non-agricultural advance and 2
percent of the aggregate average advances by rural branches. This exemption should
also be available to banks having operations outside India in respect of their Indian
assets, in addition to the deductions available under Section 36 (1) (viii).
3.10 RBI Guidelines for NPA Recognition :-
1. An asset becomes non-performing when it ceases to generate income for the bank.
Earlier an asset was considered as non-performing asset (NPA) based on the
concept of ‘past due’. A non-performing asset (NPA) was defined as credit in
respect of which interest and/or instalment of principal has remained ‘past due’ for
a specific period of time. An amount is considered as past due, when it remains
outstanding for 30 days beyond the due date. However, with effect from March 31,
2001 the ‘past due’ concept has been dispensed with and the period is reckoned
from the due date of payment.
2. With a view to moving towards international best practices and to ensure greater
transparency, ’90 days’ overdue norms for identification of NPA have been made
applicable as below. From 31st March, 2004 an asset is considered to have gone
bad when the borrower has defaulted on principal and interest repayment for more
than one quarter or 90 days.
3. As per RBI guidelines NPA consist of sub-standard assets, doubtful assets and loss
assets. Any assets generally turn into NPA when they fail to yield income during
certain period. As a result, doubtful assets find its way from sub-standard assets
after 18 months in Indian context against 12 months under the international norms
and finally when it is found irrecoverable then it moves to loss assets category.
Banks are allowed to make full provision for such assets i.e. 100 percent of
unsecured portion of doubtful assets plus 20-50 per cent of secured portion
(depending on the period for which the account is doubtful) and a general 10 per
cent (20 per cent under the international norms) of the outstanding balance in
respect of substandard assets. The central bank is in favours of implementing the
time limit of 90 days from April, 2004 so that the banks would remain competitive
in the context of their international exposure.

4. With effect from March 31, 2005, banks will have to classify assets as ‘doubtful’, if
they remained under the sub-standard category for 12 months. To help banks to
overcome extra provisioning because of changes in assets classification, the central
bank has allowed a phased provisioning; a minimum of 20 percent each year over
four years In the light of the Narasimham Committee recommendations, from time
to time RBI has issued the guidelines in respect of recognition of NPA, their
classification and provisioning, which is summarized as under. The following are
the RBI guidelines for NPA classification and provisioning.
3.10.4.1 Standard Assets:
Standard Assets, which are not NPA, but involve business risks, require a minimum
of 0.25 percent provision on global portfolio but not on domestic portfolio.
3.10.4.2 Sub Standard Assets:
From 31.3.2001, these are those accounts which have been classified as NPA for a
period less than or equal to 18 months. The general provision of 10 percent of total
outstanding interest should be made on sub-standard assets.
3.10.4.3 Doubtful Assets:
From 31.3.2001 these are those accounts which have remained as NPA for a period
exceeding 18 months. On these assets the banks are required to provide 100 percent
for the unsecured portion and an additional provision of 20 to 50 percent advances, if
doubtful for 3 and above 3 years.
3.10.4.4 Loss Assets:
Loss assets are those NPA accounts which are last by the bank or auditors or by RBI
on inspection 100 percent provision for the amount outstanding must be made.
Standard assets are treated as performing assets and the remaining categories of sub-
standard, doubtful and loss assets are known as NPA both on gross and net basis. It is
general practice to NPA in terms of percentage.

3.11 Treatment of Accounts as NPA :-
1. Record of recovery
2. Treatment of NPA – Borrower-wise and not Facility-wise
3. Agricultural Advances – default in repayment due to natural calamities
4. Housing loan to Staff
5. Credit Facilities Guaranteed by Central/ state Government
6. Project Financing
7. Other Advances
8. Recognition of Income on Investment Treated as NPA
9. NPA Reporting to Reserve Bank
10. Concept of Commencement of Commercial Production and Restructuring of
Loan Account
3.12 Provisioning Norms :-
Taking into account the time lag between an account becoming doubtful of recovery, its
recognition as such, the realization of the security and the erosion over time in the value
of security charged to the bank, the banks should make provision against assets, doubtful
assets and sub-standard assets as below.
3.12.1 Standard Assets :-
From the year ended March 31, 2000, the banks should make a general provision of a
minimum of 0.25% on the standard assets. However, Tier 2 banks are required to do
higher provisioning on standard assets as under:-
General provisioning requirement is 0.40% from the present level of 0.25%. But in case
of agriculture or in SME investors the provisioning rate is required to be 0.25%.
3.12.2 Sub-Standard Assets :-
A general provision of 10% on the total outstanding should be made on the advances
given.
3.12.3 Doubtful assets:
Provisions should be for 100 % of the extent to which the advances is not covered by the
realizable value of the security to which the bank has a valid resource should be made
and realizable value is estimated on a realistic basis.

In regard to the secured portion, provision may be made on the following basis, at the
rates ranging from 20 % to 100 % of the secured portion depending upon the period for
which the asset has remained doubtful.
3.12.4 Loss assets:
His entire assets should be written off after obtaining necessary approval from the
competent authority and as per the provision of the Co-operative Societies Act, /rules. If
the assets are permitted to remain in the books for any reason, 100 % of the outstanding
should be provided for.
In respect of an asset identified as a loss asset, full provision at 100 % should be made if
the expected salvage value of the security is negligible.
3.12.5 Higher Provisions :-
There is no objection if the banks create bad and doubtful debts reserve beyond the
specified limits on their own or if provided in the respective State Co-operative Societies
Acts.
3.13 Rajapur Urban Bank & NPA :-
3.13.1 Introduction :-
At the time of registration of bank, Loan rules were framed and approved by the DRCS,
Ratnagiri Thereafter with the approval of Board, loan rules were changed considering
guidelines issued by RBI from time to time. Now in view to increasing branch network
in numbers of geographically also, one common document viz. Appraisal policy is
framed.
3.13.2 Policy on Pre – Sanction :-
1. Application for loan should be in standardized form as devised by the bank.
2. Branch to collect all the papers/information/documents as suggested in the respective
application form.
3. Branch to visit the borrower’s office/factory/residence and to satisfy themselves
before recommending any loan to higher authority and to keep record of such visit.
4. If applicant maintains loan/current/saving account with any other bank/financial
institutions, branch to verify such account statement and to satisfy them.

5. Branch to ascertain the promptness of applicant in making payment of Power
bill/Property Tax/LIC Premium/Existing loan interest or instalment, before
recommending the proposal
3.13.3 Appraisal :-
3.13.3.1 Working Capital Facility :-
1. Working capital requirement to be assessed properly considering past performance,
holding period for debtors as also for inventory at various level, sales, etc.
2. Working capital facilities beyond Rs. 2 Lacs should not be considered in the form of
overdraft.
3. Margin for CC against stock be 30% and for receivables 50%.
3.13.3.2 Term Finance :-
1. Term loan limit to be arrived @ 25% margin in respect of Machinery/Equipment
and Vehicles while 50% against land & building, electrification, furniture fixtures.
2. Sources for margin money to be ascertained.
3. Repayment capacity, considering existing earning to be ascertained.
4. Moratorium period to be fixed considering time required going in for commercial
production.
3.13.3.3 General :-
1. Credit facilities should not exceed segment wise, individual as also group exposures.
2. In case of switch over from other bank, branch to obtain credit information report
from the concerned bank.
3. In case of existing borrower/group borrower, branch to satisfy themselves about
their dealing with the bank.
3.13.4 Exposer :-
As per the RBI guidelines per party exposure is restricted to 15% of share capital and
Free Reserves and group exposures it is 40%. RBI has given liberty to recalculate the
exposure on the basis of profitability of September half. However irrespective of these it
is restricted at lower level i.e. Rs0.39 Crore for individual and Rs.1.05 crores for group.

3.13.5 Sanctioning Authority :-
3.13.5.1 AGM :-
Rs0.50lac for all types of fresh loan except staff loan and Rs.1.00 Lacs for renewal
3.13.5.2 CEO :-
Committee of executives comprising of all the executives shall have authority to grant all
type of fresh loan up to Rs. 5.00 Lacs except loan against FDR/LIC/GOVT. security and
staff housing loan as also renewal of all working capital facilities irrespective of limit.
3.13.5.3 Chairman/Voice Chairman/Founder Chairman :-
Loan against FDR/LIC/GOVT. security and any adhoc request.
3.13.5.4 Loan Committee
All types of loans to single borrower up to Rs.0.39 Lacs and Rs.1.05 crores for group
borrower.
3.13.5.5 Board :-
All types of loan within exposure ceiling for individual and group borrower.
3.13.6 Disbursal Formalities :-
3.13.6.1 Working Capital Facility :-
1. Fresh/additional limit against stock to be released only after party obtains adequate
insurance for stock and submit stock/book debts statement.
2. In case of new unit, working capital facility to be released, only after the unit starts
commercial production.
1. So far as possible, disbursement to be made by direct payment to seller.
2. At every time of disbursement, matching contribution to be made by the borrower.
3. Immediately after disbursement, branch to follow up insurance policy, receipt for
payment made, invoice etc…

3.13.6.3 General :-
1. Disbursement to be made only after complying with all the terms and conditions of
sanction, complete documentation and obtaining disbursal authority.
2. In case of Private Ltd. Company, charge with ROC to be registered immediately on
disbursal of credit facility.
3. Before disbursal branch to ensure that borrowers/guarantors become member of the
bank
3.13.7 Post Sanction :-
3.13.7.1 Working Capital :-
1. No finance to be considered against inter-firm receivable and for the receivables of
more than 90 days.
2. Drawing power to be arrived at regularly every month on the basis of stock
statement/book debt statement submitted by the party.
3. Branch to ensure that receipt and payment through CC/OD accounts represent
genuine business transactions.
4. Branch to carry out inspection of the unit at least on quarterly basis.
1. On installation of machineries branch to inspect the unit and to ensure that
machineries as per sanction is received & place the inspection report on record.
2. At least twice a year, branch to inspect the unit to ensure that machineries financed
by the bank are in running condition.
3.13.8 Renewal of working capital facility :-
1. Personal balance sheet of proprietor/partner/directors is also to be obtained.
2. Branch to submit the renewal papers along with memorandum for renewal to higher
authority for renewal, with its comments on performance with the bank, financial
performance viz. sales, profit etc…
3. If financial performance does not justify the limit at current level, branch to persuade
the party to reduce the limit.
4. Where the accounts are statutorily required to be audited, branch to obtain audited
accounts at the time of renewal.

3.13.9 NPA Norms Of Rajapur Urban Bank :-
3.13.9.1 Classification :-
3.13.9.2 Provisions :-
3.13.10 Recovery Policy :-
3.13.10.1 Banks Policy :-
At present they are making recovery but procedure for the same is not documented in the
form of policy. Although the bank is committed to collection/recovery of its dues but the
dignity of and respect for the customer is central to their recovery policy. The policy is
framed on the principal of courtesy, fair treatment and persuasion.
3.13.10.2 Guidelines For Branch/Recovery Staff :-
All the branches of Rajapur urban bank have to follow the following guidelines…
1. Branch to continuously inform the borrower about the due date of repayment
schedule. Recovery efforts to starts from the first month of default itself.
1. Standard Asset
It does not create any problem while paying interest/
installments of the principal. It usually carries more than
normal risk attached to the business.
2. Sub- standard asset NPA for a period less than or equal to 12 months.
3. Doubtful Asset NPA for a period exceeding 12 months.
4. Loss Asset
An asset where loss has been identified by the bank or internal
or external auditors or by the RBI inspection.
Standard Asset 0.25% of standard assets in advances.
Sub- standard asset 10% of substandard assets
Doubtful Asset
20% for NPA from 13 months to 24 months
30% for NPA from 25 months to 48 months
60% for NPA from 49 months
100% for loss assets and unsecured any doubtful
assets
Table No.3.13.9.1: Classification of NPA Norms
Table No.3.13.9.2: Provisions of NPA Norms

2. Position of overdue account to be reviewed on the monthly basis to arrest slippage of
fresh accounts to NPA category.
3. If the branch does not get response from the borrower for paying the amount, they
have to visit the unit and meet with the borrower. During visit to customer’s place for
collection of dues, decency and decorum would be maintained and customer’s
privacy would be respected as far as practicable.
4. If the branch does not get any favourable response, during personal visit, they should
write a notice letter to borrower.
5. If borrower still behaves irresponsible, they should meet the guarantor and ask
guarantor to peruse the borrower. Guarantor must be informed about legal
complication to arise if borrower fails to repay the dues.
6. On failure of all the recovery steps, branch to contact Area office/Control centre
7. Area office/Control centre to call the borrower along with guarantor and try to find
out the reason for overdue. If borrower is in genuine difficulty, problem to be
resolved in a mutually acceptable and in an orderly manner.
3.14 Conclusion :-
The Indian banking sector is facing a serious problem of NPA. The extent of NPA is
comparatively higher in Public sector banks. IT is highly impossible to have zero
percentage NPA. But at least Indian banks can try competing with foreign banks to
maintain international standard.
In general the trend of NPA in CBE are increasing trend on the same time the CBA has
been adopted a very good techniques to control over the NPA.

Chapter No. 4
Data Analysis & Interpretation
4.1 Introduction
4.2 Data Analysis & Interpretation
4.2.1 Total Deposits & Loan
4.2.2 Total Assets and Capital & Reserve
4.2.3 Total Gross NPA & Net NPA
4.2.4 Total Gross Advances & Net Advances
4.2.5 Total Gross NPA Ratio
4.2.6 Total Net NPA Ratio
4.2.7 Problem Assets Ratio
4.2.8 Shareholders Risk Ratio
4.2.9 Provision Ratio

Chapter No. 4
Data Analysis and Interpretation
4.1 Introduction :-
Data analysis is a process of inspecting, cleansing, transforming, and modelling data with
the goal of discovering useful information, informing conclusions, and supporting
decision-making.
Data analysis is important in business to understand problems facing an organization,
and to explore data in meaningful ways. Data in itself is merely facts and figures. Data
analysis organizes, interprets, structures and presents the data into useful information that
provides context for the data.
4.2 Data Analysis & Interpretation :-
Data analysis is a proven way for organizations and enterprises to gain the information
they need to make better decisions, serve their customers, and increase productivity and
revenue. The benefits of data analysis are almost too numerous to count, and some of the
most rewarding benefits include getting the right information for your business, getting
more value out of IT departments, creating more effective marketing campaigns, gaining
a better understanding of customers, and so on. Data analysis models.

4.2.1 Total Deposits And Loan:-
Banks can affect the money supply through demand deposits, or loans that the bank
funds through cash deposits it receives. By using interest rates to create their own profit,
banks are also creating money to increasing the money supply in the economy.
A bank loan is the most common form of loan capital for a business. A bank loan
provides medium or long-term finance. The bank sets the fixed period over which the
loan is provided (e.g. 3, 5 or 10 years), the rate of interest and the timing and amount of
repayments
Table no. 4.2.1: Following Table shows Total Deposit & Loan (Rs. In Lacs)
Year Deposits Loan
2014 9896.93 5564.67
2015 11581.02 6838.49
2016 12828.16 7679.61
2017 15525.38 8840.77
2018 18966.43 10675.61
(Source: Secondary Data)
Interpretation:
The above table shows that the highest deposit of the bank is in the year 2018 amounting
to Rs. 18966.43 and highest loan amount was in the year 10675.61 for the year 2018.
Graph No.4.2.1: Deposits & Loan

4.2.2 Total Assets & Total Capital & Reserve :-
The asset portion of a bank's capital includes cash, government securities, and interest-
earning loans (e.g., mortgages, letters of credit, and inter-bank loans); the liabilities
section of a bank's capital includes loan-loss reserves and any debt it owes.
Bank capital is the value of the bank's assets minus its liabilities, or debts. Total reserves
are the assets that a bank has immediately available to cover its liabilities. Total reserves
count against the bank's reserve requirements.
Table No. 4.2.2: Following Table shows Total Assets and C & R (Rs. In Lacs)
Year Total Assets Total Capital & Reserve
2014 11097.08 660.86
2015 12985.19 780.45
2016 14444.04 918.34
2017 17441.59 1088.62
2018 21056.62 1321.80
Interpretation:
It is observed that the total assets have increased from Rs.11097.08 to Rs.21056.62 for 5
consecutive and capital & reserve was highest in the year 2018 and lowest in the year
2014.
Graph No. 4.2.2: Assets and Capital & Reserve

4.2.3 Total Gross NPA & Net NPA :-
Gross non-performing assets is a term used by financial institutions to refer to the sum of
all the unpaid loans which are classified as non-performing loans.
Net non-performing assets is a term used by credit institutions to refer to the sum of the
non-performing loans less provision for bad and doubtful debts.
Table No. 4.2.3: Following Table shows Total Gross & Net NPA (Rs. In Lacs)
Year Gross NPA Net NPA
2014 74.02 -75.25
2015 51.07 -94.98
2016 49.84 -82.66
2017 117.67 -14.83
2018 123.85 -8.65
Interpretation:
The above chart shows that Gross NPA has increased from 74.02 to 123.85 and Net NPA
is less than 0.00 which has decreased from the year 2015-2018. In the year 2014 Net
NPA was -75.25
Graph No. 4.2.3: Gross & Net NPA

4.2.4 Total Gross Advances & Net Advances :-
"Gross advance amount" means the sum payable to the payee or for the payee's account
as consideration for a transfer of structured settlement payment rights before any
reductions for transfer expenses or other deductions to be made from such consideration.
Net Advances means the principal amount of the outstanding Advances minus the
amounts then on deposit in the Accounts representing Principal Proceeds.
Table No.4.2.4: Following Table shows Total Gross & Net Advances (Rs. In Lacs)
Year Gross Advances Net Advances
2014 5564.68 5415.39
2015 6838.49 6692.44
2016 7679.61 7547.11
2017 8840.77 8708.27
2018 10675.61 10543.11
Interpretations:
The above chart shows that during the year 2014 the Gross Advances was Rs 5564.68
and Net Advances was Rs. 5415.39 after that there is an increased in value of Gross
Advances as well as Net Advances till year 2018.
Graph No. 4.2.4: Gross & Net Advances

4.2.5 Total 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 × 100
Gross Advances
Table No.4.2.5: Following Table shows Total Gross NPA (Rs. In Lacs.)
Year Gross NPA Gross Advance
Total Gross NPA Ratio
(%)
2014 74.02 5564.68 1.33
2015 51.07 6838.49 0.75
2016 49.84 7679.61 0.65
2017 117.67 8840.77 1.33
2018 123.85 10675.61 1.15
Interpretation:-
From the above table we can see that the Gross NPA ratio was highest in the year 2014
& 2017 where as it was lowest in the year 2015 & 2016.High gross NPA ratio indicates
the low Credit portfolio of bank and vice-versa.
Graph No. 4.2.5: Total Gross NPA

4.2.6 Total Net NPA Ratio :-
The Net NPA Ratio is the ratio of net NPA to Net Advances. This ratio shows the degree
of risk in bank’s portfolio. Net NPA ratio can be obtain by Gross NPA minus the NPA
provisions divided by Net advances.
Net NPA Ratio = Net NPA × 100
Net Advances
Table No.4.2.6: Following Table shows Total Net NPA (Rs. In Lacs)
Year Net NPA Net Advances
Total Net NPA Ratio
(%)
2014 -75.27 5415.39 -1.39
2015 -94.98 6692.44 -1.42
2016 -82.66 7547.11 -1.09
2017 -14.83 8708.27 -0.17
2018 -8.65 10543.11 -0.08
Interpretation:
The above table indicates the quality of Non-Performing Assets of the banks High Net
NPA ratio indicates the low Credit portfolio & risk of bank and vice-versa. .From the
above table we can see that the Net NPA ratio was in minuses percentage from the year
2014 to 2018.
Graph No. 4.2.6: Total Net NPA Ratio

4.2.7 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 × 100
Total Assets
Table No.4.2.7: Following Table shows Problem Assets Ratio (Rs. In Lacs)
Year Gross NPA Total Assets
Problem Assets Ratio
(%)
2014 74.02 11097.08 0.67
2015 51.07 12985.19 0.39
2016 49.84 14444.04 0.34
2017 117.67 17441.59 0.67
2018 123.85 21056.62 0.59
Interpretation:
The above table indicates the quality of Credit portfolio of the banks. High Problem
Asset ratio indicates the low Credit portfolio of bank and vice-versa. The ratio of bank
was 0.67% in March-2014and after that it has been decreased from 0.39% to 0.34% in
from 2015-16
Graph No.4.2.7: Problem Assets Ratio

4.2.8 Shareholders Risk Ratio :-
Like depositors, the shareholders are also exposed to great risk if the Net NPA is positive
or more than zero. Hence it is necessary to see that the shareholders‟ funds are safe in
view of the NPA. So, this ratio becomes important from the view point of the
shareholders.
Shareholder’s risk Ratio = Net NPA × 100
Total Capital & Reserve
Table No.4.2.8: Following Table shows Shareholders Risk Ratio (Rs. In Lacs)
Year Net NPA Total Capital & Reserve
Shareholders Risk Ratio
(%)
2014 -75.27 660.86 -11.39
2015 -94.98 780.45 -12.17
2016 -82.66 918.34 -9.00
2017 -14.83 1088.62 -1.36
2018 -8.65 1321.80 -0.65
Interpretation:
From the above table we can see that the shareholders risk ratio has declined from -
11.39% to -0.65. The highest ratio was in the year 2015 and the lowest ratio was in the
year 2018.
Graph No. 4.2.9: Shareholders Risk Ratio

4.2.9 Provision Ratio :-
The total provisions against gross NPAs must be such that its Net NPA comes to zero. It
means that three must be 100% provision
Provision Ratio = Total Provision × 100
Gross NPA
Table No. 4.2.9: Following Table shows Provision Ratio (Rs. In Lacs)
Year Total Provision Gross NPA
Provision Ratio
(%)
2014 163.02 74.02 220.24
2015 163.02 51.07 319.21
2016 163.02 49.84 327.09
2017 168.02 117.67 142.79
2018 175.02 123.85 141.32
Interpretation:
From the above table we can see that in the year 2014 the provision ratio was 220.24%
which means bank had made over provision. The provision ratio was highest in the year
2016 and lowest in the year 2018.If the provision ratio is less, it indicates that the bank
has made under provision and vice-versa.
Graph No. 4.2.9: Provision Ratio

Chapter No. 5
Findings, Suggestions & Conclusion
5.1 Introduction
5.2 Findings
5.3 Suggestions
5.4 Conclusion

Chapter No. 5
Findings, Suggestions & Conclusion
5.1 Introduction :-
The present study is listed the detailed findings along with the suitable suggestions based
on the data analysis and discussion and review of literature. The concluding remarks and
the way ahead in controlling the non-performing assets in banks are explained in a brief
manner. Finally concluding remarks along with the scope for further research is
presented.
5.2 Findings :-
Banking activities are performed in India since ancient times. There were changes in
banking activities from time to time as per changes accrued in political, economic and
social system and very fast changes particularly, after 1992. The innovative process of
banking for improved customer service matching international standards through
infusion of technology includes electronic Funds Transfer, Tele Banking, Anywhere
Banking, Credit / Debit cards, ATMs, etc. Thus the professional banker must be
convergent with the dynamics of innovation in commercial banking. But, still some
points to be noted among the few of the aspects of ancient banking system that are still in
practices in present Indian banking system.
Government’s act and also the Narasimham 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.
1. Table No.4.2.1 The deposits and loans of the bank is increasing continuously
which is creating revenue for bank.
2. Table No.4.2.2 Total assets of bank is increased yearly as well as capital &
reserve decreasing continuously which is good for bank’s wealth and financial
position.
3. Table No.4.2.3 The above chart shows that Gross NPA is increases yearly it
means that bank trying to achieving the aim of 0% gross NPA and Net NPA is
less than 0.00 which shows that bank has now enough provision capacity.

4. Table No.4.2.4 In a bank gross advances & net advances are increased in value
year by year which is shows that so for that bank’s financial condition is good.
5. Table No.4.2.5 It means that Rajapur urban co-op bank take effective recovery
action and show result of sound position of the bank but still bank trying to
achieving the aim of 0% gross NPA.
6. Table No.4.2.6 Bank has sound credit appraisal system and also sound recovery
policy. Rajapur urban. Bank’s NPA level is decreasing year by year and because
of that Rajapur urban. Bank is being considered very good bank by citizens of
Ratnagiri district.
7. Table No.4.2.7 This ratio is continuously decreasing in bank except in March-
2017 & 2018. But overall this ratio is good for bank which indicates the level of
risk is low in bank.
8. Table No.4.2.8 Shareholder risk ratio is continuously reduced year by year which
shows that Bank have enough capacity for provision and the risk on investment is
nil.
9. Table No.4.2.9 The Provision ratio against gross NPA is increase 2015 & 2016
after 2016 Provision ratio decrease yearly.
5.3 Suggestions :-
1. Rajapur urban bank’s NPA level is decreasing year by year which is good for
bank but bank should follow the recovery policy strictly.
2. In Rajapur Urban bank there is no any special recovery department so bank
should develop the department for the fastest recovery of NPA.
3. Bank should motivate the staff to do fast recovery NPA.
4. Banks have more NPA in property loan and cash credit loan so, they should try to
reduce that level of NPA.
5. Recovery Department should take weekly follow up of NPA accounts.
6. Effective inspection system should be implemented.
5.4 Conclusions :-
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. To improve the efficiency and profitability, the bank has to be
scheduled. Various steps have been taken by government to reduce the NPA.

NPA is a double- edged weapon, which affects bank profitability due to interest income
not being recognized on NPA accounts and loan loss previously to be created from profit
earned. The bank must adopt structured NPA management policy for elimination or
reducing the NPA in the banks.

Bibliography

Bibliography
List of Books:-
1. Dr. Vasant Desai
Banks & Institutional Management
Re-oriented second edition 2010
Published By –
Mrs. Meena Pandey.
For Himalaya Publishing House Pvt. Ltd.
“Ramdoot”, Dr. Bhalerao Marg, Girgaon, Mumbai – 400004
Pages Referred - 192 to 204
2. Dr. N. R. Mohan Prakash
Banking Risk & Insurance Management
First Edition 2016
Published By –
Vikas* Publishing House Pvt. Ltd.
E – 28, Sector – 8, Noida – 201301 (UP) India
Pages Referred – 1.177 to 1.206
Journals:-
Annual Report of Rajapur urban co-op bank ltd
Year – 2014, 2015, 2016, 2017, 2018
Websites:-
http://www.banknetindia.com/banking/cintro.html
(15th July 2018 & 19th
August 2018 – 10 am)
http://www.investorwords.com/
(22nd July 2018 & 5th
http://www.rajapururbanbank.com
(1st July 2018 & 8th
July 2018 – 10 am)

http://www.slideshare.com
(29th July 2018 & 12th
http://finance.indiamart.com/investment_in_india/banking_in_india.html
(26th

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