INTRODUCTION OF THE STUDY

Non-Performing Assets (NPAs) also known as Non-Productive Assets constitute integral part of banks operations. A bank gives out money upfront and earns income over time on the promise of a borrower to repay. When loans are not paid, the bank looses both its income stream, as well as its capital. The level of non-performing loans is recognized as a critical indicator for assessing bank credit risk, asset quality and efficiency in allocation of the resources to productive sectors. NPAs adversely affect lending activity of banks as non-recovery of loan installments. Banks with high level of NPAs in loan portfolio of banks make them fragile, lending ultimately to their failure. This will shake confidence of both domestic and global investors in the banking system which will have multiplier effect bringing disaster in the economy. NPAs in Indian banking system came into existence consequent to introduction of prudential accounting norms. NPAs of Bihar State Co-operative Bank Ltd. Calculated according to few data are as follows. Net NPAs as percent to net advances in year 2008,2009,2010,2011 were 2.7, 6.7, 7.4 and 9.2 respectively. Thus from Net NPAs it can be said that there has been improvement in the asset quality of the banks. In initial periods, banks had relatively lower NPAs but as

the banks expanded their operations, quality of their advances deteriorated.

OBJECTIVES OF THE STUDY

The objectives of carrying out the study of Non Performing Assets of Bihar State Cooperative Bank Ltd are as follows: (1) To know gross NPAs and net NPAs of co-operative bank. (2) To analyze NPAs level, profitability of the bank and its prospects of growth. (3) To study the general reasons for assets become NPAs. (4) (5) To point out the amount of NPAs in co-operative bank. What are the criteria to recover the advances from the bank.

(6) What are the methods adopted by the bank to look after NPA management.

HYPOTHESIS 1. Gross NPAs and Gross Advances of co-operative banks are not significantly associated.

2. Testing association between net NPAs and net advances of the co-operative bank. 3. Many times NPAs are not available to bank so it becomes bad debt for bank.

METHODOLOGYDetermining the data source the data source can be primary or secondary. The primary data are those data which are used for the first time in the study. However such data take place much time and are also expensive. Whereas the secondary data are those data which are already available in the market. These data are easy to search and are not expensive . The primary data would not be useful until and unless they are well edited and tabulated. When the person receives the primary data many unuseful data would also be there. So, I analysed the data and edited them and turned them in the useful tabulations. So, that it can become useful in my study.

(1)

Primary source Interview of bank employees Survey method Sampling method Questionnaire.

(2)

Secondary source- Books Magazines

Journals Financial news papers Internet

LIMITATIONS The limitations that I felt in my study are: (1)It was critical for me to gather the financial data of the every bank of the Co-operative Banks so the better evaluations of the performance of the banks are not possible. (2)Since my study is based on the secondary data, the practical operations as related to the NPAs are adopted by the banks are not learned. (3)Since the Indian banking sector is so wide so it was not possible for me to cover all the banks of the Indian banking sector. (4)The time factor was the big limitation in carrying out the study. (5)As a trainee of the Bihar state co-operative bank Ltd. I wanted to know lots of information about the financial position of the bank, its market status but the manager informed me that there are certain informations which are very confidential. (6)The resources of co-operative banks are also limiting factors.

CHAPTERISATIONCHAPTER (1) INTRODUCTION CHAPTER (2) PROFILE OF THE ORGANISATION CHAPTER (3) NON-PERFORMING ASSETS NPA

Types of NPA Origin of NPA

Prudential norms for loans and advancement

Factors responsible for NPA Different approaches of valuation of NPA Managing NPA

Measures to recover NPA Criticality of NPA to banks

CHAPTER (4) COLLECTION AND INTERPRETATION OF DATA CHAPTER (5) CONCLUSION AND SUGGESTIONS

SUPERVISIORS SIGNATURE SIGNATURE

STUDENTS

(DR. MOHAMMAD ALAMGIR) SINGH ASSOCIATE PROFESSOR, 39 DEPT. OF A.E.& COMMERCE, P.U,PATNA 2010-2012

BANDITA

ROLL NO.

SESSION

Approval of the Director Management Programme

Department Of Applied Economics & Commerce PATNA UNIVERSITY