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Transcript of akash presentation
8/7/2019 akash presentation
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³COMPARATIVE ANALYSIS ON
NON PERFORMING ASSETS
OF PRIVATE AND PUBLIC SECTOR BANKS´
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INTRODUCTION OF BANKING
The development of banking is an inevitableprecondition for the healthy and rapiddevelopment of the national economic structure.
Banking institutions have contributed much tothe development of the developed countries of the world. Today we cannot imagine thebusiness world without banking institutions.Banking is as important as blood in the humanbody. Due to the development of bankingadvances are increased and business activitiesdeveloping so it is rightly said,
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" The development of banking is not only
the root but also the result of thedevelopment of the business world." After
independence, the Indian government also
has taken a series of steps to develop thebanking sector.
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Due to considerable efforts of the government,
today we have a number of banks such as
Reserve Bank of India, State Bank of India,
nationalised commercial banks, Industrial Banks
and cooperative banks. Indian Banks contribute
a lot to the development of agriculture, and trade
and industrial sectors. Even today the banking
system of India possess certain limitations, but
one cannot doubt its important role in thedevelopment of the Indian economy
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INTRODUCTION OF N.P.AINTRODUCTION OF N.P.A
The accumulation of huge nonThe accumulation of huge non--performingperforming
assets in banks has assumed greatassets in banks has assumed great
importance. The depth of the problem of importance. The depth of the problem of bad debts was first realized only in earlybad debts was first realized only in early
1990s. The magnitude of NPAs in banks1990s. The magnitude of NPAs in banks
and financial institutions is over and financial institutions is over
Rs.1,50,000 crores.Rs.1,50,000 crores.
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While gross NPA reflects the quality of the loansWhile gross NPA reflects the quality of the loans
made by banks, net NPA shows the actualmade by banks, net NPA shows the actualburden of banks. Now it is increasingly evidentburden of banks. Now it is increasingly evident
that the major defaulters are the big borrowersthat the major defaulters are the big borrowers
coming from the noncoming from the non--priority sector. The bankspriority sector. The banks
and financial institutions have to take theand financial institutions have to take the
initiative to reduce NPAs in a time boundinitiative to reduce NPAs in a time bound
strategic approach.strategic approach.
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INTRODUCTION OF CO-
OPERATIVE BANK Unlike commercial banks which are engaged in
serving the industrial and commercial sectors of the economy, the cooperative banks, on theother hand provide credit and allied facilities to
the rural and agricultural sectors. The dawn of this country saw the evolution cooperativemovement in India. Cooperative societies cameinto being when the Cooperative Societies Act,1904, was enacted. The movement was started
with the aim of providing farmers funds with lowrates of interest so that exploitation by the villagemoneylenders is foiled.
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The Act provided for the formation of cooperative creditsocieties and a number of small primary credit societieswere established in various parts of the country. Thesesocieties, however, could not mobilise enough resourcesas compared to loans demanded by its members. Thisled to the enactment of a new act in 1912. TheCooperative Societies Act of 1912 provided for starting
Central Cooperative Banks with headquarters located inurban centers. In 1914, necessary steps were taken bythe then government to strengthen the cooperativemovement .
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IMPORTANCE OF STUDY
Bank should ensure that subsequent to sale of
the non performing financial assets to other
banks, they do not have any involvement with
reference to assets sold and do not assumeoperational, legal or other type of risks relating
to the financial assets sold.
Each bank will make its own assessment of the
value offered by the purchasing bank for the
financial asset and decide whether to accept or
reject the offer.
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Under no circumstances can a sale to other
banks be made at a contingent price whereby in
the event of shortfall in the realization by thepurchasing banks, the selling banks would have
to bear a part of the shortfall
A non ±performing asset in the books shall be
eligible for sale to other banks only if it has
remained a non-performing asset for at two
years in the books of the selling bank.
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OBJECTIVES OF THE STUDY
The basic idea behind undertaking theGrand Project on NPA was to:
To evaluate NPAs (Gross and Net) indifferent banks.
To study the past trends of NPA
To calculate the weighted of NPA in risk
management in Banking To analyze financial performance of banks
at different level of NPA
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To evaluate profitability positions of banks
To evaluate NPA level in differenteconomic situation.
To Know the Concept of Non Performing
Asset To Know the Impact of NPAs
To Know the Reasons for NPAs
To learn Preventive Measures
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Since the Indian banking sector is so wide
so it was not possible for me to cover allthe banks of the Indian banking sector.
the RBI norms for the classification of
asset/ NPA¶s are available on a pay site &
not publicly available through any source.
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EXECUTIVE SUMMARY
The accumulation of huge non-performingasset in banks has assumed greatimportance. The depth of the problem of
bad debts was first realized only in early1990s. The magnitude of NPAs in banksand financial institutions is over Rs.1,50,000 crores.While gross NPArefects the quality of the loans made bybanks, net npa shows the actual burden of the banks.
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FINDINGS
Gross NPA ratios i,e urban co-operative bank
has stable 5 to 6 % and prime bank ratio has
increses from the last three years. So quality of
credit portfolio of bank is lower. Net NPA ratio of this bank was higher than prime
bank. It shows that urban co-operative bank
consist of risky asset. It will become dangerous
in nthe long term solvency.
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RECOMMENDATION
Bank should check the credibility of farmer
like the proper identification and his/her
reputation in the village.
Banks have to find out the original reasons
should be check by the bank and his/her
wealth also, so that he/she can¶t mislead
the bank.
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Sarpanch of the village should also inquire
before the disbursement of the loanamount.
The stocks and receivables are to check
randomly by the bank, so that the bank are
aware of position of the firms.
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CONCLUSION
The Indian banking sector is facing a serious
problem of NPA . The extent of NPA is
comparatively higher in public sectors banks. To
improve the efficiency and profitability, the NPAhas to be scheduled. Various steps have been
taken by government to reduce the NPA. It is
highly impossible to have percentage NPA. But
at least Indian banks can try competing withforeign banks to maintain international standard.
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