NPA IN INDIAN BANKING INDUSTRY

SUBMITTED BY:

Parwani Madhurita Sunil (Prn-16010324243 Div.-C)

Pisharody Abhinav Ravi (Prn-16010324244 Div.-C)
Prajanya Raj Rathore
(Prn-16010324245 Div.-C)

Under the guidance of: Sreenivas Methuku

Symbiosis Law School, Hyderabad.

Symbiosis International University, Pune.

Submitted On:20/8/2016

Non-Performing Assets in Indian Banking

Industry
Introduction:
Banks act as a development agency and are source of hope and
aspirations of the masses. Commercial banks are the major player to
develop the economy. A major threat to banking sector is prevalence
of Non-Performing Assets. A Non-performing asset is defined as a
credit facility in respect of which the interest and installment of bond
finance principal has remained past due for a specified period of time.
NPA is used by financial institutions they refer to loans that are in
jeopardy of default. NPAs reflect the performance of banks. A high
level of NPA suggests high probability of credit defaults that affect the
profitability and net worth of banks and also erodes the value of
assets. The NPA growth involves the necessity of provision which
reduces the overall profits and shareholders.
In present scenario NPAs are at the core of financial problem of the
banks. Concrete efforts have to be made to improve recovery
performance. The main reason of increasing NPAs are the target
oriented approach, which deteriorates the qualitative aspect of lending
by banks and willful defaults, in effective supervision of loan account,
lack of technical and managerial expertise on part of borrowers.

Literature review:
The Hindu (dated 1st February 2014):
According to the report in the paper, State bank of
Travancore recorded a fall in its net profits and also a rise in its NPAs
for the current fiscal year. The net interest income moved up from Rs.
1,558.43 crore to Rs. 1,767.76 crore, showing a year-on-year growth
of 13.43 per cent. However, the period also saw the gross Non
Performing Assets (NPAs) of the bank increasing to 4.41 per cent from
3.04 per cent as at the end of corresponding quarter last year and net
NPAs rising to 2.73 per cent against 1.83 per cent as of the third
quarter last fiscal.
ASSOCHAM Report (Dated May 2014):

It states that, NPAs are the indicators of the health of

the bank. They are the key concerns for the banks in India. Though
the public sector banks have beaten the performance of private sector
banks in terms of profits, but still the public sector banks are facing
the problem of rising NPAs year by year. On the contrary the NPAs of
private sector banks have shown a decline. Therefore to improve the
profitability of the banks we must try to reduce the number of NPAs in
the banks.

Objectives:

To analyze financial performance of banks at different level of

NPA.

To evaluate profitability position of banks.

To evaluate NPA level in different economic situations.

To know Concept of NPA.

To know the reasons of rising NPA.

To learn Preventive measures to reduce NPAs

Research Methodology:
The research design used for carrying out this project is descriptive
research because the report deals with statistical data and the main cause of the
report is to describe the factors affecting the problem mentioned
Sources of Data:
Data is of two types of data, primary data and secondary data. Primary
data is raw and first hand data that is not processed and secondary data
includes the information that is collected by someone else other than the user.
Different sources of secondary data are research journals, statistical data,
various books etc. this research mainly includes secondary data from research
paper, newspaper reports, various magazines etc.