121,saurabh bhosale, npa.docx

AISSMS IOM (MBA)APROJECT REPORTONNON-PERFORMING ASSETS MANAGEMENTATVIJAYA BANK BYBHOSALE SAURABH SURESHUNDER THE GUIDENCE OFDR. SANJAY PATANKARSUBMITTED TOUNIVERSITY OF PUNE

In the partial fulfillment of the requirement for the award of the degree ofMaster of Business Administration

ACKNOWLEDGEMENT

It is my pleasure in presenting this project on partial fulfillment of master degree in business administration.

I wish to take this opportunity to express my deep of gratitude to all those people who directly and indirectly helped me in completing my project successfully.

I would like to place all my gratefulness to my project guide Mr.Neelkanth Patil (Chief Manager ) for his contribution and suggestions which has helped me in bringing this project. He has been a continuous inspiration throughout the project.

I am thankful to the director of my institute and my internal guide Dr. Sanjay Patankar, who helped and guided me by providing their valuable suggestions at every stage in bringing about this project.

Last but not the least, I am grateful to all employees of Vijaya Bank and to all my friends for the help and support they have given to me.

(SAURABH BHOSALE.)

DECLARATION

I, the undersigned honestly declare that, this Project Report entitled A study of NPA Management is a genuine and bona fide project prepared by me in partial fulfillment of degree of Master of Business Administration of University of Pune.

The Project work is original and the conclusions drawn herein are based on the data collected and analyzed by me.

To best of my knowledge, the matter presented in this project has not been submitted and award of any degree, diploma or membership either to this or any other Institute or University.

Place: PuneDate:Saurabh Suresh Bhosale (MBA 2nd YEAR, FINANCE)

EXECUTIVE SUMMARY

Studying books and merely passing exams is not worth, the education, knowledge and experience is incomplete without being exposed to what is happening in real. In order to make students competent enough to face real world, there is a requirement of course for undergoing training for six to eight weeks with some reputed organization. This exposure to real life situation gives an insight to the students the kind of pressure and problems they can expect to face during their career. For the requirement of undergoing training I sent my request for training to Vijaya Bank and fortunately it was accepted. I was assigned the project a study of Non Performing Assets Management.This research topic is a study on the objectives of comparative analysis of nonperforming assetsand its effect on profitability position of the bank and productivity of the bank. An effort has been made in the instant project to study and find out various reasons leading to none performingAssets (NPA) and ways of Managing NPA in different types of Banks. Since NPA has beengrowing menace in banking, the study may help understanding this concept better and banks mayadopt remedial measures so as to maintain NPA at the minimum level. The selected Banks inPune were Bank of Maharashtra and Vijaya Bank from National Bank. The findings of the study are presented in the form of thesis which comprises various chapters like: introduction, guidelines of npa, present scenario of npa, effect of npa, reasons of npa, management of npa and conclusion and suggestions. To conduct a uniform research and arrive at an accurate conclusion, we restrict our research to only one commercial bank and one cooperative bank. We test hypothesis that the occurrence of NPA affects the profitability and financial health of a Bank adversely.

INDEXSr. No.ContentsPage NO.

1Introduction6-7

2Meaning of NPA8-27

3Company Profile28-34

4Objective of The Study35-36

5Research Methodology

37-43

6Data Analysis And Interpretation44-55

7Findings56-57

8Conclusions

58-59

9Suggestions60-61

10Annexure62-65

11Bibliography66-67

CHAPTER: I

INTRODUCTION

TO

NON PERFORMING ASSETS

INTRODUCTION

A strong banking sector is important for flourishing economy. The failure of the banking sector may have an adverse impact on other sectors. Non-performing assets are one of the major concerns for banks in India. NPAs reflect the performance of bank. A high level of NPAs suggests high profitability and net worth of banks and also erodes the value of the assets. The NPAs growth involves the necessity of provisions, which reduces the overall profits and shareholders value. The issue of Non-performing assets has been discussed at length for financial systems all over the world. The problem of NPAs is not only affecting the banks but also the whole economy. In fact high level of NPAs in Indian banks is nothing but a reflection of the state of health of the industry and trade. The paper deals with understanding the concept of NPAs, its magnitude and major cause for an account becoming Non-performing, projections of NPAs over next three years in public sector banks and concluding remarks. After nationalization, the initial mandate that banks were given was to expand their branch network, increase the saving rate and extend credit to the rural and SSI sector. This mandate has been achieved admirably. Since the early 90s the focus has shifted towards improving quality of assets and better risk management. The directed lending approach has given way to more market driven practice. The Narasimhan committee has recommended prudential norms on in come recognition, asset classification and provisioning. In a change from the past, in come recognition is now not on an accrual basis but when it is actually received. Past problems faced by banks were to a great extent attributable to this. Classification of what an NPAs is has changed with tightening of prudential norms. Currently an asset is non-performing if interest or installments of principle due remain unpaid for more than 180 days.

CHAPTER: II

NON PERFORMING ASSETS (NPA)

WHAT IS A NPA (NON PERFORMING ASSETS)?

Action for enforcement of security interest can be initiated only if the secured asset is classified as Nonperforming asset.

Non-performing asset means an asset or account of borrower ,which has been classified by bank or financial institution as sub standard , doubtful or loss asset, in accordance with the direction or guidelines relating to assets classification issued by RBI .

An amount due under any credit facility is treated as past due when it is not been paid within 30 days from the due date. Due to the improvement in the payment and settlement system, recovery climate, up gradation of technology in the banking system etc. It was decided to dispense with past due concept, with effect from March 31, 2001. Accordingly as from that date, a Non performing asset shell be an advance where

1. Interest and/or installment of principal remain overdue for a period of more than 180 days in respect of a term loan,1. The account remains out of order for a period of more than 180 days ,in respect of an overdraft/cash credit (OD/CC)1. The bill remains overdue for a period of more than 180 days in case of bill purchased or discounted.1. Interest and/or principal remains overdue for two harvest season but for a period not exceeding two half years in case of an advance granted for agricultural purpose ,and1. Any amount to be received remains overdue for a period of more than 180 days in respect of other accounts

With a view to moving towards international best practices and to ensure greater transparency, it has been decided to adopt 90 days overdue norms for identification of NPAs, from the year ending March 31, 2004, a non performing asset shell be a loan or an advance where;

1. Interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a term loan,1. The account remains out of order for a period of more than 90 days ,in respect of an overdraft/cash credit (OD/CC)1. The bill remains overdue for a period of more than 90 days in case of bill purchased or discounted.1. Interest and/or principal remains overdue for two harvest season but for a period not exceeding two half years in case of an advance granted for agricultural purpose ,and1. Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts

Out of order

An account should be treated as out of order if the outstanding balance remains continuously in excess of sanctioned limit /drawing power. in case where the outstanding balance in the principal operating account is less than the sanctioned amount /drawing power, but there are no credits continuously for six months as on the date of balance sheet or credit are not enough to cover the interest debited during the same period ,these account should be treated as out of order.

Overdue

Any amount due to the bank under any credit facility is overdue if it is not paid on due date fixed by the bank.

FACTORS FOR RISE IN NPAs

EXTERNAL FACTORS:-

Ineffective recovery tribunal

The Govt. has set of numbers of recovery tribunals, which works for recovery of loans and advances. Due to their negligence and ineffectiveness in their work the bank suffers the consequence of non-recover, thereby reducing their profitability and liquidity.

Willful Defaults

There are borrowers who are able to pay back loans but are intentionally withdrawing it. These groups of people should be identified and proper measures should be taken in order to get back the money extended to them as advances and loans.

Natural calamities

This is the measure factor, which is creating alarming rise in NPAs of the PSBs. every now and then India is hit by major natural calamities thus making the borrowers unable to pay back there loans. Thus the bank has to make large amount of provisions in order to compensate those loans, hence end up the fiscal with a reduced profit.

Mainly ours farmers depends on rain fall for cropping. Due to irregularities of rain fall the farmers are not to achieve the production level thus they are not repaying the loans.

Industrial sickness

Improper project handling , ineffective management , lack of adequate resources , lack of advance technology , day to day changing govt. Policies give birth to industrial sickness. Hence the banks that finance those industries ultimately end up with a low recovery of their loans reducing their profit and liquidity.

Lack of demand

Entrepreneurs in India could not foresee their product demand and starts production which ultimately piles up their product thus making them unable to pay back the money they borrow to operate these activities. The banks recover the amount by selling of their assets, which covers a minimum label. Thus the banks record the non-recovered part as NPAs and has to make provision for it.

Change on Govt. policies

With every new govt. banking sector gets new policies for its operation. Thus it has to cope with the changing principles and policies for the regulation of the rising of NPAs.

The fallout of handloom sector is continuing as most of the weavers Co-operative societies have become defunct largely due to withdrawal of state patronage. The rehabilitation plan worked out by the Central government to revive the handloom sector has not yet been implemented. So the over dues due to the handloom sectors are becoming NPAs.

INTERNAL FACTORS :-

A) Defective Lending process

There are three cardinal principles of bank lending that have been followed by the commercial banks since long. 1. Principles of safety1. Principle of liquidity1. Principles of profitability

By safety it means that the borrower is in a position to repay the loan both principal and interest. The repayment of loan depends upon the borrowers:

1. Capacity to pay

1. Willingness to pay

Capacity to pay depends upon:- 1. Tangible assets 2. Success in business

Willingness to pay depends on:- 1. Character 2. Honest 3. Reputation of borrower

The banker should, therefore take utmost care in ensuring that the enterprise or business for which a loan is sought is a sound one and the borrower is capable of carrying it out successfully .he should be a person of integrity and good character.

Inappropriate technology

Due to inappropriate technology and management information system, market driven decisions on real time basis cannot be taken. Proper MIS and financial accounting system is not implemented in the banks, which leads to poor credit collection, thus NPA. All the branches of the bank should be computerized.

Improper SWOT analysis

The improper strength, weakness, opportunity and threat analysis is another reason for rise in NPAs. While providing unsecured advances the banks depend more on the honesty, integrity, and financial soundness and credit worthiness of the borrower.

Banks should consider the borrowers own capital investment.

it should collect credit information of the borrowers from_

1. From bankers.1. Enquiry from market/segment of trade, industry, business.1. From external credit rating agencies.

Analyze the balance sheet.

True picture of business will be revealed on analysis of profit/loss a/c and balance sheet.

Purpose of the loan

When bankers give loan, he should analyze the purpose of the loan. To ensure safety and liquidity, banks should grant loan for productive purpose only. Bank should analyze the profitability, viability, long term acceptability of the project while financing.

Poor credit appraisal system

Poor credit appraisal is another factor for the rise in NPAs. Due to poor credit appraisal the bank gives advances to those who are not able to repay it back. They should use good credit appraisal to decrease the NPAs.

Managerial deficiencies

The banker should always select the borrower very carefully and should take tangible assets as security to safe guard its interests. When accepting securities banks should consider the

1. Marketability 2. Acceptability3. Safety 4. Transferability.

The banker should follow the principle of diversification of risk based on the famous maxim do not keep all the eggs in one basket; it means that the banker should not grant advances to a few big farms only or to concentrate them in few industries or in a few cities. If a new big customer meets misfortune or certain traders or industries affected adversely, the overall position of the bank will not be affected.

Like OSCB suffered loss due to the OTM Cuttack, and Orissa hand loom industries. The biggest defaulters of OSCB are the OTM (117.77lakhs), and the handloom sector Orissa hand loom WCS ltd (2439.60lakhs).

Absence of regular industrial visit

The irregularities in spot visit also increases the NPAs. Absence of regularly visit of bank officials to the customer point decreases the collection of interest and principals on the loan. The NPAs due to willful defaulters can be collected by regular visits.

Re loaning process

Non remittance of recoveries to higher financing agencies and re loaning of the same have already affected the smooth operation of the credit cycle.

Due to re loaning to the defaulters and CCBs and PACs, the NPAs of OSCB is increasing day by day.

PROBLEMS DUE TO NPA:-

1. Owners do not receive a market return on their capital .in the worst case, if the banks fails, owners lose their assets. In modern times this may affect a broad pool of shareholders.1. Depositors do not receive a market return on saving. In the worst case if the bank fails, depositors lose their assets or uninsured balance.1. Banks redistribute losses to other borrowers by charging higher interest rates, lower deposit rates and higher lending rates repress saving and financial market, which hamper economic growth.1. Non-performing loans epitomize bad investment. They misallocate credit from good projects, which do not receive funding, to failed projects. Bad investment ends up in misallocation of capital, and by extension, labor and natural resources.

Non-performing asset may spill over the banking system and contract the money stock, which may lead to economic contraction. This spillover effect can channelize through liquidity or bank insolvency: a) When many borrowers fail to pay interest, banks may experience liquidity shortage. This can jam payment across the country, b) Illiquidity constraints bank in paying depositors. c) Undercapitalized banks exceeds the banks capital base.

The three letters Strike terror in banking sector and business circle today. NPA is short form of Non Performing Asset. The dreaded NPA rule says simply this: when interest or other due to a bank remains unpaid for more than 90 days, the entire bank loan automatically turns a non performing asset. The recovery of loan has always been problem for banks and financial institution. To come out of these first we need to think is it possible to avoid NPA, no cannot be then left is to look after the factor responsible for it and managing those factors.

Interest and/or instalment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purposes, and

Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.

As a facilitating measure for smooth transition to 90 days norm, banks have been advised to move over to charging of interest at monthly rests, by April 1, 2002. However, the date of classification of an advance as NPA should not be changed on account of charging of interest at monthly rests. Banks should, therefore, continue to classify an account as NPA only if the interest charged during any quarter is not serviced fully within 180 days from the end of the quarter with effect from April 1, 2002 and 90 days from the end of the quarter with effect from March 31, 2004.

NPAs do not just reflect badly in a banks account books, they adversely impact the national economy. Following are some of the repercussions of NPAs:

Depositors do not get rightful returns and many times may lose uninsured deposits. Banks may begin charging higher interest rates on some products to compensate Non-performing loan lossesBank shareholders are adversely affected

Bad loans imply redirecting of funds from good projects to bad ones. Hence, the economy suffers due to loss of good projects and failure of bad investmentsWhen bank do not get loan repayment or interest payments, liquidity problems may ensue

Reasons for Occurrence of NPAs

NPAs result from what are termed Bad Loans or defaults. Default, in the financial parlance, is the failure to meet financial obligations, say non-payment of a loan instalment. These loans can occur due to the following reasons:

Usual banking operations /Bad lending practicesA banking crisis (as happened in South Asia and Japan)Overhang component (due to environmental reasons, business cycle, etc.)Incremental component (due to internal bank management, like credit policy, terms of credit, etc.

Result of NPAs on an organization

1. They decrease profitability.2. They reduce capital assets and lending limits.3. They increase loan loss reserves.4. They bring unwanted attention from government regulators

'Out of Order' status:

An account should be treated as OUT OF ORDER if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for six months as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as 'out of order'.Overdue: Any amount due to the bank under any credit facility is overdue if it is not paid on the due date fixed by the bank.

Impact of NPA

Profitability:- NPA means booking of money in terms of bad asset, which occurred due to wrong choice of client. Because of the money getting blocked the prodigality of bank decreases not only by the amount of NPA but NPA lead to opportunity cost also as that much of profit invested in some return earning project/asset. So NPA doesnt affect current profit but also future stream of profit, which may lead to loss of some long-term beneficial opportunity. Another impact of reduction in profitability is low ROI (return on investment), which adversely affect current earning of bank.

Liquidity:-Money is getting blocked, decreased profit lead to lack of enough cash at hand which lead to borrowing money for shot\ rtes. period of time which lead to additional cost to the company. Difficulty in operating the functions of bank is another cause of NPA due to lack of money. Routine payments and dues.

Involvement of management:-Time and efforts of management is another indirect cost which bank has to bear due to NPA. Time and efforts of management in handling and managing NPA would have diverted to some fruitful activities, which would have given good returns. Now days banks have special employees to deal and handle NPAs, which is additional cost to the bank.

Credit loss:-Bank is facing problem of NPA then it adversely affect the value of bank in terms of market credit. It will lose its goodwill and brand image and credit which have negative impact to the people who are putting their money in the banks.

REASONS FOR NPA:

Reasons can be divided in to two broad categories:-

A] Internal Factor B] External Factor

A] INTERNAL FACTOR:-

Internal Factors are those, which are internal to the bank and are controllable by banks.

Poor lending decision:

Non-Compliance to lending norms:

Lack of post credit supervision:

Failure to appreciate good payers:

Excessive overdraft lending:

Non Transparent accounting policy:

Change on govt. policies:B] EXTERNL FACTOR:-

External factors are those, which are external to banks they are not controllable by banks.

Socio political pressure:

Chang in industry environment:

Endangers macroeconomic disturbances:

Natural calamities

Industrial sickness

Diversion of funds and willful defaults

Time/ cost overrun in project implementation

Labor problems of borrowed firm

Business failure

Inefficient management

Obsolete technology

Product obsolete

Types of NPA

A] Gross NPA

B] Net NPA

A] Gross NPA:Gross NPAs are the sum total of all 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 assets like as sub-standard, doubtful, and loss assets. It can be calculated with the help of following ratio:

Gross NPAs Ratio = Gross NPA *100 Gross Advances

B] Net NPAs:Net NPAs are those type of NPAs in which the bank has deducted the provision regarding NPAs. Net NPA show the actual burden of banks. Since in India, bank balance sheets contain a huge amount of NPAs and the process 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 the difference between gross and net NPA is quite high.It can be calculated by following_

Net NPAs Ratio = Gross NPAs Provisions Gross Advances - Provisions

PREVENTIVE MEASUREMENT FOR NPA

Early Recognition of the Problem: Invariably, by the time banks start their efforts to get involved in a revival process, its too late to retrieve the situation- both in terms of rehabilitation of the project and recovery of banks dues. Identification of weakness in the very beginning that is: When the account starts showing first signs of weakness regardless of the fact that it may not have become NPA, is imperative. Assessment of the potential of revival may be done on the basis of a techno-economic viability study. Restructuring should be attempted where, after an objective assessment of the promoters intention, banks are convinced of a turnaround within a scheduled timeframe. In respect of totally unviable units as decided by the bank, it is better to facilitate winding up/ selling of the unit earlier, so as to recover whatever is possible through legal means before the security position becomes worse.

Identifying Borrowers with Genuine Intent: Identifying borrowers with genuine intent from those who are non- serious with no commitment or stake in revival is a challenge confronting bankers. Here the role of frontline officials at the branch level is paramount as they are the ones who have intelligent inputs with regard to promoters sincerity, and capability to achieve turnaround. Based on this objective assessment, banks should decide as quickly as possible whether it would be worthwhile to commit additional finance.

In this regard banks may consider having Special Investigation of all financial transaction or business transaction, books of account in order to ascertain real factors that contributed to sickness of the borrower. Banks may have penal of technical experts with proven expertise and track record of preparing techno-economic study of the project of the borrowers.

Borrowers having genuine problems due to temporary mismatch in fund flow or sudden requirement of additional fund may be entertained at branch level, and for this purpose a special limit to such type of cases should be decided. This will obviate the need to route the additional funding through the controlling offices in deserving cases, and help avert many accounts slipping into NPA category.

Timelines and Adequacy of Response: Longer the delay in response, grater the injury to the account and the asset. Time is a crucial element in any restructuring or rehabilitation activity. The response decided on the basis of techno-economic study and promoters commitment, has to be adequate in terms of extend of additional funding and relaxations etc. under the restructuring exercise. The package of assistance may be flexible and bank may look at the exit option.

Focus on Cash Flows: While financing, at the time of restructuring the banks may not be guided by the conventional fund flow analysis only, which could yield a potentially misleading picture. Appraisal for fresh credit requirements may be done by analyzing funds flow in conjunction with the Cash Flow rather than only on the basis of Funds Flow.

Management Effectiveness:

The general perception among borrower is that it is lack of finance that leads to sickness and NPAs. But this may not be the case all the time. Management effectiveness in tackling adverse business conditions is a very important aspect that affects a borrowing units fortunes. A bank may commit additional finance to an align unit only after basic viability of the enterprise also in the context of quality of management is examined and confirmed. Where the default is due to deeper malady, viability study or investigative audit should be done it will be useful to have consultant appointed as early as possible to examine this aspect. A proper techno- economic viability study must thus become the basis on which any future action can be considered.

Multiple Financing:

1. During the exercise for assessment of viability and restructuring, a Pragmatic and unified approach by all the lending banks/ FIs as also sharing of all relevant information on the borrower would go a long way toward overall success of rehabilitation exercise, given the probability of success/failure.

1. In some default cases, where the unit is still working, the bank should make sure that it captures the cash flows (there is a tendency on part of the borrowers to switch bankers once they default, for fear of getting their cash flows forfeited), and ensure that such cash flows are used for working capital purposes. Toward this end, there should be regular flow of information among consortium members. A bank, which is not part of the consortium, may not be allowed to offer credit facilities to such defaulting clients. Current account facilities may also be denied at non-consortium banks to such clients and violation may attract penal action. The Credit Information Bureau of India Ltd.(CIBIL) may be very useful for meaningful information exchange on defaulting borrowers once the setup becomes fully operational.

1. In a forum of lenders, the priority of each lender will be different. While one set of lenders may be willing to wait for a longer time to recover its dues, another lender may have a much shorter timeframe in mind. So it is possible that the letter categories of lenders may be willing to exit, even a t a cost by a discounted settlement of the exposure. Therefore, any plan for restructuring/rehabilitation may take this aspect into account.

1. Corporate Debt Restructuring mechanism has been institutionalized in 2001 to provide a timely and transparent system for restructuring of the corporate debt of Rs. 20 crore and above with the banks and FIs on a voluntary basis and outside the legal framework. Under this system, banks may greatly benefit in terms of restructuring of large standard accounts (potential NPAs) and viable sub-standard accounts with consortium/multiple banking arrangements.

Recovery Process of NPAs Management

Credit DefaultInability to PayWillful defaultUnviableViableLokAdalatDebt Recovery TribunalsSecuritization Act

RehabilitationCompromise

Asset ReconstructionConsortium FinanceSole BankerCorporate Debt RestructuringFresh Issue of Term LoanConversion into WCTLFresh WC LimitRephasement of Repayment Period

Once NPA occurred, one must come out of it or it should be managed in most efficient manner. Legal ways and means are there to overcome and manage NPAs. We will look into each one of it.

Willful default:

A] LokAdalat and Debt Recovery Tribunal

B] Securitization Act

C] Asset Reconstruction

Lok Adalat:Lok Adalat institutions help banks to settle disputes involving account in doubtful and loss category, with outstanding balance of Rs. 5 lakh for compromise settlement under LokAdalat. Debt recovery tribunals have been empowered to organize LokAdalat to decide on cases of NPAs of Rs. 10 lakh and above. This mechanism has proved to be quite effective for speedy justice and recovery of small loans. The progress through this channel is expected to pick up in the coming years.

Debt recovery tribunals (DRT):

The recovery of debts due to banks and financial institution passed in March 2000 has helped in strengthening the function of DRTs. Provision for placement of more than one recovery officer, power to attach defendants property/assets before judgment, penal provision for disobedience of tribunals order or for breach of any terms of order and appointment of receiver with power of realization, management, protection and preservation of property are expected to provide necessary teeth to the DRTs and speed up the recovery of NPAs in the times to come.

DRTs which have been set up by the Government to facilitate speedy recovery by banks/DFIs, have not been able make much impact on loan recovery due to variety of reasons like inadequate number, lack of infrastructure, under staffing and frequent adjournment of cases. It is essential that DRT mechanism is strengthened and vested with a proper enforcement mechanism to enforce their orders. Non observation of any order passed by the tribunal should amount to contempt of court, the DRT should have right to initiate contempt proceedings. The DRT should empowered to sell asset of the debtor companies and forward the proceed to the winding up court for distribution among the lenders.

Inability to Pay

Consortium arrangements: Asset classification of accounts under consortium should be based on the record of recovery of the individual member banks and other aspects having a bearing on the recoverability of the advances. Where the remittances by the borrower under consortium lending arrangements are pooled with one bank and/or where the bank receiving remittances is not parting with the share of other member banks, the account will be treated as not serviced in the books of the other member banks and therefore, be treated as NPA. The banks participating in the consortium should, therefore, arrange to get their share of recovery transferred from the lead bank or get an express consent from the lead bank for the transfer of their share of recovery, to ensure proper asset classification in their respective books.

CHAPTER: III

COMPANY PROFILE

Vijaya Bank, was founded on 23rd October 1931 by late Shri A.B.Shetty and other enterprising farmers in Mangalore, Karnataka. The objective of the founders was essentially to promote banking habit, thrift and entrepreneurship among the farming community of Dakshina Kannada district in Karnataka State. The bank became a scheduled bank in 1958

The bank has made steady progress in past 30+ years and under the present Board of Directors has taken leap towards progress through technology. The Banks financial status is as follows :Deposits 12496.15 Cr

Advances81504.03 Cr

Share Capital85911.94

Vijaya Bank, was founded on 23rd October 1931 by late Shri A.B.Shetty and other enterprising farmers in Mangalore, Karnataka. The objective of the founders was essentially to promote banking habit, thrift and entrepreneurship among the farming community of Dakshina Kannada district in Karnataka State. The bank became a scheduled bank in 1958Vijaya Bank steadily grew into a large All India bank, with nine smaller banks merging with it during the 1963-68. The credit for this merger as well as growth goes to late Shri M.Sunder Ram Shetty, who was then the Chief Executive of the bank. The bank was nationalised on 15th April 1980. The bank has built a network of 1512 branches, 48 Extension Counters and1528 ATMs, that span all 28 states and4 union territories in the country.Each branch provides effective and efficient services and significantly contributes to the growth of the individual, and the nation.

Vijaya Bank today is a PAN India Institution, serving diverse sectors of the society. The bank has built a network of 1512 branches, 48 Extension Counters and1528 ATMs, that span all 28 states and4 union territories in the country. The Bank has the highest number of branches in its home state Karnataka.Vijaya Bank offers a bouquet of innovative and attractive products and services to the customers. Vijaya Bank also incorporated the latest technology to provide the best services to our customers. The Bank offers several technology products, such as, ATMs, cash deposit machines, Debit and Credit cards, internet banking, Mobile Banking, Phone Banking, Funds transfer through RTGS and NEFT etc. AllBranches / offices are under RTGS / NEFT. The Bank also offers RuPay cards to its customers.The driving force behind Vijaya Bank's every initiative has been its 12000 strong dedicated workforce.

Today, living up to the ideals of the visionaries of the bank, the management includes dedicated professionals, who bring with them a considerable amount of expertise and experience in the banking industry.

The Bank has a three tier Organisation structure.

Head Office Regional Office Branches.

The Head office hosts various functional departments that are instrumental in policy formulations and monitoring of performances, of the regions and branches

The bank's 24 Regional Offices exercise immediate supervision and control over the branches under their jurisdiction.

FINANCIAL INCLUSION PLAN

Bank has covered 378 villages with above 2000 population under Financial Inclusion.

These villages are spread over in 12 States, 47 districts.

Bank has covered these 378 villages with 89 Brick and mortar branches and 332 BCAs.

Bank has also covered 2240 villages with below 2000 population under FI with 32 branches, 457 BCAs and 20 offsite ATM Bank has introduceskiosk Banking Solutionand it is Live in 35 centers.

Bank is implementing Electronic Benefit transfer program of the Govt. of Karnataka underOne District One Bank Modelin Mandya district of Karnataka to disburse Social Security pensions to more than 95000 beneficiaries every month through business Correspondents Agents.

Bank has established 11 Financial Literacy Centers through a joint trust viz. JnanJyothi Financial literacy and credit counseling trust.9 of these FLCs are in Karnataka,3 districts level and 6 taluk level. Two more taluk level FLCs are opened in Kerala State

Three Financial Inclusion Resource Centers have been set up in the lead Districts of Mandya, Haveri and Dharwad in Karnataka.

Bank has provided five mobile vans at centers having more number of villages under Financial Inclusion for financial literacy activities.

Swabhimaanlogo is used on the Smart cards issued by our Bank.

T -Shirts and Caps bearing Swabhimaan logo and Banks logo have been provided to CSPs.

Bank has converted 43 USBs into regular Brick and Mortar branches during the year 2013- 14.

Bank has planned to cover 293 villages of below 2000 population during the current year 2014-15 as per the FIP 2013-16.

Services for personal banking: -

Sr. No.ServicesSr. No.Other Services

1ATM services1Gift Cheques

2RTGS/NEFT2International Banking

3Broking Services3Mobile Banking

4Safe Deposit Locker4Corporate Banking

5RBIEFT5Demat Services

6Foreign Inward Remittance6NRI Services

7E-rail7Agriculture/Rural Banking

8SBI VishwaYatra Foreign Travel Card

9Internet Banking

10E-pay

NRI Services:-

Sr. No.Name of NRI servicesSr. No.Name of NRI services

1Deposit Accounts4Remittances to India

2Opening of NRI Accounts5NRI car Loan Scheme

3NRI Home Loan5Miscellaneous

International Banking And Corporate BankingSr. No.International BankingSr. No.Corporate Banking

1Correspondent Banking1Mid-Corporate Group

2Trade Finance2Corporate Accounts Group

3Project Export Finance3Products And Services

4Merchant Banking4Project Finance

5Treasury5Gold Banking

6Exporter Gold Card

7USA Patriot Act Certification

8Offshore Banking

SME

Sr. NoName of SMESr. NoName of SME

1Surabhi Deposit Scheme11Transport Operators

2Commodity Backed Warehouse Receipt 12SME Petro Credit

3Business Current Accounts 13Small Business Credit Card

4Traders Easy Loan Scheme14Auto Loan

5Open Term Loan15V-Samman Term Deposit for Senior Citizens

6V- Vyapar16V-GenUTH Unnati Plus Recurring Deposit

7V- Health Care17V- Restaurant

8Retail Trade18V Dhaanya Rice Mill

9V-Shoppe19V- Dhaanya Flour Mill

10VIJAYA ADALAT20V- Dhaanya Dal Mill

The Reserve Bank of India (RBI) has offered some leeway to banks for early detection and resolution of bad loans. Under the new regime kicking off from April 1, lenders can finance 50 per cent of the outstanding loan value, RBI said in Framework for Revitalising Distressed Assets in the Economy, released on Thursday. Earlier, RBI had proposed to allow takeover of existing loans by new financiers at 60 per cent or more of the loan value.

The central bank also diluted rules for accelerated provisioning it had proposed for non-performing accounts. Now lenders will make 25 per cent provision for unsecured loans that remain unpaid for six months. Initially, RBI had proposed 30 per cent provisions.

Plus, for loans that have remained unpaid for two years, banks have to set aside 40 per cent, instead of 50 per cent.

The new framework calls for early formation of a lenders' committee with the timeline to agree to a plan for resolution. It also offers incentives for lenders to agree collectively and quickly to a restructuring plan. It will give better regulatory treatment of stressed assets if a resolution plan is underway. However, it will attract accelerated provisioning if no agreement can be reached. Seeking improvements in the current debt restructuring process, the framework allows independent evaluation of large value restructuring. This is for purpose of framing viable plans and a fair sharing of losses (and future possible upsides) between promoters and creditors. It also mooted steps to enable better functioning of asset reconstruction companies. This is apart from encouraging sector-specific companies and private equity firms to play active role in stressed assets market. It has offered liberal regulatory treatment provided for asset sales. Lenders can spread loss on sale over two years, provided the loss is fully disclosed. Leveraged buyouts will be allowed for specialised entities for acquisition of 'stressed companies'.

Steps to enable better functioning of asset reconstruction companies mooted.

The sector-specific companies / private equity firms will be encouraged to play an active role in stressed assets market, RBI said.The continuing slowdown in the economy has led to a historic pile of bad loans in the system.

RBI in its Financial Stability Report on December 30 had warned the strain on asset quality continues to be a major concern. "In a base case scenario, with the present conditions continuing, the gross NPAs (non-performing assets) in the system will rise to 4.6 per cent by September 2014 from 4.2 per cent in September 2013 or to about Rs 2.29 trillion from Rs 1.67 trillion a year earlier," it had noted.

Key drivers under new regime

* Early formation of Joint Lender's Forum for action plan

* Carrot for lenders to agree collectively and quickly to a plan

* Penalty of higher provisioning for delayed actions

* Independent evaluation for large recast deals

* Take-out and refinancing will not be treated as restructuring

* Losses from selling of NPAs can be spread over two years

CHAPTER: IV

OBJECTIVES OF

THE STUDY

OBJECTIVES OF THE STUDY:-

0. To study the Non-Performing Assets of Vijaya Bank

0. To study the appraisal process for granting of loan by bank.

0. To recognize the income, assets classification and the provisioning norms related to NPAs

0. To study the recovery process followed by the bank.

.0. To study NPA reduction measures

CHAPTER: V

RESEARCHMETHODOLOGY

RESEARCH METHODOLOGYResearch Methodology is a way to systematically solve the problems. It may be understood to study how research is done scientifically. In this, we study various steps that are generally adopted by the researcher in studding research problems along with the logic behind them, to understand why we are using particular method of technique so that the research results are capable of being evaluated. During my project work, I have used a lot of data to understand the concept of NPA and to study the Recovery process. The data collected was interpreted and then used as information in project.

In order to examine the magnitude and dimensions of NPAs of banks, the relevant literaturesuch as articles, published books and reports including RBI sources will be consulted. Theanalysis of NPAs as also its dimensions, obviously, will be at-the aggregate industry level.However in order to get insights into the various dimensions of NPAs, a comparative analysisof NPAs of commercial bank and co-operative bank will be attempted.The study is an empirical research based on collection of both primary and secondary data.The information relating to details of various aspects of NPA and management of it, it will becollected from different branches of a selected commercial banks and co-operative bank.

DATA COLLECTION:-

PRIMARY DATA: -Primary research (also called field research) involves the collection of data that does not already exist, which is research to collect original data. Primary Research is often undertaken after the researcher has gained some insight into the issue by collecting secondary data. This can be through numerous forms, including questionnaires, direct observation and telephone interviews amongst others. This information may be collected in things like questionnaires and interviews.

TYPES OF DATA

PRIMARY DATA

SECONDRY DATA

METHODS OF PRIMARY DATA:-

1. OBSERVATION METHOD:-Observation is either an activity of a living being, such as a human, consisting of receiving knowledge of the outside world through the senses, or the recording of data using scientific instruments. The term may also refer to any data collected during this activity. An observation can also be the way you look at things or when you look at something.

2. QUETIONAIRE METHOD:-A questionnaire is set of questions for gathering information from individuals. The questionnaires by mail, telephone, using face to face interviews, as handouts, or electronically (i.e., by e-mail or through web-based questionnaires)

3. INTERVIEW METHIOD:-Interviews are particularly useful for getting the story behind a participants experiences. The interviewer can pursue in-depth information around the topic. Interviews may be useful as follow-up to certain respondents to questionnaires, e.g., to further investigate their responses.

1. SCHEDULE METHOD:-

Informal, conversational interview: - No predetermined questions are asked, in order to remain as open and adaptable as possible to the interviewees nature and priorities; during the interview the interviewer goes with the flow.

General interview guide approach -the guide approach is intended to ensure that the same general areas of information are collected from each interviewee; this provides more focus than the conversational

SECONDARY DATA: -

The secondary data on the other hand, are those which have already been collected by someone else and which have already been passed through the statistical processes. When the researcher utilizes secondary data then he has to look into various sources from where he can obtain them. For e.g. Books, newspaper Internet, publications and reports. In the present study use of secondary data collected from website, i.e. www.rbi.co.in.

NORMS FOR ASSETS CLASSIFICATION AND PROVISION FOR LOAN ASSETS

The loan accounts in banks are classified into four categories. Out of these four categories, the following three categories are considered as NPAs:-A) Sub-standard assets B) Doubtful Assets C) Loss Assets The forth category of loan accounts, which is not included in NPA category, is standard Assets. Standard asset is one which does not disclose any problems and which does not carry only normal risk attached to the business.

Sub-standard Assets:-

Earlier a sub-standard asset was one, which was classified as NPA for a period not exceeding two years. With effect from 31 March 2001, a sub-standard asset was one, which has remained NPA for a period less than or equal to 18 months. With effect from 31 March 2005 the norms have been further tightened and a sub-standard asset would be one, which has remained NPA for a period less than or equal to 12 months.

In such cases, the current net worth of the borrower/guarantor or the current market value of the security charged is not enough to ensure recovery of the dues to the banks in full. In other words, such an asset will have well defined credit weaknesses that jeopardizes the liquidation of the debt and are characterized by the distinct possibility that the banks will sustain some loss, if deficiencies are not corrected

Doubtful Assets:- Earlier a doubtful asset was one, which remained NPA for a period exceeding two years. With effect form 31 March 2001, an asset is to be classified as doubtful, if it had remained NPA for a period exceeding 18 months. With effect from march31, 2005, the norms have been further tightened, and an asset would be classified as doubtful if it remained in the sub-standard category for 12 months.

A loan classified as doubtful has all the weaknesses inherent in asset that were classified as sub- standard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, condition and values-highly questionable and improbable. Loss assets:- A loss asset is one where loss has been identified by the bank or internal or external auditors or the RBI inspection but the amount has not been written off wholly. In other words, such an asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted although there may be some salvage or recovery value.

However, only those advances are classified as loss assets where no security is available. In accounts where some security / ECGC / DICGD cover is available, these accounts are not reported under loss assets.

PROVISIONING NORMS:- Bank should make provisions against sub-standard assets, doubtful assets and loss assets as below:

Loss Assets:- Loss should be written off. If loss assets are permitted to remain in the books for any reason, 100 per cent of the outstanding should be provided for.

Doubtful Assets:-

i) 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 recourse and the realizable value is estimated on a realistic basis. ii) in regard to the secured portion, provision may be made on the following basis, at the rates ranging form 20 % to 100% of the secured portion depending upon the period for which the asset has remained doubtful.

PROVISIONING NORMS FOR ASSETS:-

Period for which the advance has remained in Doubtful categoryProvision Requirement (in%)

Up to one year20%

One to three year 30%

More than three year i) outstanding stock of NPAs as on March 31, 2004. ii) advances classified as doubtful more than 3 years on or after April 1, 2004 60 % with effect from march 31, 2005 75 % with effect from march 31, 2006 100 % with effect from march 31, 2007 100 % with effect from march 31, 2005

Sub-standard Assets:- A general provision of 10% on total outstanding should be made without making any allowance for ECGC guarantee cover and securities available. The unsecured exposures, which are identified as sub-standard would attract additional provision of 10%, i.e. a total 20% on the outstanding balance. The provisioning requirement for unsecured doubtful assets is 100%

Standard Assets:-i) Bank should make general provision for standard assets at the following rates for the funded outstanding on global loan portfolio basis:a) Direct advances to agricultural and SME sector at 0.25%b) Advances to specific sectors, i.e. personal loans, loans and advances qualifying as capital market exposures, residential housing loans beyond Rs. 20 lakhs and commercial real estate loans at 1%.c) All other advances not included in (a) and (b) at 0.40%.

ii) As regards the additional facilities sanctioned as per the package finalized by BIFR and / or term lending institutions, provision on additional facilities sanctioned need not be made for a period of one year from the date of disbursement.

CHAPTER: VI

DATA ANALYSIS ANDINTERPRITATION

ANALYSIS AND INTERPRETATION OF THE DATA

TABLE NO: - Ii) CapitalSl. No.Particulars31.03.201431.03.2013

1.CRAR (%)

Basel II10.9711.32

Basel III10.56

2.CRAR - Tier I Capital (%)

Basel II8.308.54

Basel III8.12

3.CRAR - Tier II Capital (%)

Basel II2.672.78

Basel III2.44

Sl. No.Particulars31.03.201431.03.2013

i)Common Equity Tier 1 capital ratio (%)8.12%

ii)Tier 1 capital ratio (%)

iii)Tier 2 capital ratio (%)2.44%

iv)Total Capital ratio (CRAR) (%)10.56%

v)Percentage of the shareholding of Government of India in public sector banks74.06%55.02%

vi)Amount of Equity Capital raised (` In Crores) Refer item No. 10363.58NIL

vii)Amount of Additional Tier 1 capital raised; of whichPNCPS: PDI:

NIL

NIL

Amount of Tier 2 capital raised; of which Debt capital instrument (` In crores):Preference Share Capital Instruments: [Perpetual Cumulative Preference Shares (PCPS)/ Redeemable Non-Cumulative Preference Shares (RNCPS)/ Redeemable Cumulative Preference Shares (RCPS)]250.00

NILNIL

NIL

Basel III

TABLE NO:-II i) InvestmentsSl. NoParticulars31.03.201431.03.2013

1.Value of Investments

Gross value of investments42833.78*31504.02

In India42833.78*31504.02

Outside IndiaNILNIL

Provisions for depreciation and NPI (Non Performing Investment)248.39219.06

In India248.39**219.06

Outside IndiaNILNIL

Net value of investments42585.3831284.96

In India42585.3831284.96

Outside IndiaNILNIL

2.Movement of provisions held towards depreciation on investments

Opening balance207.79285.03

Add: i) Provision made during the year0.000.00

ii) Diminution on shifting of investments77.0827.89

Less: Write off48.94105.13

Closing balance235.93207.79

Includes LAF Repo of ` 575 Cr (PY ` 2000 Cr) and MSF of ` 450 Cr (PY ` 800 Cr) outstanding as on 31.03.2014 ** Includes provision of ` 12.47 Cr (PY ` 11.27 Cr) made on NPI. RBI circular DBOD.BP/BC.No. 41/21.04.141/2013-14 dated Aug 23, 2013 on Investment Portfolio of Banks - Classification, Valuation and Provisioning interalia provides Banks an option to distribute the net depreciation on the entire Available for Sale (AFS) and Held for Trading (HFT) portfolios on each of the valuation dates in the current financial year 2013-14, in equal installments. The Bank has fully provided for the depreciation on the AFS and HFT portfolios as on 31.03.2014.

ii) The particulars of repo transactions (including those from RBI under LAF Repo) are as underParticulars Outstanding during the yearAs on 31.03.2013

MinimumMaximumDaily average

Securities sold under Repos

1) Govt. SecuritiesNIL2800.00634.081025.00

2) Corporate debt securitiesNILNILNILNIL

Securities purchased under reverse Repos



Repo Transactions 31.03.2013 (Previous Year)Particulars Outstanding during the yearAs on 31.03.2014

MinimumMaximumDaily average

Securities sold under Repos

1) Govt. SecuritiesNIL3100.00436.822800.00#


Securities purchased under reverse Repos



# ` 800.00 Cr borrowed under Marginal Standing Facility (MSF) from RBI as on 31.03.2013

TABLE NO: - III

Non-SLR Investment Portfolio

Issuer composition of Non-SLR Investments -31.03.2014 (in crore.)

Sl.No.IssuerAmountExtent of Private PlacementExtent of Below Investment Grade SecuritiesExtent of Unrated SecuritiesExtent of Unlisted Securities

(1)(2) (3) (4) ( 5) (6) (7)

(i)PSUs2749.582684.072313.72177.10

(ii)FIs**4358.21675.0650.503683.1450.50

(iii)Banks1919.17209.9325.0053.56

(iv)Private Corporate355.11226.60162.23112.01

(v)Subsidiaries/ Joint Ventures32.67

(vi)Others132.1015.83132.10

(vii)Provision held towards depreciation and NPI195.02X X XX X XX X XX X X

Total9319.153811.492551.454157.9183.17

Note:Amounts reported under columns 4, 5, 6 and 7 above may not be mutually exclusive. ** Includes the investment under RIDF of ` 3615.57 Cr

Issuer composition of Non-SLR Investments -31.03.2013 (in crore.)

Sl.No.IssuerAmountExtent of Private PlacementExtent of Below Investment Grade SecuritiesExtent of Unrated SecuritiesExtent of Unlisted Securities

(1)(2) (3) (4) ( 5) (6) (7)

(i)PSUs585.55549.46

(ii)FIs**3,279.393,216.7260.00

(iii)Banks754.66256.0310.00

(iv)Private Corporate428.79347.16130.8913.7737.79

(v)Subsidiaries/ Joint Ventures8.068.06

(vi)Others382.69306.0526.404.82

(vii)Provision held towards depreciation and NPI(218.84)X X XX X XX X XX X X

Total5,220.304683.48227.2918.5993.29

Note:Amounts reported under columns 4, 5, 6 and 7 above may not be mutually exclusive.** Includes the investment under RIDF of ` 2795.40 Cr

TABLE NO: - IV

Non-Performing Non-SLR Investments (in crore)Particulars31.03.201431.03.2013


Additions during the year5.850.00

Reductions during the above period0.006.23


Total provisions held12.4711.27

Movement in provision for Non Performing Investments Particulars31.03.201431.03.2013


Add: Provision made during the year1.200.00

Less: Write off / write back of excess provisions0.001.09


(in crore)

TABLE NO: - V

Asset Quality

a) Non Performing Asset

Particulars 31.03.201431.03.2013

(i) Net NPAs to Net Advances (%)1.551.33

(ii) Movement of NPAs (Gross)


Additions during the year2173.871601.42

Reductions during the year1720.951786.94


(iii) Movement of Net NPAs


Additions /( reductions) during the year352.68(88.32)


(iv) Movement of provisions for NPAs*


Provisions made during the year400.29437.80

Write-off309.61534.75


(*excluding provisions on standard assets and including floating provision)

b) Sector-wise NPAs

Sl. No.SectorPercentage of NPAs to Total Advances in that sector

1Agriculture & allied activities4.63

2Industry (Micro & small, Medium and Large)4.71

3Services2.74

4Personal Loans2.52

c) Movement in NPAs

Particulars` in crore

Gross NPAs as on 1st April 2013 (Opening Balance)1532.94

Additions (Fresh NPAs) during the year2173.87

Sub-total (A)3706.81

Less:-

(i) Up gradations989.15

(ii) Recoveries (excluding recoveries made from upgraded accounts)435.94

(iii) Write-offs & Others295.86

Sub-total (B)1720.95

Gross NPAs as on 31st March 2014 (A-B)1985.86

TABLE NO:-VI

Comparison of deposits and advances in Vijaya bank for the last four yearsYEAR

DEPOSITSADVANCES

2010-11

7324848718

2011-12

8305659703

2012-13

97017 69765

2013-14

124296 81504

TOTAL DEPOSITS AND ADVANCES

Interpretation:- As per the above table and graph we show that in the year 2010-2011 to 2011-2012 every year deposits increased as in the advances same thing in that advances also increased every year as per the deposit increased. In the year 2013-2014 deposits and advances almost two times increased rate as 2010-11.

TABLE NO: - VII

Level of NPA in the loan granted for the last four years

YEAR

LOANSNPAS% OF NPAS

2010-114871812592.58

2011-125970317182.87

2012-13 6976515332.19

2013-148150419862.43

PERCENTAGE OF NPA:-

Interpretation:- As given above Table and Graph in the year 2010-11 loan -48718 and on that NPA was 1259 is the 2.58% as same in the year 2013-14 the NPA rate was same at the rate 2.43 % from the year 2010-11 . NPAs of the bank are steady. They are not significantly increasing over a period of time. Bank must initiate the process to reduce it further

CHAPTER: VII

FINDINGS

FINDINGS

1) Bank has mentioned NPAs as per different sector to sort it out easily

2) There is a slight decrease in Return of Assets (ROA)

3) The loans and advances have been increased from2010-11 to 2013-14

4) In case of defaulters no action is taken against guarantor thus legal action should be taken guarantor in case of default.

5) Income recognition norms are not followed properly.

6) Provisioning for NPA is not in much accordance with RBI guidelines.

7) Credit appraisal and monitoring is not up to mark so that NPA do not occur.

CHAPTER: VIII

CONCLUSIONS

CONCLUSIONS

It is not possible to eliminate totally the NPAs in the banking business but can only be minimized. It is always wise it follow the proper policy appraisal, supervision and follow-up of advances to avoid NPAs. The banks should not only take steps for reducing present NPAs, but necessary precaution should also be taken to avoid future NPAs.

The bank has achieved its target because the net profit is also increased and there is a decrease in NPAs. So it is in better position compared to last year

If the NPAs is less, the economic position of the bank remains sound and solvent.

Vijaya banks NPAs better than average banking industry & thus it depicts the soundness of Banks financial position.

Bank has to pay proper attention to recover the NPA of the bank.

CHAPTER: IX

SUGGESTIONS

SUGGESTIONS

Effective inspection system should be implemented.

Operating staff should scrutinize the level of inventories/receivables regularly.

Large exposure on big corporate or single project should be avoided.

Uneven scale of repayment schedule with higher repayment in the initial years normally is preferred.

Improvement in credit appraisal technique at all levels, so that NPA does not occur.

Improvement in the recovery policy on continuous basis for controlling NPAs.

CHAPTER XI

ANNEXURE

ANNEXURE

I am student of Second year MBA of the AISSMS IOM Pune. I am doing project on To study of non-performing assets in Vijaya Bank as a part of study. I request you to provide the required information for the completion of my study.Promise that the information is used exclusively for academic purpose only.

1. personal profile:A. Name:B. Address:

C:Sex: Male: [ ]Female [ ]G:Age: [ ]

1. Do you know the NPAs of bank?

1) Yes 2) No

2. It is possible to eliminate totally the NPAs in the banking business?

1) Yes 2) No

3. The effective inspection system should be implemented?

1) Yes 2) No4. Do you think operating staff should scrutinize the level of inventories/receivables regularly?

1) Yes 2) No

5. Do you think large exposure on big corporate or single project should be avoided?

1) Yes 2) No

6. Uneven scale of repayment schedule with higher repayment in the initial years normally is preferred?

1) Yes 2) No

7. Do you think the banks should not only take steps for reducing present NPAs, but necessary precaution should also be taken to avoid future NPAs?

1) Yes 2) No

8. The necessary precaution should also be taken to avoid future NPAs?

1) Yes 2) No

9. Do you think there is significant relationship between gross NPA of a bank to its operating profit?

1) Yes 2) No

10. The bank will always face the problem of NPA because of poor recovery of advances granted by the bank?

1) Yes 2) No

11. NPAs are more in

1. Priority sector

1. Non Priority sector

12. What are the methods adopted by the bank to look after NPAs management? ........................................

13. What are the criteria to recovery the advances from the bank? ....

CHAPTER: X

BIBLIOGRAPHY

BIBLIOGRAPHY

1. Business Standards, June 20142. RBI Bulletin, July 2013 pp-34-363. RBI Bulletin, January 2013 pp-17-194. Alok Majumdar, NPAs: Recovery Blues, Treasury Management (Dec. 2010) 5. Annual Report March, 2013-14

Website:1. www.business-standard.com/finance2. www.domainb.com/management3. www.vijayabank.com4. www.studymode.com5. www.rbi.co.in/com6. www.scribed.com

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