...| ANALYTICAL STUDY OF NPA OF THREE NATIONALISED AND THREE FOREIGN BANKS | | | Deep Majumder | Apeksha Shriyan | Non-performing Asset is an important parameter in the analysis of financial performance of a bank as it results in decreasing margin and higher provisioning requirements for doubtful debts. It affects the liquidity and profitability of the bank. The main objective of the present study is to find out the loop holes in the mechanism of controlling NPA. The data has been analysed by using tables and pie charts. The important point to be noted that if the level of NPA declines the profitability of the banks will increase. | INTRODUCTION The banking industry has undergone remarkable changes after the first phase of economic liberalization in 1991 and hence credit management. The primary function of the banks is to lend loans to various sectors such as agriculture, housing, personal and industry and to take deposits. Now the lending of the loans involves higher risk as there is always a risk of default involved. Now the present scenario of lending has changed as banks become more cautious about lending loans, the reason being the rising amount of non-performing assets. Earlier the Narasimham committee-I clearly pointed out that the reduced profitability of the banks are due to the NPA and thus recommended that it should be phased out. NON PERFORMING ASSET An asset, including a leased asset, becomes non- performing when it ceases to generate income...
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... |Page no. | | |Executive Summary |2 | |1 |General Introduction | | | |Introduction to the Topic |4 | | |Company Profile |6 | | |Non performing assets |10 | |2 | Research Methodology |32 | |3 | Data Analysis & Interpretation |38 | |4 | Findings, Suggestions & Conclusions |64 | |5 | Annexure: | | | |a) Bibliography |68 | | |b) Questionnaire |70 ...
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...shown good performance since the last few years. The public sector Banks have also shown comparatively good result. The gross profits and the net profits of the Public Sector banks have been on a high from past few years. The private sector banks are also showing good results in case of profits. However, the only problem of the Scheduled Commercial Banks these days are the increasing level of the non performing assets. The Non-Performing Assets (NPAs) problem is one of the foremost and the most formidable problems that have shaken the entire banking industry in India like an earthquake. Like a canker worm, it has been eating the banking system from within, since long. It has grown like a cancer and has infected every limb of the banking system. At macro level, NPAs have choked off the supply line of credit to the potential borrowers, thereby having a deleterious effect on capital formation and arresting the economic activity in the country. At the micro level, the unsustainable level of NPAs has eroded the profitability of banks through reduced interest income and provisioning...
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...have also shown comparatively good result. The gross profits of the Public Sector Banks currently 29,715.26crore which has been doubled to the last to last year, and the net profit of the Public Sector Banks is 12,295,47crore. However, the only problem of the Public Sector Banks these days are the increasing level of the non performing assets. The non performing assets of the Public Sector Banks have been increasing regularly year by year. If we glance on the numbers of non performing assets we may come to know that in the year 1997 the NPAs were 47,300crore and reached to 80,246crore in 2002. The only problem that hampers the possible financial performance of the Public Sector Banks is the increasing results of the non performing assets. The non performing assets impacts drastically to the working of the banks. The efficiency of a bank is not always reflected only by the size of its balance sheet but by the level of return on its assets. NPAs do not generate...
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...PROJECT REPORT ON {Commercial Credit Appraisals} “It Revolves around Character, Collateral & Capacity” FOR {HDFC Bank} BY () Submitted in partial fulfillment of requirements for award of Post Graduate Diploma in Management ATHARVA SCHOOL OF BUSINESS Marve Road, Charkop Naka, Malad (W), Mumbai 400 095 DECLARATION I hereby declare that the Project titled "{Commercial Credit Appraisals With HDFC Bank Ltd}" submitted as a part of the study of Post Graduate Diploma in Management (PGDM) is my original work. The Project has not formed the basis for the award of any other degree, diploma, associate ship, fellowship or any other similar titles. Place: Mumbai Date: CERTIFICATE This is to certify that () has completed the Project "{Commercial Credit Appraisals}" under the guidance of Prof. in partial fulfillment of the requirements for the award of Post Graduate Diploma in Management for the academic period 2009-11. Signature of the Guide Signature of the Director Place: Mumbai Date: ACKNOWLEDGEMENTS I take this opportunity to express my gratitude and extend my thanks to all those whose help and guidance made this endeavor successful. I extend my sincere thank to Shri Sunil Rane, Executive President, Atharva Education Trust; Shri N. S. Rajan, Dean...
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...SBI Research Department in 2000, through its paper “Performance analysis of 27 Public sector banks” published in SBI monthly review performance, Vol XXXIX, was prepared by Economic Research Department of State Bank of India, is to analyze the Performance of the 27 Public Sector Banks for the year 1999-2000 vis-a-vis the preceding year. Selecting four different categories of indicators-Business Performance, Efficiency, Vulnerability and labor productivity indicators, carried out the analysis. Altogether, 39 indicators were selected for this purpose. For the purpose of analysis, 27 PSBs disaggregated into four groups, namely, the SBI, ABs (7), the SBGs (8), the NBs (19). During 1999-2000, the PSBs exhibited better show in terms of several parameters...
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...MANAGEMENT RESEARCH Online Open Access publishing platform for Management Research © Copyright 2010 All rights reserved Integrated Publishing association Review Article ISSN 2229 – 3795 Non performing assets: Issues, Causes and remedial Solution Poongavanam.S H.O.D., Department of Management studies, Ranippettai Engineering College, Thenkaddapanthangal, Walaja Taluk, Vellore District. -632513 Tamil Nadu. s.poongavanam@gmailo.com ABSTRACT The banking industry has undergone a sea change after the first phase of economic liberalization in 1991 and hence credit management. While the primary function of banks is to lend funds as loans to various sectors such as agriculture, industry, personal loans, housing loans etc., in recent times the banks have become very cautious in extending loans, this is due to mounting nonperforming assets (NPAs). Therefore, an NPA account not only reduces profitability of banks by provisioning in the profit and loss account, but their carrying cost is also increased which results in excess & avoidable management attention. Apart from this, a high level of NPA also puts strain on a banks net worth because banks are under pressure to maintain a desired level of Capital Adequacy and in the absence of comfortable profit level, banks eventually look towards their internal financial strength to fulfill the norms thereby slowly eroding the net worth. Considering all the above facts banking industry has to give more importance to NPA and to structure...
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...WEBSITES: DRT Cases • DRTC is the only Journal available, devoted exclusively to DRT cases. • DRTC published in monthly parts provides in full text, the most systemic access to cases by the Supreme Court, High Courts, DRAT & DRT’s. • DRTC is a current record of the latest substantive cases on the DRT Auction Sale, Bank & Customer, Banking Frauds, Cheating, Banking relating to Companies, Partner-ship, Proprietorship, Central & Financial Corporation Act, Dishonour of Cheques, Debt Laws, Embezzle-ment, Hypo-thecation. Interest Act, Selected cases under Banking Regulation Act, Negotiable Instruments Act, BIFR, AAIFR, MRTP Commissions, SEBI, SICA, State Recoveries of Dues Act and several Allied Act making this an essential reading for Practitioners, Financial Institutions, Banks, Corporate Sector wth an invaluable reference source of developments in matters related to the above topics. • Fast access to information. • Each issue contains up to 20 decisions with full text every Judgment. • Almost all reportable / non-reportable judgements, decisions delivered by Debt Recovery Appellate Tribunals and DRT’s. • Cases are clearly presented ith catch words and concise head notes summarizing the judgments clearly and accurately. • Cross – references are given to other major legal decisions delivered by the Supreme Court & various High Courts. Accurate Case Reporting of land mark case, with topical Index, Subject Index & Important Law Point and the background of the case, the judgement...
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...Chapter 1.0 Introduction & Background 1.1 Introduction: Banks are very old form of financial institution that channels excess fund from surplus unit to deficit unit in consideration of a price called interest. Banking business definitely established on a relationship of Debtor-creditor between the surplus unit called depositor and the bank and between the deficit unit called borrowers and the bank. Here, opportunity coast of money works as interest is considered the price of the credit. For the development of an economy, bank furnishes a huge contribution and modem economy can not be imagined without the service of bank. Economic development of a country requires a well organized, smooth, easy to reach and efficient saving-investment process. The function of a single bank is not limited to its geographical region only rather it has reached beyond the border of the country. So banking business has been shaped as global business and the rest other business greatly depend on the strength of banking business performance. The recent financial crisis showed many weaknesses within the on hand financial system across the world. This triggers many issues linking to the protection of banking institution against probable future non expected risks associated with periods of insecurity. Bank regulatory authorities are directly liable to evaluate the performance of each banking business to find out any flaw. Regulatory authority should have to sense any upcoming difficulties...
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...Indian Banking Sector On the Road to Progress G. H. Deolalkar G. H. Deolalkar is formerly Managing Director of State Bank of India. 60 A STUDY OF FINANCIAL MARKETS Overview of Banking and Financial Institutions The Banking Sector The banking system in India is significantly different from that of other Asian nations because of the country’s unique geographic, social, and economic characteristics. India has a large population and land size, a diverse culture, and extreme disparities in income, which are marked among its regions. There are high levels of illiteracy among a large percentage of its population but, at the same time, the country has a large reservoir of managerial and technologically advanced talents. Between about 30 and 35 percent of the population resides in metro and urban cities and the rest is spread in several semi-urban and rural centers. The country’s economic policy framework combines socialistic and capitalistic features with a heavy bias towards public sector investment. India has followed the path of growth-led exports rather than the “exportled growth” of other Asian economies, with emphasis on self-reliance through import substitution. These features are reflected in the structure, size, and diversity of the country’s banking and financial sector. The banking system has had to serve the goals of economic policies enunciated in successive fiveyear development plans, particularly concerning equitable income distribution, balanced regional...
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...Article on Indian Banking Sector: “The challenges that the banking sector in India faces” It is by now well recognized that India is one of the fastest growing economies in the world. Evidence from across the world suggests that a sound and evolved banking system is required for sustained economic development. India has a better banking system in place vis a vis other developing countries, but there are several issues that need to be ironed out. In this article, we try and look into the challenges that the banking sector in India faces. Interest Rate Risk: Interest rate risk can be defined as exposure of bank’s net interest income to adverse movements in interest rates. A bank’s balance sheet consists mainly of rupee assets and liabilities. Any movement in domestic interest rate is the main source of interest rate risk. Over the last few years the treasury departments of banks have been responsible for a substantial part of profits made by banks. Between July 1997 and Oct 2003, as interest rates fell, the yield on 10-year government bonds (a barometer for domestic interest rates) fell, from 13 per cent to 4.9 per cent. With yields falling the banks made huge profits on their bond portfolios. Now as yields go up (with the rise in inflation, bond yields go up and bond prices fall as the debt market starts factoring a possible interest rate hike), the banks will have to set aside funds to mark to market their investment. This will make it difficult to show huge profits from treasury...
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...ROLE OF CAPITAL IN SECURING A STRONG BANKING SYSTEM – THE IMPERATIVES OF BASEL III ACCORD Dr.T.V.Rao, M.Com.,Ph.D., CAIIB,ACIBS(UK), Professor, B.V.Raju Insitute of Technology, Narasapur, Medak Dt., Telangana State ABSTRACT: The stability of the Financial System largely depends on the strength and resilience of the Banking System. Indian Banks which suffered from negative capital adequacy, negative earnings and high NPAs in the Seventies and eighties are now on a robust footing thanks to the reforms brought about by the Narasimham Committee I and II and on account of the strong resolve of the Govt. and the Reserve Bank of India. It is a matter of pride that the Indian Banks have now become fully Basel II Compliant, and that they remained relatively unscathed in the face of the Global Financial Crises which lead to severe crisis of confidence among all stake holders. Basel Committee on Banking Supervision revisited their earlier initiatives in the form of Basel I and Basel II Capital Accords and has now come out with a revised Frame work in the form of Basel III Capital Accord to ensure that the Banks remain strong and resilient and withstand the shocks of economic upheavals. The Accord recommends very stringent measures in terms of provision of capital not only for the Credit, Market and Operational Risks but also to guard against cyclical fluctuations in the economic activities. The concept of loss absorbing capital has further been extended taking away the flexibility...
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...INDIA Bank Karur Vysya Bank (KVB) Initiation 2 May 2012 Key Data Bloomberg Code Reuters Code Current Shares O/S (mn) Diluted Shares O/S(mn) Mkt Cap (Rsbn/USDmn) 52 Wk H / L (Rs) Daily Vol. (3M NSE Avg.) Face Value (Rs) USD = Rs52.9 KVB IN KARU.BO 107.2 107.2 43.2/816.1 479/315 325,412 10 Buy Target Price: Rs500 CMP: Rs403 Upside: 24% *as on 30 April 2012 A re-rating candidate Karur Vysya Bank (KVB) is a play on consistently robust performance driven by strong asset side position – a result of deeper understanding of its target segment. This has translated into strong pricing power and contained credit costs and hence robust avg ROA of ~1.6% for last decade. Renewed focus on improving liability side should aid continuity of impressive return ratios in future. Given robust financial performance on consistent basis, current valuations seem unjustified on absolute (1.1x FY14E PBV) and relative basis (~40% discount to new-gen pvt banks and at par with south based peers). KVB, a regional but quality franchisee, should get re-rated from its currently attractive valuations (1.1x FY14E PBV). Initiating coverage with Buy. Strong asset side position: KVB, a regional banking player in Southern India, has carved out a niche for itself by catering to working capital requirements with clear preference towards secured credit. Capitalising on its regional focus, KVB has churned out consistent RoA (1.6%) & RoE (~20%) during FY06-FY12 – encompassing varied operating environments...
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............................................................ 12 CHAPTER-2 Literature review ......................................................................................................... 14 2.1 Importance Of NBFC‘s ............................................................................................................... 15 2.2 Role of NBFC‘s .......................................................................................................................... 16 2.3 On Global Crisis ......................................................................................................................... 17 CHAPTER-3RESEARCH METHODOLOGY ............................................................................... 18 3.1 RESEARCH DESIGN ................................................................................................................ 19 3.2 Objective...
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...NBFC cannot issue cheques drawn on itself; and (iii) Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors unlike in case of banks. 1.2 OBJECTIVES This study represents that how NBFCs are making more profit than banks in INDIA. What types of NBFCs are there in India and how they are regulated through various regulatory bodies. Objectives of this study is to compare various NBFCs from different Sector. To identify different strength and weakness of various NBFCs in today’s competitive market. To identify various opportunity available for NBFCs in India. 1 1.3 RESEARCH METHADOLOGY DATA COLLECTION There are two methods of data collection that can be considered when collecting data for research purpose. These data collection types include...
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