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Since the introduction of economic liberalization and financial sector reforms, Banks are
under growing pressure to bring down their NPAs so as to improve their performance and
viability. hat is bothering the bankers today is the management of Non!performing Assets.
"ver the period this problem has aggravated alarmingly and therefore needs urgent remedial
actions, so in this conte#t a good number of circular instruction$guidelines have been
issued by bank$%eserve Bank of &ndia. %eserve Bank of &ndia, in the year '((', appointed a
committee under the )hairmanship of Sh. *. Narsimham to e#amine and give
recommendation for &ncome %ecognition, Asset )lassification and Provisioning of +oan
assets of Banks and ,inancial &nstitutions. -he )ommittee e#amined the issues and
recommended that a policy of &ncome %ecognition should be ob.ective and based on record
of recovery rather than on sub.ective considerations.
"n the basis of the recommendations of the Narsimhan )ommittee, %B& had issued
guidelines to all Scheduled )ommercial Banks on &ncome %ecognition, Assets )lassification
and Provisioning in April, '((/ which have been modified from time to time by the %B& on
the basis of e#perience gained and suggestions received from various 0uarters. -he Prudential
Norms for &ncome %ecognition, Asset )lassification and Provisioning have come into effect
from the accounting year 1'.21.'((1. Similarly, guidelines were issued by the %eserve
Bank of &ndia in *arch, '((3 to All &ndia ,inancial &nstitutions viz. &4B&, &)&)&, &,)&, A5&S
Bank and &&B&. Separate guidelines were also issued by the %B& on Prudential Norms to Non!
Banking ,inancial )ompanies in 6une, '((3 and to %egional %ural banks in *arch, '((7.
-hey have adopted these guidelines for the purpose of &ncome %ecognition and Assets
)lassification from the accounting year '((8!(7. 9owever, guidelines relating to
provisioning for %%Bs have been made effective from the financial: year ended 1'.21.'((;.
-he definition of NPAs is also gradually becoming tough for %%Bs to cover all advances like
)ommercial Banks. Although most of!the guidelines relating to %%Bs are similar to that of
)ommercial Banks, they have been made applicable in a phased manner for %%Bs.
INDIAN BANKS FUNCTIONALLY diverse and geographically widespread, have played a
crucial role in the socio! economic progress of the country. Banks e#tend credit to different
types of borrowers for many different purposes. ,or most customers, bank credit is
the primary source of available debt financing. ,or banks good loans are the most profitable
assets. %eturn comes in the form of loan interest, fee income and investment and the most
prominent assumed risk is credit risk.
)redit risk involves inability or unwillingness of customer or counterpart to meetcommitment
s in relation to lending once a loan is overdue and ceases to yield income it would become
a Non Performing Asset. Proper management and speedy disposal of NPAs is one of the most
critical tasks of banks today. -he problem of Non Performing Assets <NPAs= in banks and
financial institutions has been a matter of grave concern not only for the banks but also the
real economy in general, as NPAs can choke further e#pansion of credit which would impede
the economic growth of the country. Any bottleneck in the smooth flow of credit is bound to
create adverse repercussions in the economy. NPAs are not therefore the concern of only
lenders but also the public at large. >ranting of credit for economic activities is the prime
duty of banking. Apart from raising resources through fresh deposits, borrowings and
recycling of funds received back from borrowers constitute a ma.or part of funding credit
dispensation activity. +ending is generally encouraged because it has the effect of funds being
transferred from the system to productive purposes, which results into economic growth.
9owever lending also carries a risk called credit risk, which arises from the failure of
borrower. Non!recovery of loans along with interest forms a ma.or hurdle in the process of
credit cycle. -hus, these loan losses affect the bank?s profitability on a large scale. -hough
complete elimination of such losses is not possible, but banks can always aim to keep the
losses at a low level. Non!performing Asset @NPAA has emerged since over a decade as an
alarming threat to the banking industry in our country sending distressing signals on the
sustainability and insurability of the affected banks. -he positive results of the chain of
measures affected under banking reforms by the >overnment of &ndia and %B& in terms of the
two Narasimhan )ommittee %eports in this contemporary period have been neutralized by
the ill effects of this surging threat. 4espite various correctional steps administered to solve
and end this problem, concrete results are eluding. &t is a sweeping and all pervasive virus
confronted universally on banking and financial institutions. -he severity of the problem is
however acutely suffered by Nationalised Banks, followed by the SB& group, and the all &ndia
,inancial &nstitutions.
An asset, including a leased asset, becomes non!performing when it ceases to generate
income for the bank. A Bnon performing asset? was defined as a credit facility in respect
of which the interest and$or installment of principal had remained Bpast due? for a
specified period of time.
-he specified period was reduced in a phased manner as underC
Dear Ending 1'st *arch Specified Period
'((1 ,our Fuarters
'((3 -hree Fuarters
'((8 "nwards -wo Fuarters
An amount due under any credit facility is treated as Bpast due? when it has not been paid
within 12 days from the due date. 4ue to the improvements in the payment and settlement
systems, recovery climate, up gradation of technology in the banking sector, etc, it was
decided to dispense with the Bpast due? concept, with effect from 1'st *arch, /22'.
Accordingly, as from that date, a NPA shall be an advance where,
i. &nterest and$or installment of principal remain overdue for a period of more than 'G2
days in respect of a term loan
ii. -he account remains Bout of order? for a period of more than 'G2 days, in respect
of an overdraft$cash credit
iii. &nterest and$or installment of principal remains overdue for two harvest seasons but
for a period not e#ceeding two half years in the case of an advance granted for
agriculture purposes
iv. Any amount to be received remains overdue for a period of more than 'G2 days in
respect of other accounts.
ith a view to move towards international best practices, it has been decided to adopt the
B(2days? overdue norm for identification of NPAs, from 1'st *arch, /223.
-o understand the )oncept of Non H Performing Asset.
-o study the position of Non Performing assets in 94,) Bank
-o know the impact on NPA on strategic banking variable.
-o know the reason for an asset becoming NPA.
-o know the strategies to reduce the NPA and effective control on the NPA.
-o know the NPA *anagement in 94,) BANI.
-he research methodology means the way in which we would complete our prospected task.
Before undertaking any task it becomes very essential for anyone to determine the problem of
study. & have adopted the following procedure in completing my report study.
'. ,ormulating the problem
/. %esearch design
1. 4etermine the data sources
3. Analyzing the data
8. &nterpretation
7. Preparing research report
Me#nin$ of Rese#%&'
%esearch is defined as Ja scientific K systematic search for pertinent information on a
specific topicL. %esearch is an art of scientific investigation. %esearch is a systemized effort
to gain new knowledge. &t is a careful in0uiry especially through search for new facts in
any branch of knowledge. -he search for knowledge through ob.ective and systematic
method of finding solution to a problem is a research.
-he research problems, in general refers to sum difficulty with a researcher e#perience in the
contest of either a particular a theoretical situation and want to obtain a salutation for same.
-he present 4issertation has been undertaken to do the Problem of NPA in State Bank of

E5P+"%A-"%D 4ES)%&P-&ME E5PE%&*EN-A+
%ESEA%)9 %ESEA%)94ES&>N

-he present study is descriptive in nature, as it seeks to discover ideas and insight to bring out
new relationship. %esearch design is fle#ible enough to provide opportunity for considering
different aspects of problem under study. &t helps in bringing into focus some inherent
weakness weakness in enterprise regarding which in depth study can be conducted by
A sample design is a definite plan for obtaining a sample from the sampling frame. &t refers to
the techni0ue or the procedure that is adopted in selecting the sampling units from which
inferences about the population is drawn. Sampling design is determined before the collection
of the data.
SOURCES OF DATA: -here are two types of data ! Primary data or raw data and secondary
data or second hand data. -he data which is collected on source which has not been sub.ected
to processing or any other manipulation is primary data whereas secondary data is the data
collected by someone other than the user through common sources like censuses, surveys,
organizational records and data collected through 0ualitative methodologies or 0ualitative
research. -he data collected is mainly secondary in nature. -he sources of data for this %eport
include the literature published by the &ndian overseas bank %eserve Bank of &ndia. Also the
various magazines dealing with the current banking scenario and research paper have also
been a source of information.
-he scope of the study is limited to the ob.ectives as mentioned earlier. -he study ranges from
understanding the significance of non!performing assets to defining the criteria of identifying
Primary Data Secondary
non!performing assets in the banking sector, to review Bank of &ndia?s performance in the
management of non!performing assets.
&t also reviews the framework of Bank of &ndia?s recovery policy with which it hopes to bring
down the percentage of net non!performing assets to the net advances. -he study also
encompasses the recommendations, the adhering of which will bring good results to the
'A -he study on management of non!performing assets is limited to the 94,) Bank.
/A -he basis for identifying non!performing assets is the one that has been mentioned in
the report but some minor changes may have been carried out through the %eserve
Bank of &ndia circulars, which are received on a daily basis by the bank.
1A Since non!performing assets are a critical issue, bank officials are not willing to part
with all the information on them.
3A Non!performing assets is a vast topic and to do full .ustice to all the aspects of non!
Performing assets is an impossible task for me.
-he &ndian Banking industry, which is governed by the Banking %egulation Act of
&ndia, '(3( can be broadly classified into two ma.or )ategories, non!scheduled banks and
scheduled banks. Scheduled banks comprise commercial banks and the co!operative banks.
&n terms of "wnership, commercial banks can be further grouped into nationalized Banks, the
State Bank of &ndia and its group banks, regional rural banks and private sector banks @the
old$ new domestic and foreignA. -hese Banks have over 7;,222 branches spread across the
country in every city and villages of all nook and corners of the land. -he first phase of
financial reforms resulted in the nationalization of '3 ma.or Banks in '(7( and resulted in a
shift from )lass banking to *ass Banking. -his in turn resulted in a significant growth in the
geographical )overage of banks. Every bank had to earmark a minimum percentage of their
loan portfolio to sectors identified as Jpriority sectorsL. -he *anufacturing sector also grew
during the '(;2s in protected environs the banking sector was a critical source. -he ne#t
wave of reforms saw the nationalization of 7 more commercial banks in '(G2. Since then the
number of scheduled commercial banks increased four!fold and the number of bank branches
increased eight!fold. And that was not the limit of growth.

After the second phase of financial sector reforms and liberalization of the sector in the early
nineties, the Public Sector Banks @PSBA s found it e#tremely difficult to compete with the
new private sector banks and the foreign banks. -he new private sector banks first made their
appearance after the guidelines permitting them were issued in 6anuary '((1. Eight New
private sector banks are presently in operation. -hese banks due to their late start have access
to state!of!the!art technology, which in turn helps them to save on manpower costs. 4uring
the year /222, the State Bank of &ndia @SB&A and its ; associates accounted for a /8 percent
share in deposits and /G.' percent share in )redit. -he /2 nationalized banks accounted for
81./ percent of the deposits and 3;.8 percent of credit during the same period. -he share of
foreign banks @numbering 3/A, regional rural banks and other scheduled )ommercial banks
accounted for 8.; percent, 1.( percent and '/./ percent respectively in deposits and G.3'
percent, 1.'3 percent and '/.G8 percent respectively in credit during the year /222 about the
detail of the current scenario we will go through the trends in modern economy of the
Aggregate deposits of scheduled commercial banks increased at a compounded annual
average growth rate @)A>%A of ';.G percent during '(7(!((, while bank credit e#panded at a
)A>% of '7.1 percent per annum. Bank?s investments in government and other approved
securities recorded a )A>% of 'G.G percent per annum during the same period. &n ,D2' the
economic slowdown resulted in a >ross 4omestic Product @>4PA growth of only 7.2 percent
as against the previous year?s 7.3 percent. -he P& &nde# @a measure of inflationA increased
by ;.' percent against 1.1 percent in ,D22. Similarly, money supply @*1A grew by around
'7./ percent as against '3.7 percent a year ago. -he growth in aggregate deposits of the
scheduled commercial banks at '8.3 percent in ,D2' percent was lower than that of '(.1
percent in the Previous year, while the growth in credit by S)Bs slowed down to '8.7 percent
in ,D2' against /1 percent a year ago.
-he industrial slowdown also affected the earnings of listed banks. -he net profits of /2 listed
banks dropped by 13.31 percent in the 0uarter ended *arch /22'. Net profits grew by 32.;8
percent in the first 0uarter of /222!/22', but dropped to 3.87 percent in the fourth 0uarter of
/222!/22'.K LTD)
"n the )apital Ade0uacy %atio @)A%A front while most banks managed to fulfill the norms, it
was a feat achieved with its own share of difficulties. -he )A%, which at present is (.2
percent, is likely to be hiked to '/.2 percent by the year /223 based on the Basle )ommittee
recommendations. Any bank that wishes to grow its assets needs to also shore up its capital at
the same time so that its capital as a percentage of the risk!weighted assets is maintained at
the stipulated rate. hile the &P" route was a much!fancied one in the early B(2s, the current
scenario doesn?t look too attractive for bank ma.ors.
)onse0uently, banks have been forced to e#plore other avenues to shore up their capital base.
hile some are wooing foreign partners to add to the capital others are employing the *K A
route. *any are also going in for the right issue at prices considerably lower than the market
prices to woo the investors.
After the first phase and second phase of financial reforms, in the '(G2s commercial banks
began to function in a highly regulated environment, with administered interest rate structure,
0uantitative restrictions on credit flows, high reserve re0uirements and reservation of a
significant proportion of lendable resources for the priority and the government sectors. -he
restrictive regulatory norms led to the credit rationing for the private sector and the interest
rate controls led to the unproductive use of credit and low levels of investment and growth.
-he resultant financial repression? led to decline in productivity and efficiency and erosion of
profitability of the banking sector in general.
-his was when the need to develop a sound commercial banking system was felt. -his was
worked out mainly with the help of the recommendations of the )ommittee on the ,inancial
System @)hairmanC Shri *. NarasimhanA, '(('. -he resultant financial sector reforms called
for interest rate fle#ibility for banks, reduction in reserve re0uirements, and a number of
structural measures. &nterest rates have thus been steadily deregulated in the past few years
with banks being free to fi# their Prime +ending %ates @P+%sA and deposit rates for most
banking products. )redit market reforms included introduction of new instruments of credit,
changes in the credit delivery system and integration of functional roles of diverse players,
such as, banks, financial institutions and non!banking financial companies @NB,)sA.
4omestic Private Sector Banks were allowed to be set up, PSBs were allowed to access the
markets to shore up their )ars.
-he formal banking system in &ndia comprises the %eserve Bank of &ndia, commercial banks,
regional rural banks and the cooperative banks. &n the recent past, private non!banking
finance companies also have been active in the financial system, and are being regulated by
the %B&
-oday the overall )ommercial banking system in &ndia may be distinguished intoC
'. Public Sector Banks
/. Private Sector Banks
1. )o!operative Sector Banks
3. 4evelopment Banks

State Bank of &ndia and its associate banks called the state Bank group.
/2 nationalized banks
%egional %ural Banks mainly sponsored by Public Banks
"ld generation private banks
New generation private banks
,oreign banks in &ndia
Scheduled )o!operative Banks
Non!scheduled Bank
-he )o!operative banking sector has been developed in the country to the supplement the
village money lender. -he co!operative banking sector in &ndia is divided into 3 components.
State )o!operative Banks
)entral )o!operative Banks
Primary Agriculture )redit societies
+and 4evelopment Banks
Nrban )o!operative Banks
Primary Agricultural 4evelopment Banks
Primary +and 4evelopment Banks
State +and 4evelopment Banks
&ndustrial ,inance )orporation &ndia @&,)&A
&ndustrial 4evelopment Bank of &ndia @&4B&A
&ndustrial )redit and &nvestment )orporation of &ndia @&)&)&A
&ndustrial &nvestment Bank of &ndia @&&B&A
Small &ndustries 4evelopment Bank of &ndia@S&4B&A
S)&)& +td.
National Bank for Agriculture and %ural 4evelopment@NABA%4A
E#port &mport Bank of &ndia
National 9ousing Bank
-here are /' public sector banks and ; associate banks. -hey areC
Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of &ndia
Bank of *aharashtra
)anara Bank
)entral Bank of &ndia
)orporation Bank
4ena Bank
&ndian Bank
&ndian "verseas Bank
Pun.ab National Bank
Pun.ab and Sind Bank
Mi.aya Bank
Nnited Bank of &ndia
Nnion Bank of &ndia
Syndicate Bank
"riental Bank of commerce
Nco Bank
State Bank of &ndia
State Bank of &ndia KAssociate
'. State Bank of 9yderabad
/. State Bank of Bikaner K 6aipur
1. State Bank of Saurashtra
3. State Bank of &ndore
8. State Bank of *ysore
7. State bank "f Patiala
;. State Bank of -ravancore

-he main ob.ect and business of the Bank, as laid down in the Bank Nationalization Act is as
underC -he main ob.ect of the Banking )ompanies @Ac0uisition and -ransfer of
NndertakingsA Act, '(;2 under which the undertaking of the Bank was taken over by the
)entral >overnment is as underC JAn Act to provide for the ac0uisition and transfer of the
undertakings of certain Banking )ompanies, having regard to their size, resources, coverage
and organization, in order to control the heights of the economy and to meet progressively,
and serve better, the needs of the development of the economy, in conformity with national
policy and ob.ectives and for matters connected therewith or incidental theretoL.
-he *ain "b.ect of the Bank enables it to undertake the activities for which the funds are
being raised and the activities, which it has been carrying on till date.
-he Bank shall carry on and transact the business of Banking as defined in )lause @bA of
Section 8 of the Banking %egulation Act, '(3(, and may engage in one or more of the other
forms of business specified in Sub!Section @'A of Section 7 of that Act.
)lause @bA of Section 8 of the Banking %egulation Act, '(3( defines Banking as Othe
accepting for the purpose of lending or investment, of deposits of money from the public,
repayable on demand or otherwise, and withdraw able by che0ue, draft, order or otherwise.O
"ther Business that the Bank may undertake @Section 1 @;AA
Sections 1 @;A of )hapter && of the Banking )ompanies @Ac0uisitionA Act '(;2 provides for
the Bank to act as Agent of %eserve Bank.
'. -he Bank shall, if so re0uired by the %eserve Bank of &ndia, act as agent of the
%eserve Bank at all places in &ndia where it has a branchC
a. Paying, receiving, collecting and remitting money, bullion and securities on behalf
of the >overnment of &ndia
b. Nndertaking and transacting any other business which the %eserve Bank may from
time to time entrust to it.
/. -he terms and conditions on which any such agency business shall be carried on by
the corresponding new Bank on behalf of the %eserve Bank shall be such as may be
agreed upon.
1. &f no agreement can be reached on any matter referred to in )lause @/A above, or if a
dispute arises between the corresponding new Bank and the %eserve Bank as to the
interpretation of any agreement between them, the matter shall be referred to
3. )entral >overnment and the decision of the )entral >overnment, thereon, shall be

-he corresponding new Bank may transact any business or perform any function entrusted to
it under )lause @'A by itself or through any agent approved by the %eserve Bank.
Co+,#n- P%ofi.e: -he 9ousing 4evelopment ,inance )orporation +imited @94,)A was
amongst the first to receive an :in principle: approval from the %eserve Bank of &ndia @%B&A to
set up a bank in the private sector, as part of the %B&:s liberalization of the &ndian Banking
&ndustry in '((3. -he bank was incorporated in August '((3 in the name of :94,) Bank
+imited:, with its registered office in *umbai, &ndia. 94,) Bank commenced operations as a
Scheduled )ommercial Bank in 6anuary '((8.
94,) Bank:s mission is to be a orld!)lass &ndian Bank. -he ob.ective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth in
profitability, consistent with the bank:s risk appetite. -he bank is committed to maintain the
highest level of ethical standards, professional integrity, corporate governance and regulatory
compliance. 94,) Bank:s business philosophy is based on four core values ! "perational
E#cellence, )ustomer ,ocus, Product +eadership and People.
C#,it#. St%/&t/%e of t'e HDFC B#n0:
As on 12th 6une, /2'2 the authorized share capital of the Bank is %s. 882 crore. -he paid!up
capital as on said date is %s. 38(, 7(, 2;,212$! @38, (7, (2,;21 e0uity shares of %s. '2$! eachA.
-he 94,) >roup holds /1.71 P of the Bank:s e0uity and about ';.28 P of the e0uity is held
by the A4S 4epository @in respect of the bank:s American 4epository Shares @A4SA &ssueA.
/;.38P of the e0uity is held by ,oreign &nstitutional &nvestors @,&&sA and the Bank has about
3, 11,2;G shareholders.
-he shares are listed on the Bombay Stock E#change +imited and -he National Stock
E#change of &ndia +imited. -he Bank:s American 4epository Shares @A4SA are listed on the
New Dork Stock E#change @NDSEA under the symbol :94B: and the Bank:s >lobal
4epository %eceipts @>4%sA are listed on +u#embourg Stock E#change under &S&N No
A1o/t t'e M#n#$e+ent of HDFC B#n0:
*r. ).*. Masudev has been appointed as the )hairman of the Bank with effect from 7th 6uly
/2'2. *r. Masudev has been a 4irector of the Bank since "ctober /227. A retired &AS officer,
*r. Masudev has had an illustrious career in the civil services and has held several key
positions in &ndia and overseas, including ,inance Secretary, >overnment of &ndia, E#ecutive
4irector, orld Bank and >overnment nominee on the Boards of many companies in the
financial sector.
-he *anaging 4irector, *r. Aditya Puri, has been a professional banker for over /8 years
and before .oining 94,) Bank in '((3 was heading )itibank:s operations in *alaysia.
-he Bank:s Board of 4irectors is composed of eminent individuals with a wealth of
e#perience in public policy, administration, industry and commercial banking. Senior
e#ecutives representing 94,) are also on the Board.
Senior banking professionals with substantial e#perience in &ndia and abroad head various
businesses and functions and report to the *anaging 4irector. >iven the professional
e#pertise of the management team and the overall focus on recruiting and retaining the best
talent in the industry, the bank believes that its people are a significant competitive strength.
HDFC BANK B/siness
94,) Bank offers a wide range of commercial and transactional banking services and
treasury products to wholesale and retail customers. -he bank has three key business
2' B#n0in$ Se%3i&es
-he Bank:s target market ranges from large, blue!chip manufacturing companies in the &ndian
corporate to small K mid!sized corporate and agri!based businesses. ,or these customers, the
Bank provides a wide range of commercial and transactional banking services, including
working capital finance, trade services, transactional services, cash management, etc. -he
bank is also a leading provider of structured solutions, which combine cash management
services with vendor and distributor finance for facilitating superior supply chain
management for its corporate customers. Based on its superior product delivery $ service
levels and strong customer orientation, the Bank has made significant inroads into the
banking consortia of a number of leading &ndian corporates including multinationals,
companies from the domestic business houses and prime public sector companies. &t is
recognized as a leading provider of cash management and transactional banking solutions to
corporate customers, mutual funds, stock e#change members and banks.
2' B#n0in$ Se%3i&es
-he Bank:s target market ranges from large, blue!chip manufacturing companies in the &ndian
corporate to small K mid!sized corporate and agri!based businesses. ,or these customers, the
Bank provides a wide range of commercial and transactional banking services, including
working capital finance, trade services, transactional services, cash management, etc. -he
bank is also a leading provider of structured solutions, which combine cash management
services with vendor and distributor finance for facilitating superior supply chain
management for its corporate customers. Based on its superior product delivery $ service
levels and strong customer orientation, the Bank has made significant inroads into the
banking consortia of a number of leading &ndian corporates including multinationals,
companies from the domestic business houses and prime public sector companies. &t is
recognized as a leading provider of cash management and transactional banking solutions to
corporate customers, mutual funds, stock e#change members and banks.
Ret#i. B#n0in$ Se%3i&es
-he ob.ective of the %etail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one!stop window for all
his$her banking re0uirements. -he products are backed by world!class service and delivered
to customers through the growing branch network, as well as through alternative delivery
channels like A-*s, Phone Banking, Net Banking and *obile Banking.
-he 94,) Bank Preferred program for high net worth individuals, the 94,) Bank Plus and
the &nvestment Advisory Services programs have been designed keeping in mind needs of
customers who seek distinct financial solutions, information and advice on various
investment avenues. -he Bank also has a wide array of retail loan products including Auto
+oans, +oans against marketable securities, Personal +oans and +oans for -wo!wheelers. &t is
also a leading provider of 4epository Participant @4PA services for retail customers, providing
customers the facility to hold their investments in electronic form.
94,) Bank was the first bank in &ndia to launch an &nternational 4ebit )ard in association
with M&SA @M&SA ElectronA and issues the *aster card *aestro debit card as well. -he Bank
launched its credit card business in late /22'. By *arch /2'2, the bank had a total card base
@debit and credit cardsA of over '3 million. -he Bank is also one of the leading players in the
Jmerchant ac0uiringL business with over (2,222 Point!of!sale @P"SA terminals for debit $
credit cards acceptance at merchant establishments. -he Bank is well positioned as a leader in
various net based B/) opportunities including a wide range of internet banking services for
,i#ed 4eposits, +oans, Bill Payments, etc.
ithin this business, the bank has three main product areas ! ,oreign E#change and
4erivatives, +ocal )urrency *oney *arket K 4ebt Securities, and E0uities. ith the
liberalization of the financial markets in &ndia, corporate need more sophisticated risk
management information, advice and product structures. -hese and fine pricing on various
treasury products are provided through the bank:s -reasury team. -o comply with statutory
reserve re0uirements, the bank is re0uired to hold /8P of its deposits in government
securities. -he -reasury business is responsible for managing the returns and market risk on
this investment portfolio.
A4#%5s #n5 A&'ie3e+ents * B#n0in$ Se%3i&es
94,) Bank began operations in '((8 with a simple missionC to be a 62o%.5*&.#ss In5i#n
B#n07. e realized that only a single!minded focus on product 0uality and service
e#cellence would help us get there. -oday, we are proud to say that we are well on our way
towards that goal.
94,) Bank began operations in '((8 with a simple missionC to be a 62o%.5*&.#ss In5i#n
B#n07. e realized that only a single!minded focus on product 0uality and service
e#cellence would help us get there. -oday, we are proud to say that we are well on our way
towards that goal.
&t is e#tremely gratifying that our efforts towards providing customer convenience have been
appreciated both nationally and internationally.
N-& *utual ,und )NB) -M 'G ,inancial Advisor
Awards /2''
* Best Pe%fo%+in$ B#n0 * P%i3#te
Asian Banker &nternational E#cellence in %etail
,inancial Services Awards /2'/
* Best Ret#i. B#n0 in In5i#
* Best B#n&#ss/%#n&e
* Best Ris0 M#n#$e+ent
8th +oyalty Summit award ! C/sto+e% #n5 B%#n5 Lo-#.t-
Skoch foundation /2'/ ! SHG;!LG .in0#$e ,%o$%#++e
Rit/,#%n# D#s (8998 performed a research on *anaging the %isk of Non Performing
Assets in the Small Scale &ndustries in &ndia. &n this article the researcher tries to seek a
Solution to the problem of NPA in the small scale industries under the present circumstances
of banking and insurance working together under the same roof. hat is stressed in this
article is the pressing need of the small!scale entrepreneur for becoming aware and educated
in modern business management holding a professional attitude toward rational decision
making and banks have to facilitate that process as a part of the credit policy sold by them.
P%#s'#nt' K) Re55- (8998 in his research paper on the topic, JA comparative study of Non
Performing Assets in &ndia in the >lobal conte#tL e#amined the similarities and
dissimilarities, remedial measures. ,inancial sector reform in &ndia has progressed rapidly on
aspects like interest rate deregulation, reduction in reserve re0uirements, barriers to entry,
prudential norms and risk!based supervision. -he study reveals that the sheltering of weak
institutions while liberalizing operational rules of the game is making implementation of
operational changes difficult and ineffective. )hanges re0uired to tackle the NPA problem
would have to span the entire gamut of .udiciary, polity and the bureaucracy to be truly
effective. -his paper deals with the e#periences of other Asian countries in handling of NPAs.
&t further looks into the effect of the reforms on the level of NPAs and suggests mechanisms
to handle the problem by drawing on e#periences from other countries.
T#+#. D#tt# C'#/5'/%i (899< e#amined the J%esolution Strategies for *a#imizing Malue
of Non!Performing Assets @NPAsAL. -he article indicates that declining capital ade0uacy
adversely affects shareholder value and restricts the ability of the bank$institution to access
the capital market for additional e0uity to enhance capital ade0uacy. So, if a resolution
strategy for recovery of dues from NPAs is not put in place 0uickly and efficiently, these
assets would deteriorate in value over time and little value would be realized at the end,
e#cept may be its scrap value. -he purpose of this paper is to indicate the various
considerations that one has to bear in mind before zeroing on a resolution strategy and
provides a State ! %esolution ! *apping @S%*A framework. 9owever, the paper has not
specifically discussed about the various resolution strategies that could be put in place for
recovery from NPAs, and in particular, in which situation which type of strategy should be
Is##& K) Ot&'e%e (899< conducted a study on the performance of privatized banks in
middle! and low!income countries show mi#ed results by J)ompetitive and Malue Effects of
Bank Privatization in 4eveloped )ountriesL. -he paper observed that private banks in
developed countries have e#perienced significant improvements in operating performance.
-he improvement in performance remains significant after controlling for persistence in bank
performance. A comparison of the performance of privatized banks in developed and
developing countries suggests that privatization has encouraged e#cessive risk taking among
privatized banks in developing countries, with the conse0uence that those banks carry large
non!performing assets than their counterparts in the developed countries. -hey also observe
that consistent with the competitive effects hypothesis, investors view privatization
announcements as foreshadowing bad news for rival banks.
D%) A+it#1' !os'i (899= conducted a survey on JAnalysis of Non!Performing Assets of
&,)& +tdL. -he study found that Profitability and Miability of 4evelopment ,inancial
&nstitutions are directly affected by 0uality and performance of advances. -he basic element
of Sound NPA *anagement System is 0uick identification of Non!performing advances, their
containment at minimum levels and ensuring that their impingement on the financials is at
low level. E#cessive reliance on )ollaterals has led &nstitutions to long drawn litigations and
hence it should not be sole criteria for sanction. Banks should manage their e#posure limit to
few borrower@sA and linkage should be placed with net owned funds for developing control
over high leverages of borrower level. Study also revealed that e#change of credit
information among banks would be immense help to them to avoid possible NPAs.
*anagement &nformation system and *arket intelligence should be utilized to their full
T'o+#s P) Fe%$/son (899> conducted a research on J"bservations on the Securitization of
Non!Performing +oans in %ussiaL. Asset securitization is a burgeoning trend in %ussia as
companies burdened by poor credit ratings seek access to capital at lower costs than they
would be allowed in traditional e0uity or debt markets. Study indicates that securitization of
these bad loans has not occurred in %ussia at the levels one might e#pect. -his has been due
to both a relatively small amount of loans that under!perform as well as legal and regulatory
impediments that have discouraged investors and lenders alike. -he study has been conducted
to e#amine the e#pansion of consumer credit in %ussia and the circumstances under which it
is occurring indicate that the level of non!performing loans is due to rapidly increase and as
the rationale for maintaining the impediments that stand in the way of securitizing these loans
is being re!e#amined, those impediments are being scaled back to make way for market
participants to engage in such securitizations. -hus, this article anticipates a significant rise in
the level of non!performing loans, which will be logically paired with an increased interest of
%ussian lenders in securitizing these assets.
Us'# A%o%#? B'#3n# "#s'is't ( Moni&# B#ns#. (899@ in the research on JAn Analytical
Study of >rowth of )redit Schemes of Selected BanksL analyzed and compared the
performance @in terms of loan disbursement and non! performing assetsA of credit schemes of
selected banks for the last five years. -his paper is divided into two parts. &n the first part,
bank!wise as well as year!wise comparisons are done with the help of )ompound Annual
>rowth %ate @)A>%A, mean and standard deviationQ and in the second part, a positive
relationship is found between total loan disbursement and total NPA "$S of selected banks
with the help of a correlation techni0ue. -he study found a positive relationship between total
loan disbursement and total Non!Performing Assets "utstanding @NPA "$SA of selected
Dear /2'2 /2'' /2'/ /2'1
-otal ,i#ed asset in )rores
'',;82,('; ';1//;(2 /'3(278( /',;27,3G2
Inte%,%et#tion: -otal ,i#ed Assets of 94,) Bank was increasing constantly over the Dears
and the Bank has 9igh *arket Malue in the Dears. &n the above )hart, ,i#ed assets are
predominantly and significantly positively increased because of the business of the bank was
Ye#% /2'2 /2'' /2'/ /2'1
G%oss NPA in Rs)&%o%e :<B@C> :@DD9D :D8:D@ :C@B=B
Inte%,%et#tions: "ver the Dears the 94,) Banks has effectively and efficiently managing
the NPA?s. &t is observed that the >ross NPAs as compared with Dear /2'' has predominantly
increased due to significance of high credit loans to all Sectors from 94,) Bank. At present
94,) Bank NPA?s *anagement has efficiently increased in terms of )redit %isk
*anagement and )redit Appraisal System. A )omparative Analysis @%atioA in percentage is
calculated on Dear on Dear Basis, we know that 94,) Bank has /GP of >ross NPA in the
Dear /2'2 has predominantly decreased by G.18P in /2'/ and ;.18P in the year /2'1.
-otal >ross NPA to -otal ,i#ed Assets
Dear /2'2 /2'' /2'/ /2'1
-otal >ross NPA '83(7; '(GG2G 'G/'G( '7(313
-otal ,i#ed Assets '',;82,('; ';1//;(2 /'3(278( /',;27,3G2
-otal >ross NPA to -otal ,A '.1'G;78'78 '.'3;77; 2.G3;;8(2'( 2.;G287(
Inte%,%et#tion: -he >ross NPA to ,i#ed Asset %atio indicates the impact of NPA on the
,i#ed assets of the 94,) Bank. -he Bank has effectively and efficiently managing the NPA
,rom over the years. As we understand that in /2'2 the total gross NPA to total ,i#ed Asset
are in a percent of '.1' is significantly decreased to 2.;G2.
Tot#. Net NPA of HDFC B#n0
Dear /2'2 /2'' /2'/ /2'1
Net NPA /311; 7/;7/ 1(371 /(73'
-otal ,i#ed Assets '',;82,('; ';1//;(2 /'3(278( /',;27,3G2
-otal Net NPA to -otal ,i#ed Assets 2./2;'2;/3' 2.17/12GG 2.'G17/G7'; 2.'17881;
Inte%,%et#tion: -he total fi#ed assets to net NPA Shows the profitability of the 94,) Bank
and it indicates that 94,) Banks ,i#ed assets increased over the years and the Net NPA also
significantly increased. &n a comparative financial ratio shows that Bank has to focus on
effective NPA *anagement and %educing strategies to decrease the Net NPA.
4efault by customer
Non!inspection of borrower
+ack of e#pertise
&mbalance of inventories
Poor credit collection
+ack of trained staff
+ack of commitment to recovery
)hange in consumer preference
>ovt. Policies
&mpact of profitability
&mpact on outlook of Banker towards credit delivery
&mpact of productivity
)redit administrationC
A bank has to strengthen their credit administrative machinery and put in place
effective credit risk management systems to reduce the fresh incidence of NPAs
Better &nspectionC
e shall keep a close watch on the manner in which NPA reduction is taking place.
)ash %ecoveryC
e should also insist that cash recoveries should more than offset the fresh write!offs
in NPAs.
-he mindset of the borrowers needs to change so that a culture of proper utilization of
credit facilities and timely repayment is developed.
,inancial SystemC
As you are aware, one of the main reason for corporate default is on account of
diversion of funds and corporate entities should come forward of avoid this practice in
the interest of strong and sound financial system.
E#tending credit involves lenders and borrowers and both should realize their role and
responsibilities. -hey should appreciate the difficulties of each other and should
endeavor to work contributing to a healthy financial system
S'o%t#$e of ti+e: -ime is very short for research, so that is very difficult can get the
knowledge about everything.
Info%+#tion not s/ffi&ient.- #3#i.#1.e* -he source of data collection is secondary so the
information available is not sufficient.
No 5i%e&t so/%&e of info%+#tion #3#i.#1.e * -he information is collected from indirect
sources so in some information data is not available.
Se&on5#%- 5#t#:* &nformation is not reliable because of secondary data
A strong banking sector is important for a flourishing economy. -he failure of the banking
sector may have an adverse impact on other sectors. "ver the years, much has been talked
about NPA and the emphasis so far has been only on identification and 0uantification of
NPAs rather than on ways to reduce and upgrade them. -here is also a general perception that
the prescriptions of 32P of net bank credit to priority sectors have led to higher NPAs, due to
credit to these sectors becoming stickly managers of rural and semi!urban branches generally
sanction these loans. )hanged conte#t of new prudential norms and emphasis on 0uality
lending and profitability, mangers should make it amply clear to potential borrowers that
banks resources are scare and these are meant to finance viable ventures so that these are
repaid on time and relevant to other needy borrowers for improving the economic lot of
ma#imum number of households. 9ence selection of right borrowers, viable economic
activity, ade0uate finance and timely disbursement, correct and use of funds and timely
recovery of loans is absolutely necessary pre conditions for preventing of minimizing the
incidence of new NPAs
:) !o/%n#.s ( M#$#Eines:
,inance &ndia /2'', /2'/,/2'1
J%&SI *ANA>E*EN- &N )"**E%)&A+ BANISL @A )ASE S-N4D
", PNB+&) AN4 P%&MA-E SE)-"% BANISA ! ABS-%A)- "N+D Prof.
%ekha Arun kumar ! ,aculty @,inanceA, *BA Program.
Efficiency of )ommercial BanksC A comparative study of commercial banks in
&ndia ETHOS: A Journal of research articles in management science and
allied areas &SSNC 2(;3 H 7;27.
Rit/,#%n# D#s (8998 performed a research on J*anaging the %isk of Non
Performing Assets in the Small Scale &ndustries in &ndiaL.
P%#s'#nt' K) Re55- (8998 in his research paper on the topic, JA
comparative study of Non ! Performing Assets in &ndia in the >lobal conte#tL.
8) Boo0s ( Re,o%tsC
Banking and &nsurance Practices H S.N.B9A4AN&, E#cel Publishers
%eports on Progress and -rends of Banks in &ndia by %B& H /2'', /2'/, /2'1.
=) 2e1 Sites: