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For the purpose of analysis and comparison between Public and private sector banks, We
have taken five banks from both sectors to compare the non-performing assets of banks. For
understanding we further bifurcate the non-performing assets in priority sector and non-
priority sector, gross NPA and net NPA in percentage as well as in rupees, deposit ±
investment± advances.
Further we also analysis on the basis of Deposit ± Investment ± Advances to get the clear
view where the bank stands in the competitive market. At the end of March 2008, in private
sector ICICI Bank is the highest deposit-investment-advances figure in rupees crores, second
is HDFC Bank and KOTAK Bank has least figure.
In public sector banks Punjab National Bank has the highest deposit investment-advances but
when we look at the graph we can see that the Bank of Baroda and Bank of India are almost
the similar in numbers and Dena Bank is stands last in public sector bank. When we compare
the private sector banks with public sector banks, we can understand the more number of
people prefer to choose public sector banks for deposit-investment.



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c : From t above fi re we can see t at t e ICICI Bank deposit investment
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c : In public sector Punjab National Bank deposit investment advances are
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c  Here we have compared between ICICI BANK AND PUNJAB NATIONAL
BANK in term of deposit investment advances. From the above fi ure we can see that ICICI
bank deposit are quite hi her than Punjab National Bank. But in case of Investment ICICI
Bank investment amount is double than Punjab National Bank investment amount. However

Advances given by PNB is higher than that of ICICI bank.

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There are two concepts related to non-performing assets a) gross and b) net. Gross refers to
all NPAs on a bank¶s balance sheet irrespective of the provisions made. It consistsof all the
non-standard assets, viz. Substandard, doubtful, and loss assets. A loan asset is classified as µ
substandard´ if it remains NPA up to a period of 18 months; ³ doubtful´ if it remains NPA
for more than 18 months; and loss, without any waiting period, where the dues are
considered not collectible or marginally collectible.

Net NPA is gross NPA less provisions. Since in India, bank balance sheets contains 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 NPA according to the central bank
guidelines, are quite significant.
Here, we can see that there are huge differences between gross and net NPA. ° " '!!

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Here, there are gross and net NPA data for 2007-08 and 2008-09 we taken for comparison
among banks. These data are NPA AS PERCENTAGE OF TOTAL ASSETS. As we
discuss earlier that gross NPA reflects the quality of the loans made by banks. Among all the
ten banks Dena Banks has highest gross NPA as a percentage of total assets in the year 2007-
08 and also net NPA. Punjab National Bank shows huge difference between gross and net
NPA. There is an almost same figure between BOI and BOB.

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c  Comparison of  c with all banks for the year 2007-08.The growing
NPAs affect the health of banks, profitability and efficiency. In the long run, it eats up the
net worth of the banks. We can say that NPA is not a healthy sign for financial institutions.
Here we take all the ten banks gross NPA together for better understanding. Average of these
ten banks gross NPAs is 1.29 as percentage of total assets. So if we compare in private sector
banks AXIS and HDFC Bank are below average of all banks and in public sector BOB and
BOI. Average of these five private sector banks gross NPA is 1.25 and average of public
sector banks is 1.33. Y

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c  Comparison of  cwith all banks for the year2007-08. Average of these
ten bank¶s net NPA is 0.56. And in the public sector banks all these five banks are below
this. But in private sector banks there are three banks are above average. The difference
between private and public banks average is also vast. Private sector banks net NPA average
is 0.71 and in public sector banks it is 0.41 as percentage of total assets. As we know that net
NPA shows actual burden of banks. Indus India bank has highest net NPA figure and HDFC
Bank has lowest in comparison.
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c  When we further bifurcate NPA in priority sector and Non priority sector.
Agriculture + small + others are priority sector. In private sector ICICI Bank has the highest
NPA with compare to other private sector banks. Around 72% of NPAs in priority sector and
around 78% in non-priority sector. We can see that in private sector banks have more NPA in
non-priority sector than priority sector.
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advanced to weaker sector or industries. Public sector banks give more loans to Agriculture,
small scale and others units and as a result we see that there is more number of NPA in public
sector banks than private sector banks. BOB given more advanced to priority sector in 2008-
09 than other four banks.




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But when there are comparison between private bank and public sector bank still ICICI Bank
has more NPA in both priority and non-priority sector with the comparison of public sector
banks. Large NPA in ICICI Bank because the strategy of bank that risk-reward attitude and
initiative in each sector. Above we also discuss that ICICI Bank has highest deposit-
investment-advance than other banks.
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Now, when we compare the all public sector and private sector banks on priority and non-
priority sector the figures are really shocking. Because in compare of private sector banks,
public sector banks numbers are very large.
Here, there are huge differences between private and public sector banks NPA. There is
increase in new private sector banks NPA of Rs.448 cr in 2008-09 which is almost 66% rise
than previous year. In public sector banks the numbers are not increased like private sector
banks.

ANALYSIS OF TREND AND ASSET QUALITY OF GROSS ADVANCES


AND GROSS NON PERFORMING ASSETS:

The study first of all examined the trend of gross advances, gross NPAs, ratio of gross NPAs
to Gross Advances, and ratio of gross NPAs to total assets. It is apparent from table  that
gross advances of the banks have shown a rising trend since 2003-04. Gross advances of the
public sector banks in absolute term have increased from Rs 57783 crore in 2002-03 to Rs
2283473 crore in 2008-09. There is sharp increase of 295.9 percent in gross advances of the
public sector banks during the study period. The gross NPAs of the banks in absolute terms
amounted to Rs 54090 crore in 2002-03, and Rs 5538 crore, Rs 48399 crore, Rs 4358
crore, Rs 38968 crore, Rs 40597 crore and Rs 4556 crore for the years 2002-03, 2003-04,
2004-05, 2005-06, 2006-07, 2007-08 and 2008-09 respectively. The gross NPAs in absolute
terms have decreased by 6.5 percent in the year 2008-09 over 2002-03. An in-depth analysis
into gross NPAs shows that the gross NPAs of the public sector banks have declined up to the
year 2006-07, and increased in the last two years of study i.e. 2007-08, and 2008-09. The
study observed that the gross NPAs of public sector banks have depicted a mixed trend over
the period of study. It is found on the basis of analysis of data that the asset quality of public
sector banks improved consistently in the past few years as reflected in the decline in the two
ratios i.e. gross NPAs as percentage of gross advances, and gross NPAs as percentage of total
assets.
TABLE 

GROSS NPAS OF PUBLIC SECTOR BANKS




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Source: Trends & progress of banking in India, RBI Publication

ANALYSIS OF TREND AND ASSET QUALITY OF NET ADVANCES AND


NET NON PERFORMING ASSETS:
The study then investigated net advances, net NPAs, ratio of net NPAs to net Advances, and
ratio of net NPAs to total assets (Table 2). The study found that the net advances of the public
sector banks have increased in absolute term have increased by 3.42 percent in 2008-09
over 2002-03. Over the period of study, Net NPAs in absolute term have registered a decline
of 5.45 percent. The study observed a mix trend in net NPAs of public sector banks over the
period of study. It found that Net NPAs have decreased during the period of 2002-02 to 2005-
06, thereafter, it has shown an increasing trend. It is observed that despite increase in gross
nonperforming assets (NPAs) in absolute terms during the year, asset quality of public sector
banks improved in the past few years as reflected in the decline in these two ratios i.e. net
NPAs as percentage of net advances, and net NPAs as percentage of total assets. Hence, it
can be stated that as a whole there is improvement in the asset quality of public sector banks.

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TABLE 2

NET ADVANCES AND NET NPAS OF PUBLIC SECTOR BANKS


 
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Source: Trends & progress of banking in India, RBI Publication

ANALYSIS OF NPAs ON THE BASIS OF CLASSIFICATION OF LOAN ASSETS:

Loan assets of banks can be classified into three categories i.e. sub-standard assets,doubtful
assets, and loss assets (Table 3).

TABLE 3

CLASSIFICATION OF LOAN ASSETS OF NPAS OF PUBLIC SECTOR BANKS

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Table3: Loan asset as a percentage of total gross non- performing assets

Analysis of loan assets depicted that the substandard assets has shown a decline to 0.9 percent
in 2008-09 from 2.6 percent in 2002-03. The doubtful assets have declined to 0.9 percent
from 5.6 percent during the same period. The Loss assets have declined to 0.2 percent in
2008-09 from .2 percent in 2002-03. The decline in various categories of loan assets
indicates recovering health of public sector banks. All the three categories of NPAs as a
percentage of gross non- performing assets have registered a decline over the period of study.

ANALYSIS OF NPAs ON THE BASIS OF SECTOR WISE ANALYSIS:


Sector wise the NPAs have been classified into three sectors i.e. priority sector, public sector
and non priority sector as depicted in table 4.

TABLE 4: SECTOR-WISE CLASSIFICATION OF NPAS OF PUBLIC SECTOR BANKS


(AMOUNT IN CRORES)

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Source: Trends & progress of banking in India, RBI Publication

Sector wise analysis indicates that non priority sector has highest NPAs for the period 2002-
03 to 2004-05, whereas for remaining period of the study agriculture sector has highest
percentage of NPAs. The NPAs of the agriculture sector has increased to 55.2 percent in
2008-09 from 47.23 percent in 2002-03. The public sector banks have managed to reduce
NPAs in the non priority sector. In this sector, the NPAs have reduced to 43.4 percent in
2008-09 from 50.52 percent in 2002-03. In the priority sector also, the NPAs have reduced to
.08 percent in 2008-09 from 2.05 percent in 2002-03.