Professional Documents
Culture Documents
INTRODUCTION
Its known fact that the bank and financial institution in Indian face the
problem of swelling non-performing assets (NPAs) and the issue is becoming
more and more unmanageable.
In the changed scenario, it has now become extremely important for Indian
banks to remain competitive for surviving. This kind of rapid growth however led
to strains in the operational efficiency of banks and accumulation of non
performing assets in their loan portfolios.
The origin of the problem of burgeoning NPAs lies in the quality of managing
credit risk by the banks concerned. What is need is having adequate preventive
measures in place namely, fixing pre-sanctioning appraisal responsibility and
having an effective post-disbursement supervision. Banks concerned should
continuously monitor loans to identify account that have potential to become
non-performing
BANKING BACKGROUND
Meaning of a bank:
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Functions of bank:
* Primary function
* Secondary function
1. Primary function:
* Accepting deposits.
2. Secondary functions:
* Agency services
TYPES OF BANK:
RBI has statistical tables related to the bank in India. Banking structure of
the country is broadly composed of commercial banks both scheduled and non-
scheduled, foreign banks and co-operative banks, even through organized
controlled and governed by separate Acts and Rules. They are all engaged in
providing credit to different segment of our economy.
Commercial and foreign banks are engaged in providing credit to the highly
organized industrial and commercial undertakings.
1. CENTRAL BANKS:
The important functions of the central bank on India-RBI are as follows.
2. COMMERCIAL BANK:
It can be defined as “A financial institution which accept deposit, draws
cheques, and lends money to commerce industry & society. Commercial bank
borrows money or accepts deposits and lends to those who needs funds for
commercial and industrial purpose. Thus they act as dealers for the need of funds
of the society.
a. Fixed deposits
b. Savings bank account
c. Current account and miscellaneous account as pigmy deposits’ home
safe deposit etc. Deposits are accepted to make advances in the from
of
a. Cash credit
b. Overdraft
c. Loans for short & long periods.
Apart from these full functions they also render a number of services to
their customers such as collection of cheques, bill of exchange, discounting of
bills, handle and promissory notes, Safe custody of valuables, remittance
facilities, payment of insurance premium, payment of electricity bills etc.
commercial banks. They are owned and controlled by central government where
as private sector bank are owned & controlled by the shareholders. Some banks
are functioning in co-operative banks incorporated under co-operative society’s
act of the respective state.
3. INDUSTRIAL BANKS:
These banks provide long-term funds to industrial enterprises. They are
also known as development banks as they provide financial technological and
Till 1947 there were no industrial banks in India. RBI and center
government have taken active part in the setting up of such banks to finance large
medium and small-scale industries. E.g. of Industrial banks are industrial Finance
corporation state finance corporation, industrial credit and Investment
Corporation of India & industrial Development bank etc.
4. EXCHANGE BANK:
These banks undertake the usual banking business but they specialize in
foreign exchange transaction. At present there are 16 exchange banks in India
and they conduct foreign trade transaction. They also render other service
incidental to financing such as collecting and supplying formation about foreign
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customers, providing remittance facilities etc. these banks have also entered in
the field of internal trade. They compete with Indian commercial banks in their
specialization the licensing of these is controlled by the Banking regulation Act
1949. RBI controls foreign exchange control regulations & other banking
transactions.
5. RURAL BANKS:
In India, regional rural banks have been setup in backward and rural areas.
Where coverage of commercial and co-operative banking is not well spread. The
purpose of such banks is to finance agriculture, and provide employment to rural
educated youth who possess the requisite orientation to look after the need of the
rural areas. Rural banks try to combine advantages of both co-operative and
commercial banks. The regional rural banks have been included in second
schedule of the RBI act therefore enjoy the same privilege and facilities of the
scheduled banks.
6. AGRICULTURE BANKS:
These banks provide long-term finance to farmers for purchase of tools,
equipments machinery and for permanent improvement of land. In India these
banks were set up to provide loans for the purpose of repayment of loans to
village moneylenders and indigenous bankers. These banks were also known as
land mortgage banks but now emphasis have been shifted to providing long term
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loans facilities. In India these banks have been developed in the co-operative
sector.
7. EXIM BANKS:
The export and import bank of India was set up in January 1982 with its
head office in Bombay. If part of normal banking functions are conducted by
there connected with import and export of goods. This bank performs several
other functions for example financing of export out of India and imports into
India, Financing joint ventures in foreign countries financing the import and
export of machinery and equipment lease etc. It also undertakes purchasing
discounting and negotiation of export bills.
8. CO-OPERATIVE BANKS:
These banks are formed under the principle of co-operative to provide the
loans to farmers. Small scale industrial concerns, promote in general Self- Help
among the lower and middle-income groups of the society. Services are the base
of such co-operative organization. These banks are helpful to small farmers,
artisans and in mobilizing rural deposits.
STUDY ON NPA:
It’s a known fact that banks and financial institutions in India face the
problem of swelling non-performing assets and the issue is becoming more and
unmanageable. In order to bring the situation under control, the securitization
and construction of financial assets and enforcement of security interest act-2002
was passed by parliament.
Also, with increasing deposits made by the public in the banking system,
the banking industry cannot afford defaults by borrowers since NPAs affects the
repayment capacity of banks.
Further, international rating agencies like, standard and poor have lowered
India’s credit rating to sub-investment grade. Such negative aspects have often
outweighed positives such as increase in forex reserves and manageable inflation
rate.
Under, such a situation, it goes without saying that banks are no exception
and are bound to face the heat of a global down turn. One would be surprised to
known that the banks and financial institution in India hold NPA worth Rs. 1,
10,000 cores; bankers have realized that unless the level of NPA’s is reduced
drastically, they will find it difficult to survive.
The core banking business is of mobilizing the deposits and utilizing it for
lending to industry. Lending business is generally encouraged because it has the
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effect of funds being transferred from the system to productive purposes which
results into economic growth.
And RBI in terms of the two committee reports of its period has been
neutralized by the ill effects of this surging threat. Despite various correctional
steps administered to solve this problem. Concrete results are eluding. It is a
sweeping and all pervasive virus confronted universally on banking and financial
institutions. The severity of the problem is however actually suffered by
nationalized banks, followed by the RBI groups and the all Indian Financial
Institutions.
A announced in the union budget for 2004-05. it has been decided to give
an option to foreign banks to either operate as branches of their parent banks or
set up subsidiaries.
Meaning of NPA;
Term Loan:
The requirement is that the over due period should be more than 90 days.
Therefore, such an amount needn’t be classified as NPA. Any amount which had
become payable before 31.12.05 will be NPA as at 31.03.2006 if it remains
unpaid.
If the bills remain overdue for a period of more than 90 days, then such
bills would be classified as NPA. As mentioned before the bills purchased and
discontinued before 31st Dec. 2005 if unpaid as at 31st March 2006 will be treated
as NPA.
Others:
As per the recent RBI guidelines the overall ceiling for foreign direct
investment in private sector banks has also been enhanced. In the changed
scenario, it has now become extremely important for India banks to remain
competitive for surviving. Universally, there is a more towards consolidation and
convergence. This kind of rapid growth however led to strains in the operational
efficiency of banks and the accumulation of non performing acts in their bank
loan portfolios.
In recent years one factor that has common to all countries facing
economic turmeric has been weak banking system contributing to NPA’s. It has
been contention of many bankers that the Government and supervisory
authorities should only provide a conducive environment for handling, these
situations through appropriate fiscal and monetary policies supported by a sound
regulatory and supervisory framework.
Hence, the immediate concern of the policy makers and practitioners in the
banking industry is the existing mass and or near bad loans that have now called
over the years. The result is the constitution of the committee on banking
reforms.
Exempted assets:
The following categories of advances are totally exempted from assets
classification income recognition and provisioning
L.I.C policies.
If the balance on loan outstanding as on 30th June the year under audit less
amount recovered from 1st July to 31st march to year under audit is more
than the sanctioned limit, there is an arrears of interest for more than the
quarters and hence the amount will become NPA.
If the above worked out amount is less than sanctioned limit, then arrears
of installments has to be worked out as follows.
From the balance out standing in the account as on 31st August, of the year
under audit, deduct the remittances made from September 1st to March 31st
of the year under audit.
From the amount of advances deduct the installment amount over due
deduct the installments amounts overdue up to august 31st of the year
under audit if the amount marked out as per above is more then the amount
worked out as then, the account will become NPA.
Management of NPA’s:
The most important facet of risk in India remains credit risk. Banks have
been successful in containing their non-performing assets, despite adoption of 90
day delinquency norm and the over hang problem. Net NPA’s have now fallen to
about just tow percent of net advances. Banks have been able to achieve this by
using treasury profits during the last few ears. Various measures initiated by the
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Government, the Reserve Bank and the banks then selves have also facilitated the
recovery and management of NPA’s.
The Act has also created enabling conditions for asset reconstruction
companies. The corporate debt restructuring (CDR) system has also emerged as a
time bound and transparent mechanism for arriving at a consensual financial
arrangement between the creditor and the borrower.
The enactment of the credit information companies Act, 2005 will also
enable sharing of credit information and progressive formation of credit
information bureaus, which should help in reducing transaction costs of banks in
extending credit to small and medium borrowers.
This should also enable banks to keep the NPA’s levels low, which, in
turn, would improve credit delivery and promote appropriate credit pricing.
Banks, however, need to further strengthen the risk management systems and
enhance further capacity building.
INDUSTRY PROFILE
Banking industry has been facilitating this task to a satisfy level during the
last few decades. But major threat in the Indian Bank Industry is the rising level
of non performing asset which the threat the industry and profit margin in fact the
major task before the Indian banks is to reduce ratio of non-performing assets to
total assets, based upon the new income recognition norms. In this context, the
issuance of these risk management guidelines by the RBI became considerable
significance. It emphasis on the need of a bank to adopt visit management
strategy and to reduce their NPA and in order to improve that business of that
bank.
Bank adopt risk management and strategies and to reduce their NPA and in
order to improve their business the bank would have to provide not only quality
service by adopting newer technologies but also newer service the banks will
have to reap the economic scale and scope in order to cost out and raise their
They must have detailed and shared knowledge of the credit characteristic
of they have key borrowers, strategically, this remains largely on informs word of
mouth process, in Indian Banking, many decades ago RBI itself used to collect
the credit information from the Indian Banks and mis-communication it to all
financial institution regulated by it, this practice came to half in 1970’s because
information system became increasingly.
Inadequate in fact of the mass expansion of the banking system till today in
the absence of an adequate, information network, banks about to generate
information flows about major defaulter, even in mutual use.
The effective management of NPA’s single major issue which will decided
the facts of the SBM branch bank in future the periodical change in solving the
problems of NPA by time testes method and future innovative step to reduce the
NPA is in very essential at this juncture.
These loans are given as a credit line with a pre-specified limit and an
interest rate that is set at a few % points higher than prime. The gap between the
interest rate and the prime rate is fixed in advance based on the banks credit
rating and other characteristics but cannot be more than 4%. Credit lines in India
charge interest only on the part that is used up and given that the interest rate is
pre-specified all borrowers should want as large credit line as they could get.
A Year isn’t too long a time when it comes to financial institutions like
banks. Yet, there are plenty of changes we find in banks. There are different
banks like Corporation Bank, HDFC Bank, ICICI Bank, Andhra Bank, Punjab
National Bank, Karur Vysya Bank, Karnataka Bank, State of Bank of Indian and
Bank of Baroda, which have their own importance in the banking industry. The
biggest gainers in terms of jumping places on the list were public sector banks.
Karnataka Bank, for instance, was leading bank in 2004, but this year some other
bank took the place. India Overseas Bank, State Bank of Mysore and Punjab
National Bank are some other banks that stood better rankings.
The rise of India’s public sector banks is but a pointer to the dramatic
changes sweeping through the industry for some years. A growing economy,
greater consumer confidence and appetite for credit, and greater thrust on
technology have helped the more aggressive public sector unit banks not just
grow their business, but drum their balance sheets into shape.
Now, the India’s best bank is HDFC bank and Centurion Bank, it had
decided to step back and look at the industry changing contours. With the
possible opening up of the banking sector in 2009 will mean for the competitors.
Banks should use as an opportunity to get their growth strategies in place.
They should grow through mergers and acquisitions. Bankers are rushing
to tap the countries small and medium enterprises.
The fact that it has been growing upwards of 10% annually and that profit
margins here are better than those in corporate lending. Small Medium
enterprises apart, looked at what will soon become a headline-grabbing affair in
the banking industry. Mergers and acquisitions, not the one to make a case for
consolidation in the industry arguing that India needs is not a large number of
small banks but a small number of large banks.
BANK PROFILE
The reality behind the great success of this bank is good administration of
president Sir. N.R. Jagadish for his best advice, suggestion, and direction. The
Board of Directors and employees have also dedicated for the development of the
bank.
The reality behind the great success of this bank is good administration of
president Sir. N.R. Jagadish for his best advice, suggestion, and direction. The
board of directors and employees have also dedicated for the development of the
bank.
1. Tumkur district.
2. Bangalore urban and rural district.
3. Mysore district.
♦ Tiptur Branch
♦ Sira Branch:
♦ Bangalore branches:
♦ Mysore Branch:
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Elec
18 Members
1 President 16 Directors + ( 2
1 Vice President
nt inviters)
The election will be held to appoint the Board of management of the bank.
All the share holders/ members of the bank are eligible to stand for election. Each
member can cast one vote. Through democratic process 18 members of Board of
management will be constituted. These 18 members will choose 1 president and 1
vice-president among them. The tenure of Board of management is 5 years.
ORGANIZATION STRUCTURE:
SHARE HOLDERS
BOARD OF DIRECTORS
GENERAL MANAGER/CEO
MANAGER
ASSISTANT MANAGER
The bank has full time chairman/ president & also CEO & 18 board of
director who provide necessary vision & policy formulation. General and senior
manager for team formulation & implementation of strategies.
DIRECTORS:
• R.J. Anantharajaiah-Business
• M.N. Narasimhamurty nayak-Business
• H.M. Divyananda murthy-Business
• G.C. Murugappa-Business
• Prabhu devaradhya-Business
• T.M. Chennaih-Business
• M.S. Dinesh jain-Business
• T.R. Suresh-Business
• M.P. Mahesh-Industrialist
• K.B. Kanthraju-Industrialist
• K.V. Srinath-Industrialist
* B.S. Suranarayanaguptha
The sub committees will purse and render clear picture about loan proposal
and help board to take wise decisions.
The various departments and section at the Branch level comprising of,
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♦ Deposit section
♦ Loan section
♦ Cash section
♦ Miscellaneous
♦ Shares section
♦ Management section
♦ Recovery department
♦ Stores section.
Each department function under the control of chief executive officer, who
ensures effective functioning of their respective duly assisted by manager etc.,
Bank logo:
Bank logo is designed from the beginning of the bank on 16-09-1963 &
logo shows bank’s motto.
Business hours:
Sunday holiday
1. The main functions of TGMC Bank Ltd is they provide short term and
medium term loans to various sectors, and they are play a vital role in
finance.
2. They raise deposits from the members as well as non-members for the
purpose of the meeting the credit requirements of the bank.
3. Besides the above functions, they also carry on ordinary banking
operation such as acceptance of deposits from the public, leading the
loans and advances against proper securities. Collection of cheques,
receiving of valuable for safe custody discounting of bills, DD
arrangement and investing the surplus funds in government securities
etc.
Human resource is very important for any concern. TGMC BANK limited
has very talented & gifted human resources.
Training: All the 114 employees are disciplined and honest. Training &
seminars are conducted for bank employees to improve their working & skills.
Computer training is also provided to cope with modern technological changes.
• Managers
Each department function under the control of chief executive officer, who
ensure effective functioning of their respective department duly assisted by
managers etc.,
Auditing system:
The bank has good auditing control system. Bank has appointed 2 internal
auditors to check the internal discrepancies & to strengthen the internal affairs of
the bank in accordance in the RBI guidelines & system & procedures.
Awards: in the year 2003 TGMC Bank Limited got the award of ‘The Best
Managed Urban Co-operative Bank in Karnataka.’
Strategic alliance:
TGMC Bank Ltd has strategic alliance with Karnataka State co-operative,
Apex bank under inland mutual arrangement scheme under the alliance.
Providing DD & cheques collection facilities all over India with the help of
ICICI bank Bangalore. TGMC Bank Ltd works towards mutual interest in
following areas.
ABB as the name suggests is the product for any Branch banking. In which
the customer of ABB Branch can carry out his banking transaction in any of the
above Branches.
♠ Balance enquiry
♠ Settlement of account
♠ Cash deposits
♠ Cash withdrawals
This scheme covers only saving bank account, current account, cash and
credit a/c etc.
1. Current account:
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People with steady monthly income save their earnings through this
account. There are certain restrictions in withdrawals. Bank pays interest at a
nominal rate. I.e. 4% and minimum balance is Rs. 500
Money is accepted for a fixed period. The rate of interest is higher than
other accounts. Minimum period is 15 days. Interest can be withdrawn on
monthly, quarterly or half yearly. The longer the period the higher the interest.
In this scheme the capital amount gets doubled in 129 months. Interest will
accumulate quarterly minimum period is 3 years. Only matured dated interest can
be withdrawn on maturity date. Interest can be withdrawn along with principle
amount and compound interest.
6. Non-resident account:
Non-resident Indians can open savings bank accounts, fixed deposits and
mangala cash certificated accounts at designated Branches.
The Bank has been providing General insurance scheme to their customers,
Influencing on M/s. Reliance General insurance & Reliance life insurance.
1. 15 to 90 Days 6%
2. 91 to 180 Days 7%
3. 181 to 1 Year 8%
4. Above 1Year to 3 Years 10%
5. Above 3 Years 9%
[For senior citizens, widows 1% additional interest on term deposits of
above 1 year]
Advancing of loans:
□ Loans are also provided to buy buses, cars, tractors, earthmovers and all
types of vehicles for transport operator.
□ Pledge loan for whole sale dealer, loan against warehouse receipts, loan
against mortgage of property, loan against stocks held in cold storage of
property, loan against stocks held in cold storage ware houses
• Issue of DD
• Issue of banker’s cheque
• Gift cheques
• Collection of cheques. /DD/bills
• Safe deposit lockers.
Rising of funds:
The bank will raise its funds by the following ways, when there is need.
They are:
Issue of shares
Obtaining cash/ credit overdraft or other loans from Karnataka State co-
operative bank & with prior approval of registrar from any of the
nationalized commercial banks.
Donations
Entrance Fee
Distribution of profits:
At the general meeting, the net profit earned by the bank in the years as
calculated as per rule 22 of rules shall be announced & distributed as under.
Before distribution of profit & losses of previous year or years shall be deducted
out of net profit and remaining profit only shall be distributed.
Building fund-10%
Propaganda fund-5%
Bonus
Contribution to society:
Very attractive interest rates on all deposits, more than nationalized banks.
Working hours extended for 7 days a week at S.S Puram Branch, Tumkur.
Rajajinagar Branch, Bangalore.
To innovate services
RESEARCH DESIGN:
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Definition:
♦ Income from NPA should not be recognized on accrual basis and should be
booked as income only when it in actually received. This will apply to all the
NPA’s.
♦ To study the factors responsible for the cause of NPA in the bank.
♦ To study the trends in profitability & NPA for the last 4 years.
♦ To study and provide suggestion and recommendation for the growth and
prospects of the bank.
The bank will be able to assess the efficiency with regard to management
of NPA, recovery of over dues and improvements of the profitability. It also
helps the banks to assess the further widening of the financial base and come out
with some valuable measures and methods.
♦ Involvement, Orientation and motivation of staff with system of the bank and
reducing the NPA.
♦ There are some facts and figures which are considered to be confidential on the
part of the bank and those are not disclosed.
Research methodology:
Data sources:
1. Primary data.
2. Secondary data.
Primary data:-
Hence, the study is the finance management. Then the chance of primary
data is less, but the interviews from the managers and the chief accountants will
be made.
Secondary data:
Sampling design:
The researcher has identified this bank for the present study little
information has been collected from bank through the interview to manager and
staff. The causes for NPA were analyzed based on various parameters through
interviews. Further the data will be processed by applying statistical too to arrive
at valid conclusions.
In other words while classifying the advance as standard asset, there should
not be more than on one quarter installment or interest remaining past due on the
balance sheet date.
The interest or installment becomes past due after 30 days from the date
becomes due. For example the interest due of quarter ended 30th September
becomes due on 30th October.
4. Sub-standard assets:
REVIEW OF LITERATURE:
Prof. Sanjay Kumar has discussed “NPA in regional rural banks, Impact
and Management’
The study was undertaken for a period of 1995-1999. The study was
conducted to analyze the loan asset, impact of NPA & Management of NPA.
NPA have become most critical factor governing the performance of banks. NPA
The study has shown that out of the legal, policy and operational support, it
is the latter which is critical to management of NPAs. The recovery of NPA’s
through crystallized collateral and other bank - stopping is subject to a prolix
process, as the present legal and other systems normally do not provide a fast and
effective exit route.
♦ Improvement in the quality of NPAs i.e. to reduce slippage of a low grade NPA
to the next higher level
♦ Reduction of NPAs.
Definition:
1993 4 quarters
1994 3 quarters
1995 2 quarters.
Record of Recovery:
In respect of a borrower having more than one facility with a bank all the
facilities granted by the bank will have to be treated as NPA. However in respect
of financing under multiple banking arrangements, each bank may classify the
borrower accounts according to its own records recovery and other aspects.
1. TERM LOAN:
Cash Credit and Overdraft: A cash credit or overdraft will be treated as NPA if
the account remains out of order for a period of 2 quarter during the year ending
31st March. An account should be treated as “out of order”’ if the outstanding
balance remains continuously in excess of sanctioned limit.
3. OTHER ACCOUNTS:
The cases when the out standing as with in the limit/drawing power, but
no credit in the account continuously for a period of more than 180 days or on its
date of balance sheet of the bank. I.e. 1st March of the each year.
SUB-STANDARD ASSETS:
DOUBTFUL ASSETS:
1.100% of the extent to which the advance is not covered by the realizable value
of the security to which the bank has a valid resource and the realizable value is
estimated on a realistic basis
2. Over and above item 1 depending upon the period for which the assets have
remained doubtful. 20% to 50% of the secured portion on the following basis.
Advances as doubtful
Up to 3years 20 %
3 to 5 years 30 %
Any securities
ASSETS CLASSIFICATION:
Categories:
Standard assets:
Standard assets is one which does not disclosed any problem and which
does not carry more than normal risk attached to the business such an asset is not
an NPA.
Sub-standard Assets.
Doubtful Assets.
Loss Assets.
Sub-standard assets:
♦ A sub-standard assets is one, which has remained NPA for a period less than or
equal to 12 months.
DOUBTFUL ASSETS:
♦ A doubtful asset is one, which has remained NPA for period exceeding 12
months.
♦ Doubtful assets shall be bifurcated in to doubtful assets less than one year b/w 1
and3 years, above 3 years doubtful assets and above 3 years shall be further
bifurcated in to “existing stock”.
LOSS ASSETS:
A loss asset is one where loss has been identified by the bank or internal or
external auditors or RBI inspection. In other words, such as asset is considered un
collectable & of such little value that its continuance as a bankable asset is not
warranted although there may be some salvage or recovery value.
♦ Realizable value of securing has become nil or negligible due to erosion in the
value of security. (Value may be treated as negligible if it is less than 10% of the
o/s in the borrower account).
D1 stage: If NPA exists for more than two years but does not exceed 3 years than
the asset is said to be in the D1 stage.
D2 stage: The NPA exists for more than 3 years but up to 5 years.
D3 stage: If the NPA exists for the more than 5 years then assets is said to have
entered the D3 stage.
NOTE: This information stated with the help of Indian Financial System by P.N.
Vershney and D.K. Mittal.
Introduction:
There are three tasks to be performed if the collected data are to be used in
the most effective manner.
1. An intensive review must be made of all the data collected for the
project with reference to the studies objectives.
2. These data are then analyzed with the help of techniques selected
earlier.
3. The results emerging from these analyses are then related to the studies
objectives.
The collected data have to be analyzed fully on the basis of the data
collected, an analysis has been made. Some researchers make the mistake of
postponing the selection of their analytical techniques until they collect the data.
Interpretation means drawing inferences from the collected facts after the
analytical study. Interpretation helps the researcher to understand the abstract
principle that works beneath his findings. He can line up his finding with those of
other studies having relationship with the established concept. Interpretation also
enables the researcher to establish concepts, which will be the basis of future
research. Moreover, interpretation helps the target audience to understand the real
significance of his research findings.
TABLE: 1
TYPE OF DEPOSIT
(Rs. In lakhs)
TABLE: 2
Sl.
Particulars 2006 TOTAL 2007 TOTAL
No
1 Short-term loan:
0.28 0.00
11.45 12.59
5527.60 4663.29
2 Medium-term loan:
0.15
14150.69 7686.91
3 Long-term loan:
9013.34
SOURCE: Annual Report.
TABLE: 3
(Rs. In lakhs)
TABLE: 4
(Rs in lakhs)
Concepts:
The table shows the constant increasing in the reserves and other funds and
also paid up share capital should be increasing.
Analysis:
In the years 2003-04, 2004-05, 2005-06 and 2006-07, the paid up share
capital Rs458.94, Rs 457.50, Rs 477.39 and Rs 5361.50 respectively increasing,
And , bearing 2003-04, 2004-05,2005-06 and 2006-07 the reserves and other
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Interpretation:
OTHER FUNDS
TABLE: 5
Concepts:
The above table statement shows that advances and deposits of the TGMC
bank limited.
Analysis:
Here the bank advances shows in an increasing trend the years 2003-04,
2004-05,2005-06,and 2006-07 is Rs 14398.60,Rs 15359.63, Rs 19678.30 and
21363.58 is respectively increasing.
And, the 4th column of this table shows deposits of the bank it is also
increasing in year by year. for like 2003-04,2004-05,2005-06 and 2006-07 the
amount is Rs 18796.62 ,Rs20027.03,Rs22476.54,and 25696.91 is respectively.
Interpretation:
TABLE: 6
Concepts:
The bank has maintained good conditions when compared to 4years net
profit , it shows an increasing trend.
Analysis:
The net profit of the bank in 2003-04 was Rs. 852.51lakhs; in 2004-05 it
was Rs. 859.91lakhs, in 2005-06 it was Rs.916.15lakhs and 2006-07 is Rs
1150.57.
Interpretation:
The net profit is compared to last years is increasing, this shows the
healthier position of the bank.
NET PROFIT
TABLE: 7
Concepts:
As against the standard assets the movement of NPA is shown in the table.
Analysis:
Interpretation:
This shows that the bank is taking proper steps to recover the dues by the
customer, etc.; when the rate of NPA is decreasing it will help the growth of the
bank.
QUALITY ASSETS
TABLE: 8
Concepts:
The above table shows the bank total loan, standard assets, substandard
assets and doubtful assets.
Analysis:
The table shows the constant increasing in the standard assets from the
financial year 2003-04 to 06-07, the comparative of columns 1 and 2 reveals that
the standard assets as against total loans are increasing when the standard assets
will increasing from year to year. In sub-standard assets the data shows the assets
increasing from year to year. A doubtful asset shows that only in the financial
year 2003-04 is Rs. 298.04lakhs, in the year 2004-05 it was Rs. 424.30lakhs, in
2005-06 it was Rs. 393.95 lakhs and 06-07 it shows Rs. 719.45lakhs in doubtful
assets.
Interpretation:
CLASSIFICATION OF ASSETS
25000
20000
15000
Standard assets
Sub-standard Asstes
10000 Doubtful Assets
5000
0
2003-04 2004-05 2005-06 2006-07
TABLE: 9
(Rs. in lakhs)
Concepts:
Provision calls for keeping aside the specified amount safeguarding the
future mis-happening i.e., to cope up with the future contingencies.
Analysis:
The bank in the year 2003-04 the NPA amount is Rs. 14.90 lakhs and the
provision is Rs. 2.98 lakhs it shows the decreasing trend. In the last 3 years like
2004-05, 05-06 and 06-07 there is no NPA and provision.
Interpretation:
TABLE: 10
(Rs. in lakhs)
Concepts:
The above statement shows the gross profit, provision made on NPA’s and
the Net profit of TGMC Bank ltd for last four years.
Analysis:
Here the researcher analyzed the impact of NPA on the profitability of the
NPA. In the year 2003-04 the bank earned a gross profit of Rs. 2675.60 while
provision made during the year was Rs. 2.89 lakhs. Provisioning norms were first
introduced to co-operative bank, RBI, the net elect was on the profit which had
sub statistically increased to posture figure it amounted to Rs.852.51 lakhs.
In the year 2004-05 the gross profit of Rs. 2627 lakhs whereas provision
made is Nil and the Net profit was 859.91 lakhs which was position figure.
Bearing 2005-06 and 06-07 the gross profit was Rs. 4010.10 lakhs and
3153.30 lakhs respectively and NPA provision made Nil in both the year and net
profit is Rs. 916.15 and 1150.57 lakhs.
Interpretation:
The profit rate compare to last years is increasing this shows the healthier
position of the bank.
TABLE: 11
Year Previous year profit Current year profit Turnover of the year
2003-04 685.53 852.51 23111.87
2004-05 852.51 859.91 25016.49
2005-06 859.91 916.15 28315.45
2006-07 916.15 1150.57 33775.84
SOURCE: Annual Report.
Concepts:
The above table shows the compression of the bank previous year profit and
current year profit trends, and also increasing trend of the turnover.
Analysis:
The turnover of the bank in 2003-04 was Rs. 23111.87 lakhs, in 2004-05 it
was 25016.49 lakhs, in 2005-06 it was 28315.45 lakhs and in 2006-07 it was
33775.84 lakhs. There is a study increase in the turnover from year to year.
Interpretation:
TABLE: 12
(Rs.in lakhs)
Concepts:
The term, bank growth rate percentage has been increasing trend from year to
year.
Analysis:
The growth rate of the bank is decreasing in the year 2003-04 i.e., 0.86%
but after 2004-05 it shows an increasing trend over the years. The growth rate of
the bank in 2006-07 is 25.59% it is very high when compared to 2003-04.
Interpretation:
The rate and growth is gradually increasing year by year and it shows a
very healthier trend of the bank.
♦ Willful-default/intentional default
♦ Deficiency if the scheme i.e. let or subsidies of art of loan make the borrowers
irresponsible about default.
♦ Convincing for other schemes that directly motivate the borrowers to pay off
the loan and evil fresh to an intensive recovery campus & awareness campus it
harvesting seasons to initiate repayment.
Proper utilization of loan amount for the purpose actually meant for.
• Timely visit by the field staff & making personal contacts with the
borrowers.
• Filing of suits in the court & auction of security charged to the bank.
• Identification of the NPA in the initial stage & steps to be taken to recover
the loan & minimize the NPA.
• Proper follow up with the support of all the staff members who where
having good touch with customers.
96 SRI SIDDHARTHA INSTITUTE OF MANAGEMENT STUDIES, TUMKUR.
200
A STUDY ON NPA IN TGMC BANK LIMITED 8
The important steps to be taken by the bank in reducing the level of NPA
are as follows:
Legal action:
Summary:
The bank, paid up share capital and reserves and other funds can shows
an increasing trend from year to year.
The assets classification of NPA in TGMC Bank for the year 2006-06
Sub standard assets Rs 1219.86lakhs and doubt full assets is nil.
The net profit of the bank in years 03-04, 04-05, and 05-06 is
Rs852.51lakhs, 851.91lakhs, and 916.15lakhs respectively .During the
year 06-07 the net profit is increasing Rs1150.57lakhs it is a good sine
due to effective recovery of NPA.
FINDINGS
Based on the analysis of the bank , the standard assets is increasing year by
year, at the same time the level of NPA has been decreasing and also
shows “Nil” in past three years . This shows the healthy trend in the
performance of the bank.
In the years 2004-05, 05-06, and 06-07 the bank has reached comfortable
position in terms of earning of the profit and effective recovery of NPA.
The efforts made by the managers and there subordinates is reducing the
level of NPA in their branches is satisfactory.NPA and the provision made
for the during the 2004-05, 05-06 and 06-07 is Nil.
The growth rate of the bank is decreasing in the year 2003-04 i.e., 0.86%
but after 2004-05 it shows an increasing trend over the years. The growth
rate of the bank in 2006-07 is 25.59% it is very high when compared to
2003-04.
In September 2000 bank was got schedule bank status by achieved deposit
of Rs 100 crores.
Bank gives all types of loans and advances except agriculture loans and
educational loan.
SUGGESTIONS
• The steps taken by the bank in reducing the level of NPA is satisfactory.
They have to maintain the same steps in future also.
• The growth rate of the bank is fluctuating year by year; it is not a good
sign to bank. Hence, they should take proper steps to increase their growth
rate efficiently.
CONCLUSION
By analyzing NPA of the TGMC Bank Limited for the last four years. The
NPA is nil during the year 2004-05, 05-06 and 06-07 which is satisfactory. It is a
healthy and good sign of bank; it is possible by bank because of its increase in
efficiency in sanctioning the quality advances and recovery of over dues by
sincere efforts. The efforts taken by the management to reduce the level of NPA
is up to the mark... Performance of the bank is satisfactory in 2006-07 compared
to its previous year.