A SYNOPSIS ON

“AN ANALYTICAL STUDY OF NON - PERFORMING ASSETS”

WITH THE SPECIAL REFERENCE TO

SHRI LAKSHMI URBAN NIDHI LIMITED PATHRI

Submitted To

SHRI SHIVAJI COLLEGE PARBHANI Yashwantrao Chavan

Maharashtra Open University, Nashik
In the partial fulfilment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION (M.B.A.)

SUBMITTED BY

Miss. SHAILEJA SHESHERAO MAGAR PRN No.

2020017001954192
UNDER THE GUIDENCE OF
pro.dr.chlindrawar ganesh

Through The Coordinator

Study Centre Code – 8701A

INTRODUCTION

A non - performing assets (NPA) refers to a classification for loans or advances that are in
default or are in arrears on scheduled payments of principle or interest. In most cases, debt is
classified as nonperforming when loan payment have not made for a period of 90 days. While
90 days of non-payment is the standard, the amount of elapsed time may be shorter or longer
depending on the terms and conditions of each loan.
Although the most common non - performing assets are term loan, there are six other
ways loans and advance are NPAs.
• Overdraft and cash credit (OD/CC) accounts left out -of-order for more than 90
days.
 • Agricultural advances whose interest or principle installment payments remain
overdue for two crops/ harvest seasons for short duration crops or overdue one
crop season for long duration crops.
• Bill over due for more than 90 days for bills purchased and discounted.
• Expected payment is overdue for more 90 days in respect of other accounts.
• Non – submission of stock statements for 3 consecutive quarters in case of cash
credit facility.
• No activity in the cash credit, overdraft, EPC, or PCFC account for more than 91
days.

Types of Non – Performing Assets -

Banks are required to classify non - performing assets in one of 3 categories according to how
long the asset has been non – performing - Sub-standard asset, doubtful assets, and loss
assets.

A sub-standard asset is an asset classified as an NPA for less than 12 months. A doubtful asset
is an asset that has been non- performing for more than 12 months. Loss assets are assets
with losses identified by the bank, auditor, or inspector and have not been fully written off.

The Effects of NPA –

Carrying non – performing assets, also referred to as non – performing loans, on the balance
sheet places three distinct burdens on lenders. The non – payment of interest or principle
reduces cash flow for the lender, which can disrupt budget and decrease earnings. Loans are
provisions, which are set aside to cover potential losses for defaulted loans are determined,
they are written off against earning.
The students want an opportunity to carry out conduct research in ‘M. D. PAWAR PEOPLES
CO. OP. BANK LTD. URUN ISLAMPUR.

IMPORTANCE AND SIGNIFICANCE OF STUDY

Non – performing assets of bank are one of the biggest hurdles in the way of socio-economic
development of India. The level of NPAs of the banking system in India is still to high. It affects
the financial standing of the bank so that it is a heavy burden to the bank. A vigorous effort
has to be made by the bank to strengthen their internal control and risk management system
and to setup early warning signal for timely detection and action. The problem of NPAs is tied
up with the issue of legal reforms. This is an area which requires urgent consideration as the
present system that substantially delays in arriving at a legal solution of a dispute is simply not
tenable. The absence of a quick and efficient system of legal redress constitutes and important
‘Moral hazards’ in the financial sector, as it encourages imprudent borrowers.
 RATIONAL BEHIND THE STUDY

• The problem of NPA has arisen due to basic objective behind lending of public sector
bank that is social welfare. In most of the cases, the bank has to keep into
consideration the objective of the social welfare and uniform economic growth.
• The problem of NPA is more prevalent and serious in case of public sector banks in
comparison to private sectors banks because of the philosophy being followed by
public sector banks and lack of managerial skill to assess the credit worthiness of the
borrower. To some extent political reasons also be held accountable for the same.
• Economic conditions along with lack of due diligence by banks can be considered as
main reason for mounting of NPAs in banks.
• Among the various parameters being used for assessing the efficiency of banks and
financial institutions, the level of NPA of the respective institutions/ bank is considered
very important. Proper documentation and active role of management of banks can
help in reducing problem of NPA.
• Emergent need of stringent legal provisions is being felt by all banks so as to recover
the funds block in NPA.
 OBJECTIVES OF THE STUDY

• To study the financial statements and the impact of NPA on its probability.
• To study the trends of NPA for last 5 years.
• To study the impact of originating, internal, external, factors of NPAs in the banks.
• To suggest the strategies to tackle the minimize them.
 HYPOTHESIS OF THE STUDY

• Socio – economic factors have significant influence on the loan amount paid by the
borrower.
• There is significant difference in the response on reasons for failure of repaying the
loan.
• The incidence of NPAs is due to the failure of the borrower or the policy deficiency of
the banks and regulatory bodies.
 RESEARCH METHODOLOGY

1.SAMPLE –
To test the hypothesis, financial statements of past 5 years of M. D. Pawar CO. OP. Bank Ltd.
Islampur. is taken into consideration for the period starting on 1st April 2016 to 31 March 2021.

The required data for study is collected by way of two methods, which are as follows

2. SOURCES OF DATA COLLECTION –

• PRIMARY DATA –
The primary data is collected from the experienced officers/ concerned staff with the help of
manager of banks. The subject was thoroughly discussed with staff concerned.

• SECONDARY DATA –
The secondary data are from published materials such as journals, periodicals, news items, and
annual report of bank of year 2016, 2017, 2018, 2019 to 2020- 2021.

3. Tools of data Collection –

As most of data is of quantitative in nature, data collection will be through face to face
conversation annual financial statement of the company.

EXPECTED CONTRIBUTION OF THE STUDY

A study of this nature is essential at present when banks are facing various challenges in the
face of reaching reforms in the changing environment. The study seeks to offer specific
suggestions to resolve the problem faced by commercial banks, which are highlighted in the
present study as so to improve their performance in the country.
The study has greater relevance and significance in the present context of financial sectors
reforms, as earlier studies where not focused on micro prospective of the macro level problem
of NPAs in banks.

CHAPTERISATION

Chapter 1 - Introduction to study

Chapter 2 – Company Profile

Chapter 3 – Theoretical Background

Chapter 4 – Data analysis and Interpretation

Chapter 5 – Findings and Observations

Chapter 6 – Suggestions and Conclusion

Bibliography

Appendix.