EISSN 2277-4955

ANANALYSIS OF NPA IN PRIORITY SECTOR LENDING: A COMPARATIVE STUDY BETWEEN PUBLIC SECTOR BANKS AND PRIVATE SECTOR BANKS OF INDIA
Dr. Suresh Patidar International Institute of Professional Studies, DAVV Indore, spatidar99@yahoo.co.in Ashwini Kataria, Axis bank, Indore ashwini.kataria@yahoo.co.in ABSTRACT The Government of India through the instrument of Reserve Bank of India (RBI) mandates certain type of lending on the Banks operating in India irrespective of their origin. RBI sets targets in terms of percentage (of total money lent by the Banks) to be lent to certain sectors, which in RBI's perception would not have had access to organized lending market or could not afford to pay the interest at the commercial rate. This type of lending is called Priority Sector Lending. This paper examines the NPA in Priority Sector Lending and a comparative study is done between public sector banks and private sector banks. The study analyzed priority sector to find out the percentage share of NPA of components of priority sector lending, to study whether there is significant difference between NPA of SBI & Associates, Old Private Banks and New Private Banks with the NPA of Nationalized Banks, the benchmark category, and to find out the significant impact of Priority Sector Lending on the Total NPA of Banks using tools like regression analysis and ratio analysis. The result showed the significant impact of priority sector lending on total NPA of Public Sector banks, whereas in case of Private Sector Banks, there was no significant impact of priority sector lending on total NPA of Banks. Also the result showed the significant difference between NPA of SBI & Associates, Old Private Banks and New Private Banks with the NPA of Nationalized Banks, the benchmark category. Keywords: NPA, priority sector, commercial banks.

INTRODUCTION Ever since the introduction of financial sector reforms in India the NPA (non performing assets) of the banking system have been getting attention. NPA cause serious strain on the profitability as, on the one hand banks cannot book income on such accounts and on the other hand they are required to charge the funding cost and provision requirements to their profits. Since the early 90s the government has had to give over Rs. 23000 crores in bailouts to various BAUDDHIK

banks and financial institutions, out of the taxpayers’ money. Banks feel afraid of high risk of lending to priority sector because of lack of accounting and reputation, uncertain property rights of the assets they are holding and noncompliance with regulations. As per the international norms net NPA i.e. gross NPA less provision for loss are to be slashed down to 23%. India is the only country with an extensive set of policies supporting and protecting priority sectors by directly subsidizing them or exempting them from taxes and preferring them for government purchases.

VOLUME 3, NO.-1, JAN-APRIL-2012

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In the same line according to Muniappan (2002). default in investment). NPA means booking of money in terms of bad asset. JAN-APRIL-2012 55 . The banking sector has been facing the serious problems of the rising NPAs. there are many internal and external factors affecting NPLs. The observation was that NPA decrease with increased priority sector loans to total loans. Amongst the priority sector components the SSI (small-scale industries) contribute the maximum share 19. inefficient management. which may lead to loss of some long-term beneficial opportunity. But this research didn’t take interest rates. and public sector loans were affected by macro economic variables at large. Action for enforcement of security interest can be initiated only if the secured asset is classified as Nonperforming asset. So NPA doesn’t affect current profit but also future stream of profit. But the problem of NPAs is more in public sector banks when compared to private sector banks and foreign banks. as impacted by macro-economic factors and bank specific factors. which has been classified by bank or financial institution as sub –standard. business failure.27% in total NPA of old private sector banks and 5. the SSI contributed the maximum amongst various priority sectors. Agricultural Activities and Export activities fall under this category. As per the RBI report on sectoral deployment of NPA 2002-03. 18. and Saurabh Mishra. doubtful or loss asset. inappropriate technology/technical problems. time or cost overruns during the project implementation stage. BAUDDHIK VOLUME 3. NO. strained labor relations. RBI sets targets in terms of percentage (of total money lent by the Banks) to be lent to certain sectors. This type of lending is called Priority Sector Lending. Anoop Bhatia. The internal factors might be taking up new projects. (2004) in their article have made an attempt to analyse the movement of non-performing assets of public and private banks along with foreign banks operating in India during the 1994-95 to 2003-04. Another impact of reduction in profitability is low ROI (return on LITERATURE REVIEW Gourav Vallabh. 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. while external factors are GDP growth (slow or fast). using regression techniques and ANOVA model.-1. which adversely affect current earning of bank. etc. inflation rate in consideration. which in RBI's perception would not have had access to organized lending market or could not afford to pay the interest at the commercial rate.74% in total NPA of new private sector banks during 2002-03 as an individual component as per the Reserve Bank of India statistics.EISSN 2277-4955 The Government of India through the instrument of Reserve Bank of India (RBI) mandates certain type of lending on the Banks operating in India irrespective of their origin.. Small business. in accordance with the direction or guidelines relating to assets classification issued by RBI. Financing of Small Scale Industry. promoting associate concerns. product obsolescence. This is also called directed credit in Indian Banking system.24% in total NPA of public sector banks. Non-performing asset means an asset or account of borrower.

monitoring of end-usage of funds. In another research Nachiket Mor and Bhavna Sharma. OBJECTIVE OF THE STUDY 1. the need for internally consistent business models to guide the behavior of a bank in each of these three phases wais discussed. NO. exposure to peso loans. Comparison of NPA in Priority Sector of Public Sector Banks with that of Private Sector Banks. bank’s specific parameters in their study were ratio of net worth to net assets. K. the manner in which banks manage the three phases in the life cycle of an asset (creation. Ramasastri and N.-1. shortage of energy sources. S. parameters in their study were ratio of net worth ti net assets. (2002) highlighted some major micro-level issues that were believed to be the root of why unsustainable performance levels are being observed within banks. the regulatory BAUDDHIK VOLUME 3. A. Macroeconomic factors in this study were credit growth. non-performing loans of individual banks are mainly a result of management controls and systems put in place by them and recovery procedures. They concluded that higher than average credit expansion can further strengthen banks if there is a good credit appraisal systems. The study established that variables such as operating cost. Some bank specific framework in which the banks operate. and type of bank such as foreign. The macroeconomic variables such as money multiplier and reserve adequacy had a positive impact on NPAs. monitoring and recovery) determines the quality of the intermediation process within a bank. According to the researchers. Giovanniz and Grimardx (2002) in their study if Argentinean banks tried to measure NPAs by using accelerated failure model encompassing the various bank related parameters as well as macroeconomic variables. strict recovery procedures and overall checks and balances by the top management. Bercoff. 2. even after the systemic issues being resolved. It was argued that unless the micro level issues would be dealt with. was also explored in the paper. bank’s exposure to peso loans. credit growth. and foreign interest rate. NPAs are largely fallout of banks' activities with regard to advances. accidents and natural calamities. private or public. It was argued that the set of organizational competencies. the credit appraisal system. the quality of disclosure and the incentive structure of the management and Boards produce an inconsistent framework. The role of statistics such as the Economic Value of Equity (EVE) and EVE at Risk (EVER) (if mandatory disclosed on a monthly basis) in making these inconsistencies visible and therefore aiding in their elimination. had a negative effect on NPAs. both at the management and implementation levels (including overall controls by the top management). high inflation. which lead to an unsustainable performance level for a bank. the problem of NPAs or other failures of the intermediation process may resurface with greater intensity. foreign reserve interest adequacy rate. JAN-APRIL-2012 56 . It also depends on the overall economic environment.EISSN 2277-4955 other countries. To find out the percentage share of NPA of components of priority sector lending. the business cycle and the legal environment for recovery of defaulted loans.Unnikrishnan (2005) said that. monetary expansion. Since the overall environment is more or less same for all banks. and (imports/reserves). In the paper.

The study also analyzed the significant impact of Priority Sector Lending on the Total NPA of Banks using Regression Analysis. SBI & Associates Nationalized Banks Old Private Banks New Private Banks 57 . Is there any significant difference between NPA of SBI & Associates. The data about Indian banking downloaded from internet is crosschecked by the relevant RBI reports. JAN-APRIL-2012 NPAi. using Regression Analysis. Is there any significant impact of Priority Sector Lending on NPA of Banks? Hypothesis H0: There is no significant difference between NPA of SBI & Associates. α1 = Slope of the Regression Equation.t For this research we have divided the components of Priority sector lending in 3 categories: 1. Old Private Banks and New Private Banks with the NPA of Nationalized Banks. 3. METHODOLOGY The work is a mix of doctrinaire and empirical survey. the benchmark category. Old Private Banks and New Private Banks with the NPA of Nationalized Banks. following methodology is used: NPAi. It draws heavily from related books.t = Priority Sector Lending of i bank at time t. NO. reports. To find the significant impact of Priority Sector Lending on the Total NPA of Banks. 2. To analyze the significant difference of NPA of SBI & Associates. Ratio analysis is used. 2. case studies and internet. Old Private banks and New Private BAUDDHIK VOLUME 3.t = α0 + α1 PSLi. To find out the significant impact of Priority Sector Lending on the Total NPA of Banks. This study analyzed the significant difference of NPA of SBI & Associates.t + μi. α0 = Intercept of Regression Equation. where each component of priority sector is studied and comparison is done between public sector banks and private banks. the benchmark category. RESEARCH QUESTION Q. H0: There is no significant impact of Priority Sector Lending on Total NPA of Banks? H1: There is significant impact of Priority Sector Lending on Total NPA of Banks? Where. the benchmark category? Q. 4.-1. Old Private Banks and New Private banks with NPA of Nationalised Banks. Study also divided the components of NPA in Priority Sector in the following categories: 1. articles. being the base category. 4. To Study whether there is significant difference between NPA of SBI & Associates. Agriculture Small Scale Industries Others The methodology used to analyze the NPA of Priority Sector. the benchmark category.t = NPA of Bank i at time t. H1: There is significant difference between NPA of SBI & Associates.EISSN 2277-4955 3. PSLi. Old Private Banks and New Private Banks with the NPA of Nationalized Banks. 3. Old Private Banks and New Private Banks with the NPA of Nationalized Banks.

D1SBIi. BAUDDHIK www.rbi. books. JAN-APRIL-2012 58 . NO. SSI 3.in Tools for Data Collection Secondary data has been used in this research. with that of SBI & Associates. New Private Banks and Old Private Banks. It is clear that the contribution of ‘Agriculture’ in Priority Sector Lending. Agriculture 2. 1999 to 2008.2 New Private Sector Banks Also the Advances and NPA in Priority Sector has been taken in the following categories: 1. journals and newspapers.t + α2D2NPBi. but the reasons of these differences is not covered in the study. otherwise 0. Others The data has been collected from the RBI website as main source for the period of 10 years i.EISSN 2277-4955 banks with NPA of Nationalised Banks. 104094 crores which is increased to Rs.t D2OPBi. α3 = Differential Intercept Coefficient of Old Private Banks.1 Old Private Sector Banks 2. In this paper the data has been collected from various sites. Due to availability of limited resources. Also there is significant difference between NPA of Nationalised Banks.org.1 SBI & Associates 1. otherwise 0. following methodology is used: NPAi. Public Sector Banks 1. = Banks. The Priority Sector Lending by the Public Sector Banks is increasing year by year. α2 = Differential Intercept Coefficient of New Private Banks.t NPAi. In 1999 the total Lending in Priority Sector by Public Banks was Rs. otherwise 0. 1999 to 2008. α1 = The data has been taken of the following categories of Banks: 1. the whole population of banks in the categories of Public Sector and Private Sector has been considered for the Test. being the base category. α0 = Intercept of Nationalized Banks.t = NPA of the Bank Group i.e. the Comparison Category. The data is collected through: Differential Intercept Coefficient of SBI & Associates. the study also has its own limitations. Private Sector Banks 2. but the reason of the impact cannot be find out.-1. = Banks. Data Collection Method The data used to observe Advances and NPA in priority sector is taken for the period of 10 years i. which was VOLUME 3. 608963 crores in the year 2008. it doesn’t cover the qualitative aspect.2 Nationalised Banks 2.t = α0 + α1D1SBIi.t + μi.t = 1 if observation belong to SBI & 1 if observation belong to New Private 1 of observation belong to Old Private Associates.e.t D3NPBi. The study only covers the quantitative aspects of the NPA analysis. Findings and Discussions Public Sector Banks The Public Sector Banks has played a prominent role in Priority Sector Lending.t + α3D3OPBi. Sampling For the purpose of analyzing NPA. The study finds that there is significant impact of Priority Sector Lending on Total NPA of Banks.

whereas the NPA in Priority Sector is constant in the given years.41% in 2008. NO.EISSN 2277-4955 36.92% in 1999 to 24. JAN-APRIL-2012 Rs Crores 59 . Priority Sector Lending by Public Sector 300000 250000 Rs Crores 200000 150000 100000 50000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Time Agricuture SSI Others The Lending in Priority Sector by Public Sector Banks is increased in the given years.84% in 2008.15% in 1999 and 40.71% in 2008.-1. There is significant decrease in the contribution on ‘SSI’ in Priority Sector Lending.73% in 1999 whereas 34. Advances and NPA in Priority Sector by Public Banks 700000 600000 500000 400000 300000 200000 100000 0 2001 2002 2003 2004 2005 2006 2007 2008 Time Total Advances Public NPA Public The following graph represents the distribution of NPA in Priority Sector among its components. The BAUDDHIK VOLUME 3. which was 40. The ‘Others’ category in Priority Sector contributed 22.

-1. NPA of Public Banks in Priority Sector 12000 10000 Rs Crore 8000 6000 4000 2000 0 2001 2002 2003 2004 2005 2006 2007 2008 Time Agricuture SSI Others Various Ratios of NPA in Public Sector Banks BAUDDHIK VOLUME 3. NO. JAN-APRIL-2012 60 . 24156 crores in 2001and Rs.EISSN 2277-4955 NPA in Priority Sector was Rs. 25286 crores in 2008.

Estimated Linear Regression Equation of Public The various ratios suggest that the performance of Public Sector Banks in terms of NPA.66% in 2001 and Agri= NPA in Agriculture category of Priority Sector Lending SSI= NPA in Small Scale Industry category of Priority Sector Lending Others= NPA in Others category of Priority Sector Lending NPSL= Total NPA in Priority Sector Lending of Public Sector Banks.07 61.20 44.02 54.62 category of NPA which was 26. The contribution in NPA by Priority Sector has increased over the years. Total NPA= Total NPA of Public Sector Banks.66 26.35 32. There is increase in contribution by others Sector Banks NPAi.8% in 2001 and 22.10 40.35 32. NO.11 30.EISSN 2277-4955 Date 31-Mar-01 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-06 31-Mar-07 31-Mar-08 Agri/NPSL 30. where Agriculture contributed 30.t = 60068.0393PSLi.37 31.07 33.56 35.80 42. the regression analysis is used.35% in 2008. It was 45.75 37. JAN-APRIL-2012 61 .46 22. BAUDDHIK VOLUME 3.79 28.67 63.96 Others/NPSL 26.54% in 2001 and 32.-1.62% in 2008.70 SSI/NPSL 42.7% in 2008.43% in 2001 to 63.72 28.49 47.t In order to identify the significant Impact of Priority Sector Lending on Total NPA of Banks.43 44.92 25.35 44. NPSL/TotalNPA 45.51 41. being constant.36 46.96% in 2008.23 47. There was decline in SSI contribution in NPA of 42.91 30.49 30.54 31.t + μi.60 – 0.00 27.54 50.

It is also clear that the contribution of ‘Agriculture’ in Priority Sector Lending.98. PRIVATE SECTOR BANKS The Private Sector Banks has also played a prominent role in Priority Sector Lending. JAN-APRIL-2012 62 . There is significant decrease in the contribution on ‘SSI’ in Priority Sector Lending. lies in rejection area. Beta Coefficient of PSL is -0.111.872 N=8 Degree of Freedom = 7 Since the coefficient is negative. it shows that there exist some linear relationship between Dependent and Independent variables.006 t-statistic 29.002 Null Hypothesis Rejected Study proves that Priority Sector Lending has Other Statistics: R = 0. which was 23.000 as p. F Value is 48. Priority Sector lending by Private Sector 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Time Rs Crores Agricuture SSI Others BAUDDHIK VOLUME 3. which means that PSL with t value of 3.000 . which was 45.890 Adjusted R = 0.-1. There is negative correlation between Independent variables and Dependent variable. 14155 crores which is increased to Rs. The value of R2 at .039. Hence null hypothesis is rejected. the t value (table) at 5% level of Significance = 1. Correlation between NPA and PSL comes out to be -0.0393 Std.944.33 0. This shows that PSL has negative impact on Total NPA of Banks.22% in 2008.42% in 1999 whereas 36.value.01% in 1999 and 35.35% in 2008.57% in 1999 to 28.EISSN 2277-4955 Independent Variables Constant PSL Coefficient 60068.6 -0.890 suggests that the independent variables reveal 89% of the reasons for change in dependent variable due to independent variables. NO. The ‘Others’ category in Priority Sector contributed 31. it means that the model is significant. At 95 % Confidence Interval. 163223 crores in the year 2008. The Priority Sector Lending by the Private Sector Banks is increasing year by year.111 P-Value . Error 2046. In 1999 the total Lending in Priority Sector by Public Banks was Rs.42% in 2008. 2 2 significant impact on Total Non Performing Assets of Public Sector Banks.773 at .354 3.

Advances and NPA in Priority Sector by Private Banks 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 Rs Crores Total Advances Private NPA Private 2001 2002 2003 2004 2005 2006 2007 2008 The following graph represents the distribution of NPA in Priority Sector among its components.53 crores in 2008. JAN-APRIL-2012 63 . The NPA in Time Priority Secotor was Rs.71 crores in 2001 and Rs. whereas the NPA in Priority Sector is also increased in the given years. NO.EISSN 2277-4955 The Lending in Priority Sector by Private Sector Banks is increased in the given years. 1834. NPA of Private Banks in Priority Sector 1600 1400 1200 Rs Crore 1000 800 600 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 Time Agricuture SSI Others BAUDDHIK VOLUME 3.-1. 3418.

84 42.35 22. JAN-APRIL-2012 64 .33 51.05% in 2008.25 21. There is increase in contribution by Others category of NPA which was 27.12 47.53 29. Total NPA= Total NPA of Private Sector Banks.92% in 2008.22 26.54 58.58 17.97 24. The various ratios suggest that the performance of Private Sector Banks in terms of NPA.62% in 2001 to 26.61 23.03% in 2008.EISSN 2277-4955 Various Ratios of NPA in Private Sector Banks Date 31-Mar-01 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-06 31-Mar-07 31-Mar-08 Agriculture/NPSL 17.88 24.03 NPSL/Total NPA 28. NO. It was 28. In order to identify the significant Impact of Priority Sector Lending on Total NPA of Banks.34% in 2008.42 26.35 19.82 20.27 22.67 42.t = 9239.06 35.58% in 2001 and increased upto 42.86 44.67 + 0. where Agriculture contributed 17.60 50.45 30.-1.88% in 2001 and 38.34 Agri= NPA in Agriculture category of Priority Sector Lending SSI= NPA in Small Scale Industry category of Priority Sector Lending Others= NPA in Others category of Priority Sector Lending NPSL= Total NPA in Priority Sector Lending of Private Sector Banks.82 38.64 34.17 31.62 21. There was decline in SSI contribution in NPA of 54.87 29.92 SSI/NPSL 54.t BAUDDHIK VOLUME 3.95 18. the regression analysis is used.t + μi.50 21. The contribution in NPA by Priority Sector was constant over the years.54% in 2001 and 19.0084PSLi.05 Others/NPSL 27. Estimated Linear Regression Equation of Private Sector Banks NPAi.

JAN-APRIL-2012 NPA Graph 65 . Hence null hypothesis is accepted.11 2968.1 15158.0084 Std.208.151732 F Value is 0.82 4118.52 6816. 2 2 Coefficient 9239. it shows that there exist some linear relationship between Dependent and Independent variables.7 31964.2075 864.value. Nationalised Year 2001 2002 2003 2004 2005 2006 2007 2008 Mean SD SBI & Associates 20190.7 19743.4375 2580. New Private Sector Banks and Old Private Sector Banks.970507 New Pvt banks 1599. At 95 % Confidence Interval.116 N=8 Degree of Freedom = 7 The value of R2 at .89 4636.15 4021.56375 2802.91625 4883.-1.3 6270. lies in acceptance area.01 3711.42 36762.67 0. NO. Error 1503.145 0.001 .521.12 4234. Correlation between NPA and PSL comes out to be 0.621 Null Hypothesis Accepted It was revealed that Priority Sector Lending has no significant impact on Total Non Performing Assets of Private Sector Banks.272 at .043 Adjusted R = -0.621 as p. the base category with NPA of SBI & Associates.39 15978.38 5951.3% of the reasons for change in dependent variable due to independent variables. it means that the model can be insignificant.61 14808.82 34989.98.03 28184.57 16958.492695 Old Pvt banks 4810.38 12555.19 13193.008.57 15220.61 24528. Comparison between NPA of Nationalised Banks.521 P-Value . Beta Coefficient of PSL is 0.51 2557.016 t-statistic 6.41 7230.241861 Banks 32983. This shows that PSL has minimal impact on Total NPA of Banks.82 4850. There is positive correlation between Independent variables and Dependent variable. Since the coefficient is positive.05 4401. the t value (table) at 5% level of Significance = 1.19 4565.12 31240.97 10418. BAUDDHIK 40000 35000 VOLUME 3.043 suggests that the independent variables reveal 4.57 0.EISSN 2277-4955 Independent Variables Constant PSL Other Statistics: R = 0.78 35848.91 5871. which means that PSL with t value of 0.85 24665.

t = 31240.762 Coefficient t.t = 1 if observation belong to SBI & 1 if observation belong to New Private 1 of observation belong to Old Private Associates.91 – 0.000 .-1. otherwise 0.258 -9.EISSN 2277-4955 Estimates of Multi Regression Model Dummy Variable Approach NPAi. α1 = D1SBIi.t D3NPBi. JAN-APRIL-2012 66 .t D2OPBi.t – 0.591SBI 1. NPAi.591 28.t i. NO.t = NPA of the Bank Group i. α3 = Differential Intercept Coefficient of Old Private Banks.t NPAi. α0 = Intercept of Nationalized Banks. α2 = Differential Intercept Coefficient of New Private Banks. = Banks.982NPB – Differential Intercept Coefficient of SBI & i.t + α3D3OPBi.t Associates. otherwise 0. = Banks. Independent Variable Constant Dummy SBI & 31240.000 Null Hypothesis Rejected BAUDDHIK VOLUME 3.statistic P. the Comparison Category. otherwise 0.t = α0 + α1D1SBIi.91 -0.Value .t + α2D2NPBi.t + μi.053OPB i.

which affects the performance of the banks.42% of Priority Sector Lending in 2008. 2. with that of BAUDDHIK VOLUME 3. whereas in Private Sector Banks Priority Sector lending has no significant impact on Total NPA. 14155 to Rs. whereas advances in Others category contributed highest 36. 25286 crores is more than that of Private Sector Banks Rs. suggests that there is some significant difference in NPA of Nationalised Banks with NPA of other 3 categories.41 . 4. 163223 crores in past 10 years. The Total Priority Sector Advances by Public Sector Banks has been increased from Rs.-1.value. The following are the points of Conclusion: 1. where banks need to compulsorily invest in these sectors.982 -1. F Value is 127. 6. The value of R at . It is also clear that there is significant difference between NPA of Nationalised Banks. New Private Banks and Old Private Banks. from time to time and try to minimize it in order to get increasing returns.2% of the reasons for change in dependent variable due to independent variables. 104094 crores to Rs 608963 crores in past 10 years. The reasons for growing Advances in Priority Sector is the Norms given by RBI.EISSN 2277-4955 Associates Dummy Private Banks Dummy Old Private Banks Other Statistics: R2 = 0.053 -16.924 N = 32 The nationalized bank is been taken as the benchmark category. it means that the model is significant. with that of SBI & Associates.22 at .932 Adjusted R = 0. NPA produced by Public Sector Banks Rs. This study analysed the NPA in Priority Sector and comparison is also done between Public Sector Banks and Private Sector Banks.000 . This study explored that there is significant difference between NPA of Nationalised Banks. Since the coefficient is negative. 2 2 New -0. whereas Advances by Private Sector Banks has increased from Rs. 3418 crores. it shows that there exist some linear relationship between Dependent and Independent variables.226 -17. NO. Advances in Agriculture category contributed highest 40. Using Regression analysis it is clear that Priority Sector lending has significant impact on Total NPA in Public Sector Banks.000 Rejected Rejected CONCLUSION NPA is an important factor. So it is very important to check it. The Difference showed by Coefficient of Dummy Variable with that of Constant. 3. JAN-APRIL-2012 67 .000 as p.84% of Priority Sector Lending in 2008 by Public Sector Banks. 5. on the basis of highest mean NPA produced in the given years when compared to other categories.932 suggests that the independent variables reveal 93.

REFERENCES Gourav Vallabh. Economic and Political weekly.-1. Vol. Chennai June 28. “Nonperforming Loans of Public Sector Banks-Some Panel results”. Indira. and G. Thesis Rajaraman. New Private Banks and Old Private Banks. “Nonperforming Loans in Sub-Saharan Africa: Causal Analysis and Macroeconomic Implications” World Bank Policy Research Working Paper No. August 2007 Hippolyte Fofack. 3. February. 6.Unnikrishnan “The effect of credit growth on NPAs” Hindu Business Line. NO. and financial factors in context of private commercial banks in Bangladesh” Ph. (2002). 2002 Prashanth K Reddy (October 2002) “A comparative study of Non Performing Assets in India in the Global context . and Saurabh Mishra (May 2004). No. S. Nachiket and Sharma.org A. pp. macroeconomic factors. 07/115 BAUDDHIK VOLUME 3. K. Ramasastri N. Bhavna (2002) “Rooting Out Non-Performing Assets” iciciresearchcenter. JAN-APRIL-2012 68 . 3769 Syeda Zabeen Ahmed (April 2006) “An investigation of the relationship between nonperforming loans. Vasistha.EISSN 2277-4955 SBI & Associates. remedial measures” Working Paper Mor. 7-28.similarities and dissimilarities. “Non Performing Assets of Indian Public. 2005 Rita Babihuga International Monetary Fund (IMF) May 2007IMF Working Paper No.D. Private and Foreign Sector Banks: an empirical assessment” Icfai Journal of Bank Management. (November 2005). Anoop Bhatia.

16 1485.11 1300.9 6506.44 961.-1.95 6733.51 NPAs of Public Sector Banks in Priority Sector (Rs.26 621.11 7707.37 7240.71 Total NPA 25286.48 7821.35 10161.1 860.12 1262.03 5804.85 7376.09 514.05 7834.36 25139.4 9253.59 1379.99 465.53 2884.org.in BAUDDHIK VOLUME 3.93 322.24 www.EISSN 2277-4955 ANNEXURE Date 31-Mar-08 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 31-Mar-02 31-Mar-01 31-Mar-00 31-Mar-99 Date 31-Mar-08 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 31-Mar-02 31-Mar-01 31-Mar-00 31-Mar-99 Date 31-Mar-08 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 31-Mar-02 31-Mar-01 Date 31-Mar-08 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 31-Mar-02 31-Mar-01 Priority Sector Lending By Private Sector (Rs.4 2546.46 2481.41 6440. Crores) Agriculture SSI Others 8268.39 536.18 Total 163223 144549 106586 69886 48920 36705 25709 21550 18368 14155 Total 608963 521376 409748 307046 244456 203095 171185 149116 127478 104094 Total NPA 3418.01 6202.03 2188.6 807.75 11213.74 23397.34 24156.76 459.47 1000.86 646.76 439.33 24938.35 1834. NO.31 758.78 1261. Crores) Agriculture SSI Others 248685 148651 211346 202614 102550 206661 155220 82434 163756 109917 68000 125114 84435 58311 96170 73507 52988 71448 63082 49743 53712 53571 48400 40791 45296 46045 30816 37631 42591 23661 NPAs of Private Sector Banks in Priority Sector (Rs.43 7254.18 2284. Crores) Agriculture SSI Others 1467.96 8308. Crores) Agriculture SSI Others 57702 46069 59447 52034 13136 76919 36712 10421 57777 21636 8592 38797 14730 7590 25786 11873 6857 17602 8022 8613 9074 5394 8158 7998 4023 8000 6345 3257 6451 4447 Priority Sector Lending By Public Sector (Rs.41 760.93 2445.31 651.62 22373.3 8837.67 22953.34 5843.4 964.rbi.54 10583.38 23840.65 10339.92 7762.73 511.53 7069. JAN-APRIL-2012 69 .92 6917.28 10604.51 644.

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