CHAPTER - 8

CONCLUSION

The Challenges a Rural Person experiences particularly to avail the credit is the Time

Taken for Disbursement, and in addition different visit to Bank for benefiting the Loan is

not a reasonable choice. As the country individual or rancher needs to go to a long

separation, because of which the loss of time and cash for travel is one of the real

reasons, alongside the unsettling influence in routine homestead action. Every one of

these Factors makes the advance Disbursement a Painful undertaking for the Rural

Customer. Well beyond this, on occasion the Designated Bank authority will have a

Negative Perception towards the Farmer and Agro partnered movement, which

additionally expands the dissatisfaction of country client while profiting the credit. Every

one of these Findings was investigated, and a Recommendation was given to Saraswat

Bank. Furthermore, Bhagirathi's Team likewise proposed that; Rural People are

essentially particularly delicate and Emotional, Keeping these things in Mind, if the

Loans are dispensed in single Visit and furthermore Bank authorities Good Behavior

which would influence the country client to feel Respected and his poise is kept up. As

the Rural Customer would try every one of his endeavors to keep up the connection with

the bank, and he will guarantee that the Dues are constantly paid on time. Following

Bhagirathi's Recommendation, Saraswat Bank had executed the Concept of Single Day
Disbursement of Loans to Rural Customers. What's more, it has been incredibly invited

by the clients and acknowledged. Seeing the Response from the Rural Customers,

Saraswat Bank's Senior Officials are likewise guaranteed and Confident about the Timely

reimbursement by these clients in future.

STRUCTURE OF STUDY

The present research work on “An Empirical Analysis of Non Performing Assets of

DFI” has been divided in eight chapters. The brief discussions of these chapters are as

follows.

1).The first chapter is ‘Introduction’ describes the non-performing assets and DFI’s are

the subject of major concerns to the banking sector and the other non-banking financial

institutions. A loan or lease that does not meet the stated principal amount and the interest

amount payments is termed as non-performing assets. NPA can be classified into

commercial loans which are overdue for more than 90 days, and consumer loans which

are due for more than 180 days, and rise in NPA is due to the overdue of the commercial

loans, there are a lot of pending cases which are being handled by the Indian banks and

other financial institutions.

Development financial institutions (DFI) are financial institutions which were established

provides project appraisal & project finance to the Indian industry. The first DFI to be

established was the Industrial Finance Corporation of India in 1948. DFI are created in

developing countries to resolve market failures.

Non-performing assets are further classified into three categories based on the span for

which the asset has remained non-performing and the recovery of the dues:

i. Substandard Assets: A Substandard asset would be the one, which has remained as a

nonperforming asset for a period of less than or equal to 12 months. Substandard assets

have credit weaknesses that jeopardize the liquidation of the debt and there are also

possibility of incurring and sustaining some losses if the deficiencies are not corrected.

ii. Doubtful Assets: An asset is classified as uncertain if it has remained as a sub-standard

asset for a period of 12 months. A loan classified under the doubtful category has all the

limitation characteristics as defined for the sub-standard assets, also it has added

characteristics that the weakness makes full liquidation or collection, on the basis of the

presently known conditions, facts and values that are highly unsure and questionable.

iii. Loss Assets: A loss asset is one where loss has been identified by the banks internal

auditors and RBI external auditors, but the amount has not been written off fully. These

kinds of assets are also considered as uncollectible, and of little value that its persistence

or maintenance as a bankable asset is not warranted or acceptable though there may be

some salvage or resurgence value.

The Causes of increasing NPAs, at the time of collection of primary data the researcher

has interacted with some of the borrower who has taken the loan from banks and other

financial institutions. The respondents have spoke about the problems which they are

facing for taking the loan or for borrowing the money. They said the government is
constantly saying that we are simplifying the procedure but the fact is that still the

procedure is too complicated and banks are demanding lots of documents. Some time it

becomes so difficult for a borrower to arrange such papers. When the researcher asked

about the repayment of loan amount they seem so reluctant about the repayment.

Surprisingly they are not aware with the concept of nonperforming assets. During

interacting with borrower it is observed that most of the borrowers are not aware with

the stringent recovery norms. Some of the borrowers are also found misleader by the

middle man.

The Financial institutions sector has been facing the several problems of the rising

NPA’s. But the problem of NPA’s is more in public sector banks when compared to

private sector banks and foreign banks, the NPAs in PSB are increasing due to external as

well as internal factors.

The Development and comparisons of banks and non banking financial institutions - The

study involved the comparison between the private sector banks (HDFC Bank & Axis

Bank). The banking industry with the commitment of the government to implement

social control on banks to make them realize the national goal of developing the

economy.

2) The second chapter is ‘Objective of the study’. The main objectives of the study are

to study the NPA of development of financial institute. To examine the existing structure

of the financial system and its various components and to make suggestions. To find the

preventive measure to overcome the problem of NPA and DFI. To improve the efficiency
and effectiveness of the system with particularly reference to the economy of operations,

accountability and profitability of the financial institutions.

A Hypothesis and Scope of the study: A hypothesis testing help to decide on the basis of

sample data, that whether a hypothesis about the universe is likely to be true or false.

Testing the hypothesis enables the researcher to take the decision in the appropriate

direction, to bring out the shortcomings of the research problem and to make valuable

suggestions for solving the problem. This study is under taken to examine the following

hypothesis:-

a). The Management of NPA’s in private banks is relatively easier than that of Public

sector banks.

b). Due to huge NPA’s the profitability of DFI’s is low.

c). There is a week mechanism to handle the NPA’s and DFI

3).The third chapter ‘Research Methodology’, the purpose of research is to discover

answers to the questions through the application of scientific procedures. The main aim

of research is to find out the truth which is hidden and which has not been

discovered as yet. In it we study and analyze the banking industry. What type

of challenges this industry is facing. The research work done through the

comparison, analysis and statistical tools of banks from various sources of data

(primary and secondary) such as Interviews where interacted with different categories of

persons, preparing questioners where the person responded very properly and answered
the questions up to the level of satisfaction. Their answers were great helping me in this

research work also go through Magazines, Journals and websites. As per the requirement

of research, information is derived from the said sources and inculcated in this research

work. Research methodology is a way to systematically solve the research problem. It

may be understood as a science of studying how research is done scientifically.

4). The fourth chapter ‘Review of Literature’ NPA is a ablaze subject for the banking

sector & many authors tried to study the reasons of NPA, problems formed by NPA &

the impact of NPA on the banking sector, furthermore came to a solution or remedies of

the growing problem of NPA.

5). The fifth chapter ‘Data Analysis with Diagram – A Comparative study on NPA &

DFI (with special reference of HDFC & AXIS Bank) Under this chapter, The purpose of

study to find the reasons of increasing trend in NPA’s, leading banks of the countries

were selected. For this research work two major banks HDFC and AXIS were selected

for this research work. The information was also collected from though a specially

designed questionnaire. The specimen of questionnaire designed for the purpose of study

is given in the annexure.

In order to assess the understanding of the respondents of the subject, following questions

were included in the questionnaire.

1. Do you know the significance of management of NPA’s?

2. Do you know the guidelines which are issued by the RBI regarding NPA’s?

3. Objective of NPA’s management.

 4. How NPA’s can be avoided all together by adopting proper strategy.

A COMPARATIVE STUDY ON NPA AND DFI OF HDFC AND AXIS BANK

1). Sector Wise Non Performing Advances of HDFC Bank and Axis Bank - In case

of HDFC Bank, In priority sector increase of NPA is observed during first years and later

on in the year 2014 there is phenomenal decrease is observed in NPA but again from very

next year it started going up in 2017 again it gone down. It shows fluctuation in NPA is

observed in the priority sector.

In the public sector, year 2012, 2013 and 2014 it went up continuously, but from the year

2015 it has come down and finally in 2017 remarkable decline is observed. The same

trend is clearly visible in the case of Axis Bank. It also depicted that special care is

required to be taken to control the NPA’s from the other areas.

2). Bank Group wise NPA’s (HDFC & AXIS BANK)

In case of HDFC Bank more or less increasing trends in NPA is observed during the

course of study. Only in the year 2015 there is a slight downfall is observed. But it is

quite minimum that’s why it does not make sense because again from the very next year

it started going up and went to 31.33% in the year 2017.

If we talk about the Axis bank the same trend is visible and it has a increase continuously

and 32.54% is noticed in the year 2014. In 2015, there is slight down fall is observed and
it is recorded up to the level of 32.01 % but from the very next year again it started

increasing and the year 2017 slight downfall is noticed.

3). Percentage of Gross NPA to Gross Advance and Net NPA to Net Advance

(HDFC & AXIS BANK)

The trend analysis in table 5.5 clearly exhibit that gross NPA against gross advances is

continuously increasing while in the case of Net NPA against Net advances also exhibits

the same trends. This is the indication that whether it is a matter of Gross NPA or Net

NPA in both the situation increasing trend is observed.

In case of HDFC Bank the trend of Gross NPA’s shows the declining trends while on the

other hand Net NPA’s to Net Advances is showing increasing trends up to year 2014 but

in the year 2015 its slightly went down but again on the very next year it started

increasing and in the year 2017 it went up to the level of 0.33%.

4). Gross NPA/Gross Advances and Net NPA/Net Advances of HDFC & Axis

Bank

In this table comparison is brought about between Gross NPA & Net NPA as to HDFC

Bank with respect to the total advance made as far as Gross NPA is consent fluctuating

trend is observed as in the year 2012. From the year 2016 it started increasing and in the

year 2017, Gross NPA touches the level of 1.30%.

The trend of Gross NPA in the case of Axis Bank it remained continuously increasingly

except in the year 2014 the declining Gross NPA is noticed & it is recorded at the level of

0.93% but from the year 2015 again it started increasing and it touched the level of 1.10%

in the year 2017.

5). Gross NPA and Net NPA in Relation to Total Assets (HDFC & Axis Bank)

In the said table it shows that HDFC Bank Gross NPA and Net NPA with relation to the

total assets. The Gross NPA in the case of HDFC Bank exhibits the trend of upward

movement. From the year 2014 to 2017 it maintained the increasing trends.

In the case of Axis Bank the Gross NPA and Net NPA in relation to total assets exhibits

that gross NPA maintained the increasing trend during the course of study. The same

trend was observed up to the year 2016 when it was 1.67% but in the year 2017 huge

change in the figure of Gross NPA was noticed and the figure went up to the level .

The concept and significance of NPA’s in banks are to understand the impact of NPA’s

on the operations of the banks, examine the guidelines issued by RBI regarding income

recognition and provisioning norms in respect of both cooperative and commercial banks.

What are the methods adopted by the RBI to look after NPA management.

6).The sixth chapter is ‘Findings and Results’. At the point when a bank is not ready to

recuperate the advance given or not getting consistent enthusiasm on such advance, the

stream of assets in saving money industry is influenced. Prudent steps to be taken by the

banks against the borrowers deceitful act regarding lodging advance is talked about under
section 6 of this proposal. Political obstruction and political preference for endorsing has

been a reason for increasing NPA.

7).The seventh chapter is ‘Limitations and Suggestions’. To know about what steps are

being taken by the Indian banking sector to reduce the NPAs. , Why NPA’s are the great

challenges to banks. The data used in the study is based on annual accounts which

contain normal accounting limitation. It was tried to use latest data, figure and facts for

the research work whenever it was possible, however in certain cases latest data could not

be available but the same has not affected the research work in `any way.

Mentioned suggestions to reduce NPA’s will effective to improve the management of

NPA in Banks. As the law of India has simplified the procedure but still it is the

impression that the procedure is too complicated, so either the process is still complicated

or the borrower is not aware with this. So, financial institutions need to advertise this

relation among the public. We will have to make them aware regarding the stringent

norms of recovery. As the borrowers are not aware with these facts.

8).The last chapter ‘Conclusion’ concludes the study with summary of work and

structure of study.