‘‘A STUDY ON IMPACT OF NPA ON PROFITABILITY OF KOTAK

MAHINDRA BANK VIJAYAPURA BRANCH, BANGALORE”

Synopsis submitted in partial fulfillment of the requirements for the award for the
degree of

MASTERS OF BUSINESS ADMINISTRATION

Of
BENGALURU CITY UNIVERSITY

By:

Name: LIKHITHA R
Reg No: MB200048

Under the guidance of

PROF.SUSMITHA TP

International Institute of Business Studies

Bangalore City University
2020– 2022
 TITLE OF THE STUDY:

A STUDY ON IMPACT OF NPA ON PROFITABILITY OF KOTAK

MAHINDRA BANK VIJAYAPURA BRANCH, BANGALORE.

INTRODUCTION:

The banking industry plays a critical role in the economy of our country. It grew in leaps and bounds and
so is the complexity associated with it. Now a day’s Loans measurement from time to time and recovery
mechanism of NPA is a significant role in the banking industry.

NPA are those loans dispersed by banks or financial institutions which borrowers default in making
payment of principal amount or interest. When a bank is not able to recover the loan given or not getting
regular interest on such a loan, the flow of funds in the banking industry is affected. The issue of Non
Performing Assets has been discussed at length for the financial system all over the world. The dilemma
of NPAs is not only distressing the banks but also the entire wealth of the country.

In fact, the level of NPAs in Indian banks is nothing but a reflection of the state of health of the industry
and trade.In fact, the level of NPAs in Indian banks is nothing but a reflection of the state of health of the
industry and trade. Providing credit for economic activities is the prime duty of banking. Lending is
generally encouraged because it has the effect of funds being transferred from the system to productive
purposes, which results in economic growth. However, lending also carries a risk called credit risk, which
arises from the failure of a borrower.

In this situation, there is a need of the researcher to address how the non-performing assets of the banks
affect the bank’s profitability, growth and development. For this, the present study is going to discuss this
issue. The study covered the Review of Literature, Statement of the problem, Objectives of the study,
Methodology, Results & Discussion and Conclusion.

STATEMENT OF THE PROBLEM:

A sound banking sector is important for the flourishing economy. The banking industry is growing in
leaps and bounds, and so is the difficulty associated with it. In fact, the level of NPAs in Indian banks is
nothing but a reflection of the state of health of the industry and trade.

Non-recovery of loans along with interest forms a major hurdle in the process of the credit cycle.The
issue of Non Performing Assets has been discussed at length for the financial system all over the world.

When a bank is not able to recover the loan given or not getting regular interest on such a loan, the flow
of funds in the banking industry is affected. NPA growth involves the necessity of provisions, which
reduces the overall profits and shareholders’ value.
If the level of NPAs is high it leads to the high probability of credit defaults that affect the profitability
and net-worth of banks and also eat away the value of the asset. Against this background, the present
study focused on the level of NPA and how it influences the profitability of banks.

OBJECTIVES OF THE STUDY:

The present study has the following objectives:

 To Know the level of Non-Performing Assets of Kotak Mahindra bank.

 To identify the impact of Non-Performing Assets on profitability.

 To offer the recommendations to the regulators and policymakers.

 To make proposals for reducing Non-Performing Assets (NPAs) in Kotak Mahindra Bank.

SAMPLING:

In this study totally focused and taken information regarding NPA of Kotak Mahindra
Bank. Totally the data of last previous 3 years (i.e 2019 -20 to 2021-22) have been taken
for this study.

SOURCES OF DATA:

1. Primary data :
Primary data is the kind of data that is collected directly from the data source without
going through any existing sources.
Primary data for this study getting by the employees working in Kotak Mahindra Bank
and also by conversation with Branch manager.

2. Secondary data :
Secondary data is the data that has been collected in the past by someone else but made
available for others to use.

Secondary data for this study will be getting through websites, Journals, etc.

This study contains both data according to the topic.

TOOLS FOR DATA COLLECTION :

The tools used for this study is quiet simple. First collecting primary data from working place of
Kotak Mahindra bank at Vijayapura by conducting personal interview with employees working there
and also major information from the branch head.
Secondly using secondary data by visiting websites and studying books regarding NPA and
journals, etc.

PLAN OF ANALYSIS:
The banking industry plays a critical role in the economy of our country. So measuring and maintaining

the asset quality of the banks is important for the development of the banks.The impact of Gross NPA

significantly influences the ROA negatively and also Net NPA positively influences the ROA of Kotak

Mahindra bank. So the bank should take care to ensure that they give loans to credit worthy customers

only.

Signature of the Candidate Signature of the Guide

(LIKHITHA R) (PROF.SUSMITHA TP)

Date:

Place: BANGALORE
Signature of the Candidate Signature of the Guide
(LIKHITHA R) (PROF.SUSHMITHA)

Date:

Place: BANGALORE