Professional Documents
Culture Documents
Presented By
Anindya Sankar Kundu
v OBJECTIVES OF THE STUDY
Primary Objectives:
• To evaluate Gross NPA and Net NPA in different banks.
• To study the past trends of NPA.
Secondary Objectives:
• To calculate the weighted of NPA in risk management in Bankin
• To analyze financial performance of banks at different level of
v RESEARCH METHODOLOGY
• In this project Descriptive research methodologies were use.
• At the first stage theoretical study is attempted.
• At the second stage Historical study is attempted.
• At the Third stage Comparative study of NPA is undertaken.
•
•
v Sampling Methods
• To prepare this Project we have taken five banks from public
sector as well as five banks from private sector.
defined as a
credit facility in respect of
which the interest and /
or instalment of principal has
CATEGORIES OF NPAs
•
•
Provisional Norms :
Asset Classification Provision requirements
Standard assets (a) direct advances to agricultural & SME sectors at 0.25 per cent;
(b) residential housing loans beyond Rs. 20 lakh at 1 per cent;
(c) advances to specific sectors, i.e., personal loans (including credit card
receivables), loans and advances qualifying as Capital Market exposures,
Commercial Real Estate loans etc. at 2 per cent
(d) all other advances not included in (a), (b) and (c) above, at 0.40
percent.
Substandard assets 10 per cent of the total out standings for substandard assets.
Contd …
Asset Classification Provision requirements
Doubtful assets 20% - 50% of the secured portion depending on the age of NPA, and
Loss assets It may be either written off or fully provided by the bank. The entire
Comparison of GROSS NPA with all banks for the year 2007-08. The growing NPAs
affect the health of banks, profitability and efficiency. In the long run, it eats up the net
worth of the banks. We can say that NPA is not a healthy sign for financial institutions.
Here we take all the ten banks gross NPA together for better understanding. Average
of these ten banks gross NPAs is 1.29 as percentage of total assets. So if we
compare in private sector banks AXIS and HDFC Bank are below average of all banks
and in public sector BOB and BOI. Average of these five private sector banks gross
NPA is 1.25 and average of public sector banks is 1.33. Which is higher in compare of
private sector banks.
COMPARISON OF NET NPA WITH PUBLIC AND PRIVATE SECTORS BANKS FOR
THE YEAR 2007-08
Comparison of NET NPA with all banks for the year 2007-08. Average of these ten
bank’s net NPA is 0.56. And in the public sector banks all these five banks are
below this. But in private sector banks there are three banks are above average.
The difference between private and public banks average is also vast. Private
sector banks net NPA average is 0.71 and in public sector banks it is 0.41 as
percentage of total assets. As we know that net NPA shows actual burden of
banks. IndusInd bank has highest net NPA figure and HDFC Bank has lowest in
comparison.
PRIORITY SECTOR PRIVATE SECTOR BANK
BANK AGRI SMALL OTHERS PRIORITY NON-PRIORITY
(1) (2) (3) SECTOR
( 1+2+3 )
TOTAL
PRIORITY
PUBLIC
NON PRT PUBLIC SECTOR 39749
2007-08
22954
490
15158
38602 2008-09
25287
299
14163 NEW PRIVATE
2007-08
31468
4800
6271 2008-09
02080
8339
10419
SECTOR
Here, there are huge differences between private and public sector banks NPA.
There is increase in new private sector banks NPA of Rs.4148 crin 2008-09 which
is almost 66% rise than previous year. In public sector banks the numbers are not
increased like private sector banks.
Suggestions
Availability of historical data
Availability of historical data is paramount of important in
taking credit
decisions. Ex: To rate a customer, to extract performance ratios