Synopsis of Summer training

report Topic:- Non performing

Assests

Submitted to:- Submitted by-

Ms. Ruby Kapoor Jaspreet Kaur

Assistant professor B.com (p)-5th sem

Roll no. 1715589

Introduction:-
The economic and banking sector reforms initiated by the government of India in the nineties
have revolutionized the whole banking system in the country. The implementation of
prudential norms as a part of the banking sector reforms has an impact on the functioning of
banks and has entirely change the approach of banking operations. The introductions of NPA
norms, as a part of prudential Norms have a deep-rooted impact on the functioning of banking
sector. Introduction of prudential norms by the RBI has introduced the banking sector to far
reaching consequential changes. The co-operative banks implemented these norms from the
accounting year 1996-97. As a result, the banks have become more aware of their credit risks and
have started striving hard to reduce NPAs. On the other hand, they have started giving more
focus on the loans which may get bad and result in non-performing assets.

The Reserve Bank of India National Bank for Agriculture and Rural
Development has issued a number of circulars regarding the income recognition and NPA
norms.

Research methodology:-
The 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.

Tools and Techniques

As no study could be successfully complete without proper tools and techniques, same with my
project for the better presentation and right explanation I used tools of statistics and computer
for the completion of my project.
 Basic tools which I used for project from statistics are-

• Bar Charts

• Pie charts

Bar charts and pie charts are useful tools for every research to show the result in a well clear,
ease and simple way. Because I used bar charts and pie charts in project for showing data in a
systematic way, so it need not necessary for any observer to read all the theory.

Objective of the Study

• To find the reasons of why NPAs are the great challenges for the banks.

• To understand what is Non performing Assets and what are the reasons for the
emergence of the NPAs.

• To understand the impact of NPAs on the operation of the bank.

• To study the loan disbursement pattern in Ropar Central Co-operative Bank.

• To study the status of non-performing assets (NPA) In ropar Co-operative Bank

Suggestions:-

1.Credit Appraisal System:

Banks need to have better credit Appraisal systemas to prevent NPAs to come into
existence, the problem can be solved only if there is enabling legal structure, since recovery of
NPAs often requires litigation and court orders to recover stuck loans. With long-winded
litigation in India, debt recovery takes a very long time.

2.DebtRecoveryTribunals
Banks are now working on developing the debt recovery tribunals to solve this problem. The
Government has also mooted the suggestion of an asset reconstruction company, which will be
a specialized agency set up for rehabilitating revivable NPA and recovering funds out
unreliable NPAs

3.Don’t Eliminate Manage:

Studies have shown that management of NPAs rather than elimination is prudent. India’s

growth rate and bank spreads are higher than the western nations. As a result, we can support a

non-zero level of NPAs which balances the risk vis-à-vis return appropriate to the Indian

context.

4.Effects of Capital Norm Tightening:

There is a fear that disposal through the provision of the excessive reserves may result in
deflationary spiral. A thorough provision of reserves will have no negative impact on the long-term
dividends paid to shareholders. Firstly, it helps restore credibility in financial system. Further,
which capital gains can create an adjustment mechanism and future profits that will result
from the disposal of NPAs, will pass back to the creditor and taxpayers who incurred the losses
today. The swift disposal of NPAs during the great depression in the middle of a severe
deflationary current helped restore the credibility of the financial system.

5.Legal Issues:

There have been instances of banks extending credit to doubtful debtors (who willfully default
on debt) and getting kickbacks for the same. Ineffective legal mechanisms and inadequate
internal control mechanisms made this problem grow. Quick action has to be taken on both
counts so that both the defaulters and authorizing officer are
punished heavily.Without this all the mechanisms suggested above may prove to be
ineffective.

Conclusion:-

1. The factor that decides performance of the banks nowadays is nonperforming assets
(NPA). NPAs are those loans given by a bank or financial institute where borrower defaults
or delays interest or principle payments.

2. Cooperative Banks are now required to recognize such loans faster and then classify
them as problem assets. These assets affect the profitability of the bank adversely.

3. Eventually, increasing NPAs means that funds locked are not being used properly or not
producing adequate returns. If a bank has high NPAs, then it may not be to earn enough
to pay depositors interest or repay their principal.

4. Therefore, NPA is a major problem of Cooperative Bank. It should be controlled at all

the levels & take precautions at the time of new financing & recovery. Cooperative banks
are trying to reduce the issue of NPA with efforts and precautions.