MBA Finance SIP

A
PROJECT REPORT
ON
“A STUDY ON NON-PERFORMING ASSETS”
AT
NAMCO BANK, NASHIK
SUBMITTED BY
RAHUL DIPAK NIKAM
UNDER THE GUIDANCE OF
DR. NAMRATA DESHMUKH
SUBMITTED TO
UNIVERSITY OF PUNE
IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF

THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION (MBA)
MET’S INSTITUTE OF MANAGEMENT

BHUJBAL KNOWLEDGE CITY, ADGAON
NASHIK – 422003
2022-23
1
MET’S INSTITUTE OF MANAGEMENT
BHUJBAL KNOWLEDGE CITY, ADGAON
NASHIK – 422003
Department of Master of Business Administration
CERTIFICATE
This is to certify that Mr. Rahul Dipak Nikam has completed her project
work satisfactorily as a partial fulfillment of the requirement of MBA Course
(2022-23) during the academic year 2022 – 2023.
Title: “A STUDY ON NON-PERFORMING ASSETS AT NAMCO BANK”
Dr. Namrata Deshmukh Dr. Atul Thombre Dr. Nilesh R. Berad

Project Guide Head of Department Director
External Examiner
2
COMPANY CERTIFICATE
3
STUDENT’S DECLARATION
I undersigned hereby declare that, the project entitled, “ A STUDY ON NON-

PERFORMING ASSETS AT NAMCO BANK” is executed as per the course
requirement of two year full time MBA program of Savitribai Phule Pune
University. This report has not been submitted by me or any other person to any
other University or Institution for a degree or diploma course. This is my own and
original work.
Place: Nashik
Date: Rahul Dipak Nikam
4
ACKNOWLEDGEMENT
I wish to express my sincere thanks to our respected Director, Dr. Nilesh Berad Sir, and deep
sense of gratitude to Dr. Atul Thombre Sirour HOD and MET’s Institute of Management,
Nashik for their kind support and encouragement in completion of the Internship report.
I thank Dr. Namrata Deshmukh sir, my guide for guiding through this entire project
and helping me see through various aspects of it.
I would also like to thank our bank manager Mr. Sanjay Bhimashankar Desale for his kind
support and gave me this golden opportunity to do this
project in their prestigious financial services, which helped me to learn various concepts.
Finally, I would like to express my sincere thanks to my parents, my friends and all the staff
of MBA department and staff of NAMCO Bank for their valuable suggestions in
completing this Project Report.
5
EXECUTIVE SUMMARY
Non-Performing Assets have turned to be a major stumbling block affecting the profitabilityof Indian
banks. Before 1992, banks did not disclose the bad debts sustained and provisions,made by them fearing
that it may have an adverse effect. Owing to the low level of profitability, bank owned funds had to be
strengthened by repeated infusion of additional capital by the government. The introduction of prudential
norms by The Reserve Bank of India strengthened the banks’ financial position and enhanced transparency
is considered to be a milestone measure in the financial sector reforms. These prudential norms relate to
Income recognition. Asset classification, provision for Bad and Doubtful debts and Capital adequacy.
An Exploratory study was adopted to achieve the objectives of the study, and the study was conducted in
The NAMCO Co-Operative Bank Ltd., Nashik Merchants on “Non-PerformingAssets”. The general
objective of the study was to analyse the Non-Performing Asset level inThe Nashik Merchants Co-Operative
Bank. However the study was conducted with the following specific objectives:
1. To analyses the Non-Performing Assets level of NAMCO Bank.
2. To identify the nature of the problems associated with Non-Performing Assets.
3. To study the impact of Non-Performing Assets on the profitability of the firm.
4. To know what steps are being taken by NAMCO Bank to reduce their Non-PerformingAssets?
The major limitation of the study was the paucity of time. Even then, maximum care has beentaken
to arrive at appropriate conclusion. The method adopted for collection of data was personal
interview with bank officials. It was also sourced from the secondary data. After collecting data
from the respective sources, analysis & interpretation of data has been made based on the findings,
logical conclusions are drawn and future suitable suggestions and recommendations are bought out.
The entire project is presented in the form of a report usingchapter scheme in a logical sequence
from Introduction to Annexure & Bibliography.
6
INDEX
Serial No. Particulars Page

No.
Title Page 1
Institute Certificate 2
Company Certificate 3
Student Declaration 4
Acknowledgement 5
Executive summary 6
1 Introduction
1.1 About the Internship Topic 9
1.2 Topic chosen for the study
1.3 Need for the study
1.4
Research methodology
Objectives of study
10
Scope of study
Limitation of study
Sources of data
Types of research
Review of literature 11
2 Theoretical Background
2.1 History, Evolution and Growth of banking in India
2.2 Industry details
2.2.1 History of banking in India
14
2.2.2 15
Types of Co-operative Bank
2.2.3
18
Historical Perspective
21
2.2.4 NAMCO bank 26
2.2.5 Objectives of NAMCO bank 32
2.2.6 Non-performing assets 38
2.2.7 Causes of NPA
3 Data analysis and Interpretation 48
7
4 Summary of Findings, Suggestions and Conclusion 52
Financial Statements of 2021 55
Bibliography 58
Table Table Name Page

No. No.
4 Table showing Gross & Net Non-Performing Assets from 2017- 48
. 2021
1
4 Table showing the Percentage of Non-Performing Assets from2017- 49
.
2021
2
4 Table showing the comparative percentage of Gross Non- Performing 51
.
Assets of the bank with other banks from 2019-2021
3
4 Table showing the comparative percentage of Net Non- 51
.
Performing Assets of the bank with other banks from 2019-2021
4
Table Table Name Page No.
No.
4 Graph showing Gross & Net Non-Performing Assets from 2017- 48
. 2021
1
4 Graph showing the Percentage of Non-Performing Assets from2017-21 49
.
2
4 Graph showing the comparative percentage of Gross Non- Performing 51
. Assets of the bank with other banks from 2019-21
3
4 Graph showing the comparative percentage of Net Non- Performing 52
. Assets of the bank with other banks from 2019-21
4
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CHAPTER 1.
INTRODUCTION
9
NON PERFORMING ASSETS
Non-Performing Assets NPA (Non-Performing Assets) is defined as an advance where payment of interest
or repayment of principal amount or both remains unpaid for a period of more than 90 days. Till an asset
generates the income expected from it, it will be treated as performing assets but as soon as it fails to
generate the expected income, it becomes into the category of Non-Performing Assets. This is the moment
when it starts to create problem for banking industry. NPA have been affecting the Indian financial sector
badly from long time. NPA’s are prime indicators of credit risks. Narasimham committee was set up by RBI
to study the problems faced by Indian banking sector and take appropriate measures to solve them. This
committee brought up the identification of NPAs in banking sector, which has been eroding the profitability
of Banks, but proper measures have not been taken in respect of this. With passing time Banks implemented
many provisions and beneficial measures to eliminate NPA, which helped them to overcome few problems
regarding NPA, but soon they found out that NPAs cannot be eliminated completely, they can just be
reduced with proper implementation and management of funds.
It is now recognised that the banks and financial institutions in India express the problems of increase of
Non-Performing Assets and the problem is flattering more and more uncontrollable. In order to get the
condition under switch, several actions have been occupied i.e. announcing of Securitization and
Reconstruction of Financial Assets and Implementation of Security Interest Act, 2002 by Parliament, which
was a phase to removal of Non-Performing Assets in the Indian economy.
Topic Chosen for study: A Study on The Non-Performing Assets at NAMCO Bank, Nashik.
Statement of the problem

Banking Institution provides financial assistance to business units that help in the growth of the country. In
present years the Non-Performing Assets, loans and advances given by the bank are not up to the yielding
expected returns. The Non-Performing Assets are growing in such a rate where banks’ profits are balanced
to their Non-Performing Assets. Hence, there is need to study the cause of such Non-Performing Assets and
sound steps are taken by banking institutions and the Government to cut down such Non-Performing Assets.
Need for the study
To investigate the performance of a bank Non-Performing Asset is a significant constraint as it result in

diminishing boundary and developed provisioning necessities for doubtful debts. The banking sector is
affected by Non-Performing Asset. It disturbs profitability as well as liquidity, in addition to it posing risk
on quality of asset and endurance of banks. The intention of the study is to evaluate the Non-Performing
Assets of The Nashik Merchants City Co-operative Bank and its influence on effectiveness and to see the
link amongst total advances, Net Profits, GROSS & NET NPA. The facts have been premeditated by using
coefficient and correlation and tables. The significant point to be renowned is that the deterioration of Non-
Performing Asset is crucial to progress productivity of banks.
Therefore, the proposed research will be an attempt towards examining the effectiveness of Non-Performing
Assets recovery measures.
Objectives of the study
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• To study the concept of Non-Performing Assets and its main impact on Indian Banking Industry.
• To study the various levels of NPAs with reference to Nashik Merchants Co-operative Bank Ltd.
• To study the trend of trend of NPA on various sector’s from last five years.
• To study the relationship between various co-operative banks with Nashik Merchant Co-operative Bank Ltd.
• To suggest various measures for the bank to reduce the level of NPA.
Scope of the study
The project entitled “A study on NPA with reference to Nashik Merchants Co-operative
Bank Ltd.,” was carried out in Nashik Merchants Co-operative Bank Limited, situated in Nashik. The study
was undertaken to have a comprehensive examination of the NPA management of bank and also to suggest
how NPA can be controlled so that it doesn’t hamper the financial position of bank. Bank’s 5 years’ annual
report are verified for getting the information for the study.
LIMITATION OF STUDY:
• Time factor is other limitation in this study, because the bank officials didn’t have proper time to meet and
solve mine queries of NPA.
• Some of my recommendations are not for all banks because they are basis on high cost.
• The amount of loans and advances are also limited so it is obvious that the non-performing of this bank
will less than the other comparatives banks.
• Non-performing asset cannot be totally converted into performing asset but only these are some solutions
for reducing it
Sources of Data
Primary Data:
The facts were collected over direct interview with chief manger and staff of the bank.
Secondary Data:
• Annual report of The Nashik Merchant Co-operative Bank ltd.
• Case Study
• Other necessary theoretical requirement
• The information has been collected from the other sources to make a project report effective and
informative. That data are collected from various website and financial management for making concept
very clear.
Type of Research
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The study is both an Analytical and a Descriptive reading on the Management of NPA of Nashik Merchants
Co-operative Bank Ltd. The study is largely analytical in the sense that it analysis various financial variables
based on secondary data. It also implements descriptive research methodology in order to determine the
views of bankers to know their views on the management of NPAs.
Review of Literature:
Bloem and Gorter (2001) suggested that a more or less predictable level of non-performing loans, though it
may vary slightly from year to year, is caused by an inevitable number of „wrong economic decisions by
individuals and plain bad luck (inclement weather, unexpected price changes for certain products, etc.).
Under such circumstances, the holders of loans can make an allowance for a normal share of non-
performance in the form of bad loan provisions, or they may spread the risk by taking out insurance.
Enterprises may well be able to pass a large portion of these costs to customers in the form of higher prices.
For instance, the interest margin applied by financial institutions will include a premium for the risk of non-
performance on granted loans. At this time, banks‟ non-performing loans increase, profits decline and
substantial losses to capital may become apparent. Eventually, the economy reaches a trough and turns
towards a new expansionary phase, as a result the risk of future losses reaches a low point, even though
banks may still appear relatively unhealthy at this stage in the cycle.
“Non-Performing Assets in co-operative banks” By K Ravichandran and R. Mayilsamy (2008) Non-

Performing Assets (NPAs), as a syndrome, though not new to the Cooperative Banking Structure has been
causing trouble and confusion during the recent past. Because NPAs as the percentage to total recoverable
funds acts as a constraint on the efficiency of the lending institution and their capacity to borrow funds and
lend to agriculture. Inordinate delay in recovery of loan builds up NPAs, which affect the health of
Cooperative Banks. The Committee on Banking Sector Reforms reported that funds blocked in NPAs
increase the cost of financial inter-mediation as banks resort to raising deposits and borrowings at a higher
Costas a measure to minimize the balance between the cash outflow and cash inflow arising out of the NPAs
and the money locked up NPAs are not available for productive uses and to the extent that banks seek to
make provisions for NPAs. This has an adverse impact on the profitability of the banks both in short and
long run.
“Non-Performing Assets in commercial banks” By Vibha Jain (2007) The book provides a comprehensive
coverage of the challenges facing the banking industry in India in tackling the bargaining problem of Non-
Performing Assets (NPAs). It traces the history of growth of NPAs in the banking industry caused initially
by directed lending due to strong government hold on banks. The government control also kept the issue
under wraps for a long time, understanding the enormity of the problem only at the advent of economic
reforms in early nineties. The book elucidates the various measures taken by Reserve Bank of India to
Control NPAs over the last decade and a half and critically analyses the success obtained in containing the
same. “Management of Non-Performing Assets in Banks and Financial Institutions” By B. Ramachandra
Reddy (2008) Non-performing assets (NPAs) not only eat into profitability and hamper their ability to
recycle funds, but also shake the public confidence which is crucial for existence of any financial institution.
The present trend of NPAs is alarming and calls for rigorous and concerted efforts by banks and financial
institutions as well as government. This book is based on the selected papers presented by academicians‟
and bankers in a national seminar which discussed various aspects of the issue in detail
Chandan Chatterjee, Jeet Mukherjee and Dr. Ratan Das (2018) focuses the issue of increasing non-
performing assets in banking segment chiefly in various mounting economy. This editorial effort is an
emphasis primarily on the reasons and significances of NPAs, procedure vices of RBI, creativities of Indian
Government, scenario of NPA segment and bank group wise and lastly the remedial actions for NPAs in
India.
Priyanka Mohnani and Monal Deshmukh (2019) made an effort to estimate the effective presentation of
the particular PSBs and Private bank in India and also analyse how efficient Public and Private sector banks
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can manage NPA. The degree of NPA was moderately developed in public sectors banks associated to
private banks understudy but today, they have accomplished the quantity minor conclusion.
Srinivas K. T. (2019) has given the motives for loans flattering NPA in the Indian Commercial Banks Area
and to stretch appropriate suggestions to overwhelm the problems. The clang of the banking segment may
have an adverse effect on further segments. A banker will be very suspicious in advancing, since banker out
of his capital is not lending money. A majority share of the money which is hired arises from the payments
established from the public and government segment. Currently NPA in the banking segment is dispute
subject since particularly in nationalized banks NPA is increasing year by year.
Shalini H. S. (2019) analyses the consequence of diverse variables on the non-performing agriculturalists,
as the chief objective of the learning is to identify the problems challenged by the Indian farmers in giving
back the hired amounted with consistent sum of interest. The methods used for facts gathering are telephonic
interview to gather adequate evidence and Chi square analysis test to know the effect on the non- payment of
interest with the variables.
Mayur Raoa and Ankita Patel (2021): Considers the collective information of public, private and foreign
sector banks and attempts to match, analyse and understand the NPA management form the year 2009-2019.
The findings reveal the proportion of Gross NPA to Gross Advances in growing for public banks, ratio of
Loss Advances to Gross Advances are higher in foreign banks, the estimated Gross NPA for 2020 is also
extra in public banks as associated to private and foreign banks and from the ANOVA test, it is concluded
share of Gross NPA to Gross Advances for public sector, private sector and foreign banks does not have
important transformation between 2009 to 2019.
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THEOROTICAL BACKGROUND
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INDUSTRY DETAILS:
A bank is a business that provides banking services for profit. Traditional banking services include receiving
deposit of money, lending money and processing transactions. Some banks (called Banks of issue) issue
banknotes as legal tender. Many banks offer ancillary financial services to make additional profit; for
example: selling insurance products, investment products or stock broking. Currently in most jurisdictions
the business of banking is regulated and banks require permission to trade. Authorizations to trade is granted
by bank regulatory authorities and provide rights to conduct the most fundamental banking services such as
accepting deposits and making loans.
What is Bank?
“Banking is an establishment which makes to individual, such advances of money as may be required &
safely made to which individuals entrust money when not needed by them for use”. - Walter leat
in general sense, banking is writing of supplement, day-books ledger posting, balancing preparation of pass-
books, carrying outstanding instruction, interest calculation, cash transfers, outward and inward cleaning,
etc.
Bank is a lawful organization, which accepts deposits that can be withdrawn on demand. It also lends money
to individuals and business houses that need it. Banks also render many other useful services – like
collection of bills, payment of foreign bills, safe-keeping of jewellers and other valuable items, certifying the
credit-worthiness of business, and so on. Banks accept deposits from the general public as well as from the
business community. Anyone who saves money for future can deposit his savings in a bank. Businessmen
have income from sales out of which they have to make payment for expenses.
They can keep their earnings from sales safely deposited in banks to meet their expenses from time to time.
Banks give two assurances to the depositors:
a. Safety of deposit
b. Withdrawal of deposit, whenever needed
On deposits, banks give interest, which adds to the original amount of deposit. It is a great incentive to the
depositor. It promotes saving habits among the public. On the basis of deposits banks also grant loans and
advances to farmers, traders and businessmen for productive purposes
Thereby banks contribute to the economic development of the country and well-being of the people in
general. Banks also charge interest on loans. The rate of interest is generally higher than the rate of interest
allowed on deposits. Banks also charge fees for the various other services, which they render to the business
community and public in general. Interest received on loans and fees charged for services which exceed the
interest allowed on deposits are the main sources of income for banks from which they meet their
administrative expenses. The activities carried on by banks are called banking activity.
“Banking” as an activity involves acceptance of deposits and lending or investment of money. It facilitates
business activities by providing money and certain services that help in exchange of goods and services.
Therefore, banking is an important auxiliary to trade. It not only provides money for the production of goods
and services but also facilitates their exchange between the buyer and seller. You may be aware that there
are laws which regulate the banking activities in our country. Depositing money in banks and borrowing
from banks are legal transactions.
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History of Banking in India:
Without a sound and effective banking system in India it cannot have a healthy economy. The banking
system of India should not only be hassle free but it should be able to meet new challenges posed by the
technology and any other external and internal factors. For the past three decades India's banking system has
several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer
confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to
the remote corners of the country. This is one of the main reasons of India's growth process. The
government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of
14 major private banks of India. Not long ago, an account holder had to wait for hours at the bank counters
for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days when the most
efficient bank transferred money from one branch to other in two days. Now it is simple as instant
messaging or dials a pizza. Money has become the order of the day. The first bank in India, though
conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be
segregated into three distinct phases.
They are as mentioned below:
• Early phase from 1786 to 1969 of Indian Banks
• Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.
• New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after
1991. To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase III
Phase I:
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank.
The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras
(1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920
and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans
shareholders. In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India,
Central Bank of India, Bank of Baroda, Canada Bank, Indian Bank, and Bank of Mysore were set up.
Reserve Bank of India came in 1935. During the first phase the growth was very slow and banks also
experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small.
To streamline the functioning and activities of commercial banks, the Government of India came up with
The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per
amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for
the supervision of banking in India as the Central Banking Authority. During those day’s public has lesser
confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the savings bank
facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to
traders.
Phase II:
Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it
nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and
semi-urban areas. It formed State Bank of India to act as the principal agent of RBI and to handle banking
transactions of the Union and State Governments all over India. Seven banks forming subsidiary of State
Bank of India was nationalized in 1960 on 19th July, 1969, major process of nationalization was carried out.
16
It was the effort of the then Prime Minister of India, Mrs Indira Gandhi. 14 major commercial banks in the
country was nationalized
Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with seven more
banks. This step brought 80% of the banking segment in India under Government ownership.
The following are the steps taken by the Government of India to Regulate Banking Institutions in the
Country:
• 1949: Enactment of Banking Regulation Act.
• 1955: Nationalization of State Bank of India.
• 1959: Nationalization of SBI subsidiaries.
• 1961: Insurance cover extended to deposits.
• 1969: Nationalization of 14 major banks.
• 1971: Creation of credit guarantee corporation.
• 1975: Creation of regional rural banks.
• 1980: Nationalization of seven banks with deposits over 200 Cr
Banking Overview:
The major participants of the Indian financial system are the commercial banks, the financial institutions
(FIs), encompassing term-lending institutions, investment institutions, specialized financial institutions and
the state-level development banks, Non-Bank Financial Companies (NBFCs) and other market
intermediaries such as the stock brokers and money lenders. The commercial banks and certain variants of
NBFCs are among the oldest of the market participants. The FIs, on the other hand, are relatively new
entities in the financial market place.
Historical perspective:
Bank of Hindustan, set up in 1870, was the earliest Indian Bank. Banking in India on modern lines started
with the establishment of three presidency banks under Presidency Bank's act 1876 i.e. Bank of Calcutta,
Bank of Bombay and Bank of Madras. In 1921, all presidency banks were amalgamated to form the Imperial
Bank of India. Imperial bank carried out limited central banking functions also prior to establishment of
RBI. It engaged in all types of commercial banking business except dealing in foreign exchange. Reserve
Bank of India Act was passed in 1934 & Reserve Bank of India (RBI) was constituted as an apex bank
without major government ownership. Banking Regulations Act was passed in 1949. This regulation
brought Reserve Bank of India under government control. Under the act, RBI got wide ranging powers for
supervision & control of banks. The Act also vested licensing powers & the authority to conduct inspections
in RBI. In 1955, RBI acquired control of the Imperial Bank of India, which was renamed as State Bank of
India. In 1959, SBI took over control of eight private banks floated in the erstwhile princely states, making
them as its 100% subsidiaries. RBI was empowered in 1960, to force compulsory merger of weak banks
with the strong ones. The total number of banks was thus reduced from 566 in 1951 to 85 in 1969. In July
1969, government nationalized 14 banks having deposits of Rs.50 corer & above. In 1980, government
acquired 6 more banks with deposits of more than Rs.200 corer. Nationalization of banks was to make them
play the role of catalytic agents for economic growth. The amendment of Banking Regulation Act in 1993
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saw the entry of new private sector banks. Banking Segment in India functions under the umbrella of
Reserve Bank of India. This segment broadly consists of:
1. COMMERCIAL BANKS
2. CO-OPERATIVE BANKS
Commercial Banks:
The commercial banking structure in India consists of:
• Scheduled Commercial Banks
• Unscheduled Banks
Scheduled commercial Banks constitute those banks which have been included in the Second Schedule of
Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only those banks in this schedule which satisfy
the criteria laid down vide section 42 (60 of the Act. Some co-operative banks are scheduled commercial
banks albeit not all co-operative banks are. Being a part of the second schedule confers some benefits to the
bank in terms of access to accommodation by RBI during the times of liquidity constraints. At the same
time, however, this status also subjects the bank certain conditions and obligation towards the reserve
regulations of RBI. This sub sector can broadly be classified into:
1. Public sector
2. Private sector
(1) Public sector banks
In the history of Indian banking, nationalization of imperial bank of India was considered as a landmark.
Another land mark in the history of Indian banking was the nationalization of 14 large sized commercial
banks on 19th July 1969. The nationalized commercial bank was considered as a separate corporate body’s
establishment under the banking company act of 1970. The new 14 banks came to be called public sector
banks being owned managed by government of India. According to socialist thinkers “financial institution
are among the most important levers that any society has at its command for the achievement of its social
and economic objectives. Public ownership, it was believed, would curb down the tendency open the part of
the banks to provide for speculative and other unproductive purposes
(2) Private sector banks
Government of India nationalized private sector banks two times. First time in 1969 and second time in
1980. In 1980 the government nationalized only those banks whose hundred corer. Those private sectors
banks which had deposited less than 200cr were left for private management. Those banks which were not
nationalized had to function in conformity with banking regulation acts and the directives issued to the RBI
from time to time. These banks function in the same way as that of private sector banks. The private’s sector
banks enjoy certain amount of freedom in opening branches and providing loans and advances. Though they
are also required to provide loans and advances to priority sector, they take great precaution in selecting the
beneficiaries. They are better managed than same of the public sectors banks.
Co-operative banks:
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The Cooperative banks in India started functioning almost 100 years ago. The Cooperative bank is an
important constituent of the Indian Financial System, judging by the role assigned to cooperative, the
expectations the cooperative is supposed to fulfil their number, and the number of offices the cooperative
bank operate. Though the cooperative movement originated in the West, but the importance of such banks
have assumed in India is rarely paralleled anywhere else in the world. The cooperative banks in India play
an important role even today in rural financing. The businesses of cooperative bank in the urban areas also
have increased phenomenally in recent years due to the sharp increase in the number of primary co-operative
banks. Cooperative Banks in India are registered under the Co-operative Societies Act. The cooperative
bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking
Laws (Co-operative Societies) Act, 1965.
Cooperative banks in India finance rural areas under:
• Farming
• Cattle
• Milk
• Hatchery
• Personal finance
Cooperative banks in India finance urban areas under:
• Self-employment
• Industries
• Small scale units
• Home finance
• Consumer finance
• Personal finance
1. Primary co-operative credit societies.
2. Central / district co-operative banks.
3. State co-operative banks (also called as apex banks) at the top.
Types of co-operative bank:
Primary co-operative credit societies:
Primary credit society is at the bottom of the three-tier structure of co-operative banks. The society normally
contacts farmers. So, only a few people living within the area of society are admitted as members. Here
individuals of a particular area meet together inspired by sentiment of co-operation. Every member has to
pay his share in a share capital. The price of a share is nominal so that even a common man can be a
member. The functioning of such society is limited. The society is managed by elected people. Hon-
secretary and members of working committee. Such a society collects its funds by admission fees, share
capital and deposit of people. In case of need such society also get finance from central co-operative banks
or state co-operative Bank
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District co-operative Bank:
This bank is a link joining state co-operative bank with the primary credit society. After the report of all
India rural advances inquiry committee in 1945, the central co-operative banks earned much importance the
flow of rural advances reach to every farmer's home through this bank via credit society. In reality central
co-operative banks were establish to supply financial help to primary credit society.
State Co-operative Banks:
This is the apex bank in the three tier structure set up of the country. Maclegan Committee appointed in
1974 recommended to establish at least one state co-operative bank per state. Today every state has the state
co-operative bank. This bank especially co-operative ordinates them and give required guidance. There were
approximately 26 state co-operative banks at the end of 77/78 in India. Since state co-operative bank is an
apex bank, its main function is co-ordination of co-operative lending, its balance and controlling
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Reserve Bank of India
Commercial Banks Regional Rural Banks Co- operative Banks
Public Sector Banks Private sector Banks State co-operative Bank
Indian Foreign
Central cooperative Bank
State Bank Group Other Nationalised Banks
Primary Credit Societies
SBI Associate Banks
21
HISTORY OF COOPERATIVE BANKS:
Over the years, the difference between co-operative banks & commercial banks has blurred as they all have
come under a common law. All products & services are offered by co-operative banks are on the par with
commercial banks, with a few exceptions related to government business. In 1904 the co-operative
movement started in India with a view to provide finance to the agriculturist at a low rate of interest. The co-
operative society has to take the place of the money lenders & provide cheap loan to the farmers for
productive purposes. Even though many types of co-operative societies have been started particularly for the
artisans & others, the most common form of such societies deal in rural credits. And today co-operative
banks have started verities of Services with different technologies.
Once Mahatma Gandhi has remarked that “There is sweetness in co-operation; There is no one who weak or
strong among those who co-operate. Each is equal to other.” Over a period of time, a strong co-operative
network made its way into rural areas with Gujarat, Maharashtra and Andhra Pradesh leading the way. The
original founders of the cooperative movement were people with integrity, foresight and vision. However,
with the passage of time, there has been erosion in the quality of leadership in this sector
Cooperative movement in India was started primarily for dealing with the problem of rural credit. The
history of Indian cooperative banking started with the passing of Cooperative Societies Act in 1904. The
objective of this Act was to establish cooperative credit societies “to encourage thrift, self-help and
cooperation among agriculturists, artisans and persons of limited means.”
Many cooperative credit societies were set up under this Act. The Cooperative Societies Act, 1912
recognised the need for establishing new organisations for supervision, auditing and supply of cooperative
credit. These organisations were-
(a) A union, consisting of primary societies;
(b) The central banks; and
(c) Provincial banks.
Although beginning has been made in the direction of establishing cooperative societies and extending
cooperative credit, but the progress remained unsatisfactory in the pre-independence period. Even after
being in operation for half a century, the cooperative credit formed only 3.1 per cent of the total rural credit
in 1951-52.
There are 4 types of co-operative banks in India:
1. Central Co-operative Banks:
These banks are organized and operated at the district level and can be of two types:
• Co-operative Banking Union
• Mixed control Co-operative Bank
In the first, the members of the bank are the co-operative societies only. However, in the second, the
members can be co-operative societies as well as individuals. The central co-operative banks lend money
mainly to the affiliated primary societies with typical loan tenure lending between 1 to 3 years.
2. State Co-operative Banks:
These banks are organized and operated at the district level and rest at the top of the hierarchy in the co-
operative credit structure.
22
With the help of State Co-operative Banks (SCBs), the RBI funds the co-operative institutions.
These banks also get loans at an interest rate of 1% to 2% lower than the standard bank rate.
3. Primary Co-operative Banks:
These offer credit services in the urban and semi-urban regions. Thus, they are not considered agricultural
credit societies.
Primary Co-Operative Banks receive concessional refinance services from RBI and IDBI from time to time
for them to offer housing loans and other types of loans that can be used by small businesses.
4. Land Development Banks:
The land development banks are divided into three tiers which are primary, state, and central. These offer
credit services to the farmers for developmental purposes. They used to be regulated by the RBI as well as
the state governments. However, this responsibility was recently transferred to the National Bank for
Agricultural and Rural Development (NABARD).
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Here are different types of cooperative credit institutions working in India. These institutions can be
classified into two broad categories- agricultural and non-agricultural. Agricultural credit institutions
dominate the entire cooperative credit structure.
Agricultural credit institutions are further divided into short-term agricultural credit institutions and long-
term agricultural credit institutions.
The short-term agricultural credit institutions which cater to the short-term financial needs of agriculturists
have three-tier federal structure-
(a) At the NDCC, there is the state cooperative bank in each state;
(b) At the district level, there are central cooperative banks; (c) at the village level, there are primary
agricultural credit societies.
ROLE OF CO-OPERATIVE IN INDIAN ECONOMY
In today’s competition era it is necessary that all work in cooperation.
As rightly said that “United we stand, Divided we fall”. So cooperative banks become necessary for the
society. Also our nation is the agriculture based where 60% people live on agriculture and farming. So
cooperative banks provide low interest loan to farmers.
Our government adopted LPG policy in 1991 so cooperative banks also need to reform. It has become
necessary to make co-operatives more competitive and market oriented. The old vision of cooperatives as
merely government sponsored institutions or as individual driven organization would have to give way to a
new vision of co-operatives where in the co-operative become “competitive business units” to play an active
and effective role in economic welfare of its members. This calls forcreation and development of new type
of co-operatives institutions and re-engineering and reinnovation of existing co-operatives to meet the
23
challenges of new economic scenario. In liberalized market economy cooperatives provide protection to
people and make possible survival of weakest also
CHARACTERISTICS OF CO-OPERATIVE BANKING
1. Customer-owned entities
The members of cooperative banks are both the owners and the customers of the bank. Thus, the aim of
the cooperative bank is not to maximize profits but to provide the best possible services to its members.
Some of the cooperative banks also admit non-members so as to provide them with banking services.
2. Democratic member control
Cooperative banks are owned and controlled by members, who democratically elect the board of directors.
The basic principle of co-operatives “one man one vote” is followed, irrespective of the number of shares
held by a member, which ensures that no member enjoys any arbitrary power over other members.
3. Profit allocation
A specified portion of the profits are transferred to Statutory Reserve and other reserves, and then a fair
rate of interest is paid on the capital subscribed by the members. A part of this profit can also be distributed
to the co-operative members, with legal and statutory limitations in most cases.
4. Inclusion of rural masses
It plays a significant role in the financial inclusion of unbanked rural masses.
Functions of Cooperative Banks
1. It provides financial assistance to people with small means and protects them from the latches of money
lenders providing loans and other services at a higher rate at the expense of the needy.
2. It supervises and guides affiliated societies.
3. Rural financing- It provides financing to rural sectors like cattle farming, crop farming, hatching, etc. at
comparatively lower rates.
4. Urban financing- it provides financing for small scale industries, personal finance, home finance, etc.
5. It mobilises funds from its members and provides interest on the invested capital.
Objectives of Cooperative Banks
To provide rural financing and micro-financing.
To remove the dominance of money lenders and middleman.
To provide credit services to agriculturalists and weaker sections of the society at comparatively lower rates.
To provide financial support and personal financial services to small scale industries, housing financial
assistance, etc.
To provide basic banking services to its members.
To promote the overall development of rural areas.
24
Problems faced in the Indian Cooperative Banking System
Small capital base
Cooperative banks have a small capital base as it can start with a capital base of 25 lakhs, making it difficult
for them to account a portion of such capital as their working capital and raising working capital has been a
major hurdle for almost all cooperative banks.
Political interference
Politicians use them to increase their vote bank and usually get their representatives elected over the board
of directors in order to gain undue advantages like sanctioning of loans which later gets written off.
RBI Supervision
The supervision of RBI is not as stringent on cooperative banks as compared to commercial banks. RBI
inspects the books of these banks only once a year.
Dual control
Cooperative banks are controlled under the dual system, i.e. by RBI and by their respective State
government which poses a problem in coordination and management.
Professional management and technological advancement
Cooperative banks are often reluctant to adopt new technologies like computerised data management.
Professional management in the banks is often missing due to lack of training of personnel because of lack
of funds.
Dependence of finance
Cooperative banks depend heavily on RBI, NABARD and the government for refinancing facilities. It
depends on the government for capital rather than on its members.
Overdue loans
Overdue loans of cooperative banks are increasing yearly, restricting the recycling of funds which in turn
affects the lending and borrowing capacity of the bank.
Advantages of Cooperative Banks
Easy to form
Registration and legal requirements are comparatively easy compared to traditional banks. It takes a group
of ten adults to form a cooperative bank. It needs a base capital of 25 lakhs only as compared to 100 crores
of Small Finance Banks.
Alternative credit source
25
One of the objectives of the cooperative system is to provide easy accessibility to the rural section of the
country so as to protect them from the clutches of greedy money lenders. These money lenders exploit the
needy by providing credit facilities at higher rates and by manipulating their accounts. It acts as an effective
alternative to this traditional money lending system.
Cheap credit
It provides cheap credit to rural masses. It provides a high-interest rate to members for their investments and
low lending interest rate. This also protects the rural masses from the exorbitant interest rate at which money
lender provides credit, thus breaking their monopoly.
Encouragement of savings and investments
It has encouraged the habit of thrift among the masses. Instead of hoarding money or spending
unnecessarily, masses tend to invest and save their money.
Advancement in farming
Cooperative societies provide credit to agriculturalists at cheaper rates to buy inputs, warehousing facilities,
marketing assistance and other facilities. These banks often provide assistance for buying cheap products
and services and help them by introducing them to modern technology and better farming methods to
improve their output.
26
COMPANY PROFILE
When we look at the history of banking approximately 57 years ago, it is very difficult to get finance from
banks not only in Nasik but the other parts of the Maharashtra for a common man or a small industrialist or a
small merchant for their true needs.
In those days Banks policy was to collection of deposits from the rural areas and distribute these deposits as
a loan to specific industries as loan and to collect more and more profits from it in the name of secured
banking. So the actual needy people are not getting the benefits of banking from such policies.
To break this tradition, some prominent and hardworking social activists came together to remove such
barricades between a common and needy people and the Bank, and so "NAMCO", as it is popularly called,
took birth on 11 June 1959 on auspicious day of nagpanchami in house no.99,Gaidhani Wada, at auspicious
hands of Principle S.G.Puranik. Other enthusiast social workers like late Visukaka Kshatriya, late
Dadasaheb Potnis, Mamasaheb Shukla, Prabhakarpant Modak, Gopalrao Pathak, Annasaheb Kulkarni,
M.S.Aurangabadkar, BabubhaiRathi, G.V.Ashtaputre, Narayan Vaishya and many other social workers gave
an excellent contribution .It is very difficult journey from 1959 to 1975 to emerge as a bank for the common
man.
Some glorious achievements:
• Certified as a scheduled Bank from RBI in 22 April 1996
• Certified as a Multistate scheduled Bank from RBI in 25 Oct.2000
• Working areas: Maharashtra, Gujrat, Andhra Pradesh.
Branches: Including Administrative Office total Branches 81
• In Nasik District 63 Branches
• In Maharashtra 16 branches
Out of state 2 Branches
In the new edge of technology, there are vast customer services options to provide better banking solutions.
In India's 500 topmost software companies, 25% software companies are in our Maharashtra as well as 40%
people using internet. In such a situation the computerized banking concept is not only limited for the
cosmopolitan cities but it started on the rural areas too. So reach more and more customers and provide them
the fastest way of services, the Bank moves towards the Core Banking Solutions and successfully completed
his core banking solutions and implemented for all branches in March 2007. Because the strong technology
base bank is always ahead in banking.
To improve the strength of staff and officers bank arranges time to time training schedules for the advance
banking and better customer care. In the results we proud to say that The Nasik Merchants C0-Op bank Ltd.,
is the first bank having his own data centre with Core Banking solutions in North Maharashtra. At
celebration of 57 glorious year, Bank working as bridge between common man and easy Banking with
newest technology in a customer friendly way.
27
BRANCHES OF NASHIK MERCHANT CO-OPERATIVE BANK
Serial State District Branch

No
1 MAHARASHTRA NASIK DHANVARDHINI
2 MAHARASHTRA NASIK MORNING EVENING
3 MAHARASHTRA NASIK SATPUR (IE)
4 MAHARASHTRA NASIK PANCHAWATI
5 MAHARASHTRA NASIK TILAKWADI
6 MAHARASHTRA NASIK BHADRAKALI
7 MAHARASHTRA NASIK SAYKHEDA
8 MAHARASHTRA NASIK GANDHINAGAR
9 MAHARASHTRA NASIK TRIMBAKESHWAR
10 MAHARASHTRA NASIK CIDCO
11 MAHARASHTRA NASIK POONA ROAD
12 MAHARASHTRA NASIK GANGAPUR ROAD
13 MAHARASHTRA NASIK AMBAD (IE)
14 MAHARASHTRA NASIK RAVIWAR PETH
15 MAHARASHTRA NASIK IGATPURI
16 MAHARASHTRA NASIK PAWAN NAGAR
17 MAHARASHTRA NASIK MANMAD
18 MAHARASHTRA NASIK NAMPUR
19 MAHARASHTRA NASIK UMRANE
20 MAHARASHTRA NASIK VINCHUR
21 MAHARASHTRA NASIK LASALGAON
22 MAHARASHTRA NASIK PIMPALGAON ( B )
23 MAHARASHTRA NASIK MALEGAON
24 MAHARASHTRA NASIK SATANA
28
25 MAHARASHTRA NASIK NASIK ROAD
26 MAHARASHTRA NASIK GHOTI
27 MAHARASHTRA NASIK KALWAN
28 MAHARASHTRA NASIK INDIRANAGAR
29 MAHARASHTRA NASIK SINNAR
30 MAHARASHTRA NASIK DINDORI
31 MAHARASHTRA JALNA JALANA
32 MAHARASHTRA PUNE PUNE
33 MAHARASHTRA JALGAON JALGAON
34 MAHARASHTRA AHMADNAGAR AHMEDNAGAR
35 MAHARASHTRA G. BOMBAY DADAR
36 MAHARASHTRA NASIK NANDGAON
37 MAHARASHTRA NASIK ADGAON NAKA
38 MAHARASHTRA NASIK VANI
39 MAHARASHTRA NASIK CHANDVAD
40 ANDHRA HYDERABAD HYDERABAD

PRADESH
41 MAHARASHTRA AHMADNAGAR SHRIRAMPUR
42 MAHARASHTRA AHMADNAGAR RAHATA
43 GUJARAT SURAT SURAT
44 MAHARASHTRA NASIK ASHOKAMARG
45 MAHARASHTRA NASIK MUMBAINAKA
46 MAHARASHTRA AHMADNAGAR SANGAMNER
47 MAHARASHTRA NASIK OLD NASHIK
48 MAHARASHTRA NASIK OJHAR
49 MAHARASHTRA AURANGABAD AURANGABAD
50 MAHARASHTRA NASIK GIRNARE
51 MAHARASHTRA NASIK NIPHAD
29
52 MAHARASHTRA NASIK YEOLA
53 MAHARASHTRA NASIK DEOLALI CAMP
54 MAHARASHTRA NASIK GOVINDNAGAR
55 MAHARASHTRA NASIK HARSUL
56 MAHARASHTRA NASIK ASHOK NAGAR
57 MAHARASHTRA NASIK JAIL ROAD
58 MAHARASHTRA NASIK SURGANA
59 MAHARASHTRA AURANGABAD LASUR STATION
60 MAHARASHTRA NASIK BHAGUR
61 MAHARASHTRA NASIK PEITH
62 MAHARASHTRA NASIK DEOLA
63 MAHARASHTRA NASIK GOLE COLONY
64 MAHARASHTRA PUNE VASHI
65 MAHARASHTRA PUNE CHAKAN
66 MAHARASHTRA DHULE DHULE
67 MAHARASHTRA NASIK ANANDWALI
68 MAHARASHTRA NASIK MALEGAON(SINNAR)
69 MAHARASHTRA NANDURBAR NANDURBAR
70 MAHARASHTRA NANDURBAR DONDAICHA
71 MAHARASHTRA PUNE BHOSARI (PUNE)
72 MAHARASHTRA NASIK MHASRUL
73 MAHARASHTRA NASIK UNTWADI(TRIMURTY)
74 MAHARASHTRA NASIK ADGAON
75 MAHARASHTRA NASIK GONDE DUMALA
76 MAHARASHTRA NASIK CHANDORI
77 MAHARASHTRA NASIK COLLEGE ROAD
78 MAHARASHTRA NASIK HANUMANWADI
30
79 MAHARASHTRA NASIK ABHONA
80 MAHARASHTRA NASIK MAKHAMALABAD
BOARD OF DIRECTORS
Sr. Name Post

no.
1. Hon. Mr. Dhatrak Hemant Haribhau Chairman
2. Hon. Mr. Lodha Harish Babulal Vice Chairman
3. Hon. Mrs. Jategaonkar Rajni Jayprakash Public Relation Director
4. Hon. Mr. Gite Vasant Nivrutti Director
5 Hon. Mr. Bhandari Sohanlal Mohanlal Director
6. Hon. Mr. Lodha Harish Babulal Director
7. Hon. Mr. Daga Shivdas Mohanlal (C.A.) Director
8. Hon. Mr. Gothi Avinash Mulchand Director
9. Hon. Mr. Nahar Subhash Champalal Director
10. Hon. Mr. Jain Kantilal Bhagchand Director
11. Hon. Mr. Thakre Ranjan Punjaram Director
12. Hon. Mr. Gite Ganesh Baban Director
13. Hon. Mr. Sane Vijay Rajaram Director
14. Hon. Mr. Sancheti Prafulla Budhamal Director
15. Hon. Mr. Pawar Narendra (Nandunana) Hiraman Director
16. Hon. Mr. Burad Mahendra Mulchand Director
17. Hon. Mr. Dhadiwal Santosh Mangilal Director
18. Hon. Mr. Sonje Ashok Shravan Director
19. Hon. Mr. Choudhari Bhanudas Narayan Director
31
20. Hon. Mrs. Chajed Shobha Jayprakash Director
21. Hon. Mr. Dive Prashant Ashok Director
22. Hon. Mr. Anand Ajit Bagmar Expert Director
23. Hon. Mr. Prakash Vishwanath Kshirsagar Expert Director
24. Hon. Mr. Kulkarni Triguna Arvind CEO
Working areas: Maharashtra, Gujrat, Andhra Pradesh
Branches : Administrative Office total Branches 81 o In Nasik District 63 Branches o In Maharashtra 16

branches o Out of state 2 Branches
In the new edge of technology, there are vast customer services options to provide better banking solutions.
In India's 500 topmost software companies, 25% software companies are in our Maharashtra as well as 40%
people using internet. In such situation the computerized banking concept is not only limited for the
cosmopolitan cities but it started on the rural areas too. So reach more and more customers and provide them
the fastest way of services, the Bank moves towards the Core Banking Solutions. And successfully
completed his core banking solutions and implemented for all branches in March 2007. Because the strong
technology base bank is always ahead in banking.
To improve the strength of staff and officers bank arranges time to time training schedules for the advance
banking and better customer care. In the results we proud to say that The Nasik Merchants C0-Op bank Ltd.,
is the first bank having his own data centre with Core Banking solutions in North Maharashtra. At
celebration of 57 glorious year, Bank working as bridge between common man and easy Banking with
newest technology in a customer friendly way.
32
Deposit New Interest Rate from 26 June 2020
General Senior citizen
Period
% %
Saving account and basic saving account 3.75 3.75
15 to 45 days 3.75 4.25
46 to 90 days 3.75 4.25
91 to 180 days 4.5 5.00
181 to 364 days 5.00 5.50
Above 12 to 18 months 5.25 5.75
Kalpvruksha Thev Yojana
Period-Minimum 5 years and maximum 10 years
6 6
Deposit amount-upto 1lakh
Applicable for ITAX act 1961 - 80C
NRI saving accounts 4 4
Objectives of the bank:

To encourage thrift and mutual co-operation among its members.
1) To create funds to be lending at moderate of interest to the members of the bank in accordance with the
procedure specified in these byelaws.
33
2) To give possible help and necessary guidance to traders, artisans etc. who are members of this bank, in
the conduct of their business.
3) To do hundi business –
• To lends money on security to its members.
• With the previous permission of the registrar, to purchase any property for the business of or for the use of
the bank, to construct it and / or to make suitable alternatives as may be necessary and to maintain the same.
• To provide safe deposit vault to facilitate safekeeping of ornaments and valuable, etc.
• To perform any function as may deemed lawful for the bank and that as the Central Government or the
States Government may direct.
4) To do every kind of trust and agency business and particularly do work investment of funds, sale of
properties and of recovery or acceptance of money. - To undertake the management of trust and for that to
accept any office of the trustee, executors or office to perform duties of such of confidence nature either
independently or jointly with some other person as the deems fit.
5) To accept money, documents, securities, valuables articles and goods every description for keeping them
in Safe-Custody or for sending them for one place to the other.
Interest Rate for Loan Scheme Effective from July 2022
Loan Type New Interest Rate %
Housing 7.50
Vehicle (Personal) 8.50
Vehicle (Commercial) 12.00
Gold Loan *upto Rs 2 Lakhs 8.90
Gold Loan Installment *Above Rs 2 Lakhs 8.90
Gold Overdraft 9.50
Personal (For salaried person) 12.00
Cash Credit Installment (Commercial) 13.50
Cash Credit 13.00
Educational 11.00
Bedana and Dryfruit (Pledge at

11.00
Coldstaorage)
12.00
Hypothication
Above Rs 10 Lakh as per Credit Rating
(9.50 to 12 .00) *
34
* Terms and Conditions applicable
12.00

Hypothication Installment
(9.50 to 12 .00) *
12.00

Working Capital
(9.50 to 12 .00) *
12.00

Working Capital Installment
(9.50 to 12 .00) *
12.00
Machinery / Industrial Shed / Shop
Purchasing /Shop Construction /Furniture /
(9.50 to 12 .00) *
Construction of go down / Hospital Building
Project Finance 12.00
Construction of educational institute 12.00
Lease rent discounting 12.00
T.L.S.M.E Asset bank loan 12.00
Property loan 12.00
Pledge 13.50
0.50 more than fdr rate. If third party

Advance against deposit
2.00 extra
Government security loan 12.00
Bills payable 13.50
a)1.00 commission +GST if 100 deposit

Bank guarantee
b)1.50 commission +GST if 25 deposit
and 75 mortgage
35
c) 2.50+gst in case bank guarantee
In case bank guarantee 14.50
Solvency certificate Rs300 per lac
Procedure of taking loan:
The procedure associated with a term loan involves the following principle steps.
Process of loan
1. Submission of application
2. Primary assessment
3. Branch head recommendation
4. Final assessment of various level of bank
5. Lending committee
6. Documentation of loan application
7. Disbursement of loan
8. Creation of security
(1) Submission of application The main & the first step is the submission of the duty filled form or the loan
application it is the choice customer that which types of application he wants to give depending upon the
needs.
(2) Primary assessment: When the application is received, an officer of the recipient institution reviews it to
ascertain whether it is complete for processing. If it is incomplete the borrower is asked to provide the
required additional information. When the application is considered complete, the recipient institution
prepares of flash report, which is essentially a summarization of the loan application, to be evaluated at the
Senior Executive Meeting (SEM). Once the SEM, on the basis of its evaluation of the flash report, decides
that the project justifies a detail appraisal, it nominates lead financial institutions. The factors taken in to
account for designating lead institution are: location of the project, prior experience of institution in handling
similar projects, representation of institutions in the state and promoter group, and existing work load of the
institutions.
(3) Branch head recommendation The appraisal is moving one step ahead that is to analysis the applicants
eligibility as per the norms provided by the considering his gross income after detecting his liabilities, his
actual repayment capacity is checked as per norms.
(4) Final assessment of various level of bank After referring the application form and appraisal branch head
put his recommended action whether to accept the application or not & send it the corporate office.
(5) Lending committee At the corporate office the final assessment is to be done & decision is taken to reject
the application is forwarded to the particular branch from where the application has been received. Before it
also lending committee decide whether to give loan or not.
36
Example
• Loan for more than 10 lack rs all BOD need to agree for that particular Loan.
• Also some of the lending committee is formed by bank in which Directors are included and they decide
whether to give Loan or not. The branches have the power to take the major decision on the sanctioning of
the loan if it is less than rs 1 lack.
(6) Documentation of loan application Once the Loan is Sanction Banks need to check all the document of
borrower as well as guarantor once again and only then and then they can proceed ahead.
(7) Disbursement of loan if loan is sanction than Bank open the account of borrower in their bank and issue
the check. Before the entire term loan is disbursed the borrowers must fully comply with all terms and
condition of the loan agreement.
(8) Creation of security the term loans (both rupee and foreign currency) and the differed guarantee
assistance provided by the All-India financial institutions are secured through the first mortgage, by way of
deposit of title deeds of immovable properties and hypothecation of movable properties. As the creation of
mortgage, particularly in the case of land, tends to be a time consuming process, the institutions permit
interim disbursement against alternate security (institution the form of guarantees provided by the
promoters.
37
NON PERFORMING ASSETS:
Introduction: “A Man without money is like a bird without wings”, the Rumanian proverb insists the
importance of the money. A bank is an establishment, which deals with money. The basic functions of
Commercial banks are the accepting of all kinds of deposits and lending of money. In general there are
several challenges confronting the commercial banks in its day to day operations. The main challenge facing
the commercial banks is the disbursement of funds in quality assets (Loans and Advances) or otherwise it
leads to Non-performing assets.
NPA’s –means: An asset which ceases to generate income of the bank is called non-performing asset. The
past due amount remaining uncovered for the two quarter consequently the amount would be classified as
NPA for the whole year. It includes borrowers‟ defaults or delays in interest or principal repayment.
Definition of Non-Performing Assets:
The term Non-performing is, “loans or advances whose credit quality has deteriorated such that full
collection of principal and /or interest in accordance with the contractual repayment terms of the loan or
advances is in question”. For purposes of this Directive, loans or advances with pre-established repayment
programs are non-performing when principal and or interest is due and uncollectible for 90 days or more
beyond the scheduled payment date or maturity. For purposes of this Directive, overdraft and loans or
advances that do not have a pre-established repayment program shall be considered as non-performing
when;
• The debt remains outstanding for 90 consecutive days or more beyond the scheduled payment date or
maturity.
• The debt exceeds the borrowers approved limit for 90 consecutive days or more.
• Interest is due and uncollected for 90 days or more or
• For overdrafts, the account has been inactive for 90 consecutive days and / or deposits are insufficient to
cover the interest capitalized during the period.
Classification of Loans or Advances: Banks shall classify all loans and advances into the
following five categories
A. Pass: Loans or advances in this category are fully protected by the current financial and paying capacity
of the borrower and or not subject to critics. In general, any loans or advance or portion thereof, this is fully
secured, both as to principal and interest, by cash or cash substitutes, shall be classified under this category
regardless of past due status or other adverse credit factors.
B. Special mention: Any loan or advance part due 30 (thirty) days or more, but less than 90 (ninety)
days shall be classified Special Mention.
C. Substandard: Non-performing loans or advances past due 90(ninety) days or more but less than
180(one hundred and eighty days) days shall, at a minimum, is classified substandard. Without prejudice to
the classification criteria used for the substandard category set out above, the following non-performing
loans and advances shall be categorized as substandard;
1. Renegotiated non-performing overdraft facilities unless equivalent of all past due interest is paid by the
borrower in cash at the time of renegotiation and the account shows at a minimum.
38
A nil balance at least once; or
A turnover rate of once the approved limit.
2, Renegotiated non-performing merchandise loans unless physical inventory of the merchandise taken by
the bank at the time of renegotiation shows that the outstanding principal loan and interest thereof are fully
covered and the safety margin determined, following the inventory is at least not lower than the margin
stated in the loan contract entered into by the bank and the borrower at the time of initial extension of the
loan
D. Doubtful: Non-performing loans or advances past due 180 days or more, but less than 360 days shall be
classified, at a minimum, as doubtful.
E. Loss: Non-performing loans or advances past due 360 days or more shall be classified as Loss.
GENERAL REASONS FOR ASSETS BECOMING NPAs:
A multiplicity of factor is responsible forever increasing size of NPAs in banks. A few prominent reasons
for assets becoming NPAs are as under.
• Poor credit appraisal system
• Lack of proper monitoring
• Reckless advances to achieve the budgetary targets.
• There is no or lack of corporate culture in the Bank. In adequate legal provisions on foreclosure and
bankruptcy.
• Change in economic policies/ environment.
• No transparent accounting policy and poor auditing practices.
• Lack of coordination between banks.
• Directed lending to certain sectors.
CAUSES OF NPA:
NPA arises due to a number of factors or causes like:
• Speculation: Investing in high risk assets to earn high income.
• Default: Default by the borrowers by will.
• Fraudulent practices: Fraudulent Practices like advancing loans to ineligible persons, advances
without security or references, etc.
• Diversion of funds: Most of the funds are diverted for unnecessary expansion and diversion of
business.
39
• Internal reasons: Many internal reasons like inefficient management, inappropriate technology, labour
problems, marketing failure, etc. resulting in poor performance of the companies.
• External reasons: External reasons like a recession in the economy, infrastructural problems, price
rise, delay in release of sanctioned limits by banks, delays in settlements of payments by government,
natural calamities, etc.
Technical Aspects of Non-Performing Assets:
A major element of the financial sector reform in India has been the introduction of prudential norms and
regulation. These prudential norms and regulation are basically aimed at ensure the safety and soundness of
the financial system; impart greater transparency and accountability in operation and restoring credibility
and confidence in the India financial system. Prudential norms serve two primary purposes, which are
1. Bringing out the true position of a bank’s loan profitability, and
2. Help arrest its deterioration.
A proper system for recognition of income, classification of assets and provisioning for bad debts on
prudential basis is necessary if balance sheet of a bank is to reflect its actual financial health. The committee
on financial system under the chairmanship of Shri M. Narshimhan had examined this issue, recommended
that a policy of income recognition should be objective, and based on recovery rather than on any subjective
consideration. Similarly, the classification of assets, which would ensure a uniform and consistent
application of norms. The recommendation of Shri M. Narsimham committee regarding income recognition,
asset classification and provisioning were sought to be implemented by RBI in a phased manner over a three
year period commencing from the year 1992-93. in these regard RBI has issued a separate guidelines for
different category of commercial scheduled banks (in April 1992), all financial institutions (in April 1992
with some modification considering their functioning) NBFCs ( in June 1994), RRBs (in March 1996) at a
proper time with the adequate modification, In 1993 all the primary cooperative Banks have been told that
they should comply with prudential norms on income recognition, assets classification, and provisioning
with some modification. Later on a high power committee on Urban Co-operative Banks constituted in May
1999 under the chairmanship of K. Madhav Rao, was set up to review the performance of Urban Co-
operative Banks and to make necessary changes to strengthen this sector. There was a need for structural
reforms in the complete set up of the co-operative banks
Income Recognition:
1. Effective form 1st April 1992: Interest on those loan accounts which have been identified as Non
Performance Assets (NPA) cannot be taken to the income account of the bank unless it is actually realized.
Such unrealized interest on NPA taken to the income account in the earlier year has to be provided for. In
other words, income has to be recognized on the basis of Actual recovery and not on accrual basis.
2. Accrued interest on NPA: Interest accrued on NPA should not be debited to borrower accounts, but
to “interest Receivable Account” and credited to “Overdue interest Reserve Account” and shown on the
asset and liability side of the balance sheet respectively (the amount held in the Overdue Interest Reserve
Account, however, cannot be regarded as a “Reserve” or as part of the Owned funds of the Bank)
3. Accrued interest on performing assets: In respect of borrower accounts, which are treated as
performing assets, accrued interest can be debited to the borrower account and taken to the income account.
In cases, where such interest is not actually received before the end of the accounting year, an amount year,
40
an amount equivalent to the unrealized interest should be reversed by debiting the profit and loss account
and credited to the Overdue Interest Reversed Account.
4. Partial recovery of interest: Banks can take partial recovery of interest on NPA to their income
account, but it should be ensured that such recovery is not of fresh/additional credit facilities sanctioned to
the borrowers concerned.
5. Others: Wherever the state co-operative Societies Act prescribes a more stringent accounting
procedure, it should be followed. Further, where the bank has a more stringent accounting procedure, it can
continent follow such a procedure.
Non-Performing Assets and Exemptions:
An asset/account is considered to be nonperforming when it ceases to generate income for the bank. The
criteria a borrower account as NPA depend on the nature of facility / limit granted and is as under:
1. Term Loans: Here interest and installment of principal remain overdue for the period of more than 90
days. If the account is regularized before the balance sheet date by repayment of overdue amounts through
genuine sources, the account did not treated as NPA. Banks should, however, ensure that the account
remains in order subsequently and solitary credit entry made in the account on or before the balance sheet
date to adjust the overdue interest or installment of principal is not reckoned as the sole criterion for treating
the account as a standard asset.
2. Cash Credit and Overdraft Accounts: An account is treated as „out of order‟ if the balance
outstanding in the account is continuously in excess of the sanctioned limit or drawing power or where the
outstanding balance in the principal operating account is within the sanctioned limit or drawing power, but
there are no credits continuously for three months as on the date of balance sheet, or credits are not enough
to cover the interest debited the same period.
3. Bill purchased and Discount: A bill is treated NPA, if it remains overdue and unpaid for period of
more than 90 days. Overdue interest should not be charged and taken to income account in respect of
overdue bills, unless it is realized.
4. Agricultural Loan: If interest or installment of principal remains overdue for two harvesting season
or two half year whichever is earlier, the loan is treated as NPA. 5. Project finance: In the case project
finance, where moratorium is given for payment of interest, the respective amounts will become due only
after moratorium/ gestation period is over.
Exemptions:
1) Advance against Term Deposits, NSCs. And Surrender Value of Life Policies etc :
Advances against fixed and other term deposits, Nation Savings Certificates eligible for surrender, LIC
policies, Indira VikasPatras and Khedut Vikas Patras have been exempted from provisioning requirements.
Accordingly, banks need not treat such account as NPAs and make provision in respect of such advances
although interest there on has not been paid for three quarters as on 31st March 1994. Interest on such
advances may also be taken to income account on the due dates, provided adequate margin is available in
the account.
2) Reversal of Income on Accounts Becoming NPAs: If any advance including bills purchased
and discounted becomes NPAs as the close of any year, interest accrual and credited to income account in
the corresponding previous year, should be reversed or provided for if the same is not realized. This will
apply to Government guaranteed accounts also. If interest income from assets in respect of a borrower
41
becomes subject to nonaccrual, fees, commission and similar income with respect to same borrower that
have been accrued should cease to accrue in the current period and should be reversed or provided for with
to past periods , if uncollected.
3) Interest Application: In case of NPAs where interest has not been receive for 90 days or more, as a
prudential norm, there is no use in debiting the said account by interest accrued in subsequent quarters and
taking this accrued interest amount as income of the bank as the said interest is not being received. It is
simultaneously desirable to show such accrued interest separately or park in a separate account so that
interest receivable on such NPA account is computed and show as such, though not accounted as income of
the bank for the period. The interest accrued in respect of performing assets may be taken to income account
as the interest is reasonable expected to received however, if interest is not actually received for any reason
in these cases and the account is to be treated as an NPA as per the guidelines, then the amount of interest so
taken to income should be reversed or should be provided for in full.
Norms or Criteria for Asset Classification:
Classification of agricultural and non-agricultural loans is required to be done into four categories, on the
basis of age overdue, as under.
• Good/standard Assets: Good asset is one which can not disclose any problem and which does not
carry more than normal risk attached to business. Thus, in general, all the current loans, ST agricultural and
non-agricultural loan which have not become NPA may be treated as standard asset.
• Sub-standard Assets:
A non-performing may be classified as sub-standard on the following basis of criteria.
1) An Asset which has remained overdue for a period not exceeding 3 years in respect of both agricultural
and non-agricultural loan should be treated as substandard.
2) In case of all types of loans, where installments are overdue for a Period not exceeding 3 years, the entire
outstanding in term loan should be treated as substandard.
3) An asset, where the terms and condition of the loans regarding payment of interest and repayment of
principal have been renegotiated rescheduled after commencement of production, should be classified as
substandard and should remain so in such category for at least two years of satisfactory performance under
the renegotiated terms In other words, the classification of asset should be upgraded merely as a result of
rescheduling unless there is satisfactory compliance of the above condition.
• Doubtful Asset: A non-performing asset may be classified as doubtful on the basis of following
criteria.
1) An Asset which has remained overdue for a period exceeding 3 years in respect of both agricultural and
nonagricultural loans should be treated as doubtful asset.
2) In case of all type of loans, where installments are overdue for more than 3 years, the entire outstanding in
terms of loans should be treated as doubtful
• Loss Asset: Loss asset are those where loss is identified by the bank inspectors but amount has not been
written off wholly or party. In other words an asset which is considered un realizable or such little value of
its continuance as a doubtful asset is not worthwhile, should be treated as a loss asset such loss asset will
include overdue loans in which cases
42
1) Decreases of executions petitions have been time barred or documents are loss or no other legal proof is
available to claim the debt.
2) Where the members and their sureties are declared insolvent or have died leaving no tangible assets.
3) Where the members are left the area of operation of the society leaving no properly and their securities
have also no means to pay the dues.
4) Where the loans is fictitious or when gross utilization is notified
5) An amount which cannot be recovered in case of liquidated societies.
Effect of Non-Performing Assets on the operations of the banks
1. Profitability: Non-Performing Assets that hold of money in Bad debts, which arisen due to
incorrect selection of clients. Because of the money getting clogged the profitability of bank
declines. Additional effect of decline in productivity is low ROI (Return on Investment),
which disturb the current earning of the bank.
2. Liquidity: The amount of money is clogged, diminished profit lead to absence of enough
cash in hand, which leads to borrowing money for short period of time, which lead to added
cost to the company
3. Involvement of Management: Time and effort of management is added secondary cost

which bank has to tolerate due to NPA. Time and effort of management is handling and
handling NPA would have distracted to some productive activities, which would have given
good returns.
4. Credit Loss: There is a problem in the NPA which is really unfavourably disturb the
goodwill of bank and their market share would automatically decrease and also disturbs the
market credit.
Measures to Tackle the Non-Performing Asset:
1. One Time Settlement Scheme: One Time Settlement Scheme launched in May 1999 and
July 2000. Government of India along with RBI are announcing one-time settlement scheme
to reduce the absolute amount of NPA. When the borrowers find it difficult to pay their dues
from various reasons, they have the preference to repay their debts to banks which is very
much helpful to the borrowers and lending institutions.
43
2. Technical Write off: When the recovery is not at all possible in those accounts under any
circumstances banks decide writing off small loans which have become bad under any
circumstances on account of the fact that the borrower has no means to repay the loan and
there may be huge losses in respect of the properties. This is for the sole purpose of serving
such NP accounts.
3. Recovery Camps: The regaining camps will be effective in case an early payment notice
is assisted on the borrowers mentioning the date recovery camps. Since this is also quick
process of deciding claims, banks are advised to cover the camps by state.
4. Comprise Proposals: Where normal recovery is not possible and where borrowers
experience certain genuine difficulties, banks adopt comprise routes. Such a proposal can be
taken up considering the history of the borrower account, security available, net worth of the
borrower, time value of offer made etc.
5. Debt recovery tribunals: In case where the loan amount is Rs.10 lakhs and above with the
objectives of facilitating the banks and financial institutions for speedy recovery of payments
the debt recovery tribunal act was passed by Indian Parliament in 1993.
6. Lok Adalat: Lok Adalat is been established for the recovery of payments in accounts
deteriorating in the doubtful and loss group with outstanding balance up to Rs.5 lakhs, by way
of conciliation settlement. It is a legal forum for expeditious settlement of loan dues on
consensus arrived between the bank and the borrowers mediated by the Lok Adalat.
7. Securitisation Act: The Securitisation and Reconstruction of Financial Assets and

Implementation of Security Interest Act, 2002 (SARFAESI) aims to empower banks as
secured creditors to yield control, manage and sell securities with no interference of
court/tribunal. However, loan with balance below Rs.1 lakh unsecured loans and loans against
collateral of agricultural land are exempted from the purview of the act.
Importance of the recovery of Non-Performing Assets
1. Increases the trust of shareholders of the bank and increase the income of bank.
2. Decrease in provisioning requirements.
3. By recovery reduce the level of prevailing Non-Performing Asset.
RBI Guidelines for reducing Non-Performing Assets
44
Certain important guidelines issued by RBI in order to protect banks and financial
institutions.
1. Timeless and Adequate of response: As long as there is delay in response, there is a greater
harm to the account and the asset.
2. Early Recognition of the problems: At the beginning stage the financial institutions do
not identify their Non-Performing Assets. Therefore, the banks at first should recognize their
Non-Performing Assets and take proper steps at the early stage.
3. Government Relief: Closer monitoring is needed to work in the direction of cutting time
log.
4. Write off: To clear the Balance Sheet, write offs in small Non-Performing Asset doubtful
account.
5. Management effectiveness: In order to take important decisions regarding the Non-

Performing Assets management should be vigorous and adaptive. Organisation effectiveness
in managing corporate condition is very significant factor that influence borrowings.
6. Auditor’s Responsibility: Banks and financial institutions must ensure that suitable loan
contracts are made to facilitate Auditor’s certification.
Measures to control Non-Performing Assets
1. Preventive Measures:
The significant relevant factors of great level of Non-Performing Assets inside the banks
dimness in credit appraisal system, no of operative observing and administration of credit
account, non- appearance of credit evidence which is shared among the banks.
The complete evidence about unit, industry, its financial stake, management etc. have to be
collected for the appropriate assessment of the loan application which may help in finding the
unviable projects at the first instance.
In order to have complete evidence about the industry and its forecasts in upcoming the
industrial cell should be established at the bank level.
45
The distinct observing department should be set up in big divisions for periodic reviews of
account, comparative risk analysis and agreement of terms and conditions of approval for
inspecting the progress of the project or the business.
To help the banks funds and cut the insolvency risk, it should be fortified with newest credit
risk management and in order to avoid risk banks should develop credit derivatives markets.
2. Curative measures:
The banks should take stepladder to regain the amount from assets, which have previously
fallen into Non-Performing Assets group instead on making efforts to stop the fresh addition
of Non- Performing Assets.
The interruption affected due to denial by defendants to receive the command, and due to
modification in address too is one of the main factor accounting for stay in arranging of
application by Debt Recovery Tribunals.
For the quick reclamation of the assets from Non-Performing Assets category the Narasimhan
Committee has suggested the establishment of Debt Recovery Tribunals. The bill on recovery
of debt due to banks and Financial Institutions Act 1993 was established on the basis of
recommendations 22 Debt Recovery Tribunals. To make its implementation effective, the Act
has several boundaries which must be isolated. The Central Government has appointed added
presiding officers for immediate removal of recovery cases for amending the Debt Recovery
Tribunals.
The government should assist the recovery in case of government sponsored schemes. In
reducing the Non-Performing Assets, it may be renowned that suggestions enumerated will go
a long way which will help the banks in improving the productivity of the banks, progress the
quality of assets.
Measures for the recovery of Non-Performing Assets adopted by The Nashik Merchants
Co-Operative Bank Ltd
1. The file is referred to legal department for arbitration if the branches are not able to recover
the loan amount.
46
2. The legal department will initiate all the steps to recover the amount finally Execution
Petition will be filed.
3. The sale officers are appointed from Co-Operative departments for handling the Execution
Petition. The sale officer will send the recovery force to identify the defaulter and his property
as soon as the file is received. After the identification, Form No.6 will be issued attaching the
property for sale and to pay the amount within 10 days.
4. Then Form No.8 & 9 will be fixed showing one month time if the party does not settle the
amount within 10 days.
5. In spite of issuing Form No. 8 & 9, if the party do not give productive response than a
published paper “fixing the sale of property” will be announced.
6. The locality people and others are invited to participate in inspecting the mortgage property
before three days of option.
Later the auction will be conducted of the property among the bidders and then it will be
confirmed to the higher bidder
47
CHAPTER 3:
DATA ANALYSIS AND
INTERPRETATION
48
1. GROSS NPA RATIO:
Gross NPA is sum of all the loan assets that are classified as NPA as per the RBI guidelines as on the
balance sheet data. Gross NPA ratio is the ratio of gross NPA to gross advantages of the bank. When it is to
be expressed in percentage, it is known as gross NPA percentage.
Gross NPA Ratio = Gross NPA

x100
Gross Advances
2. NET NPA RATIO:
The net NPA percentage is the ratio of NPA to net advances, whereas the net NPA can be
simply worked out as the gross NPA minus provisions held for NPA account, and net
advances can be simply worked out as the gross advances minus provisions held for the NPA
account.
NET NPA Ratio = Net NPA

x100
Net Advances
Particulars 2018 2019 2020 2021 2022
Gross NPA 24107.29 14233.63 24889 5137.44 9520.47
Net NPA 5554.52 0 0 0 0
Gross NPA & Net NPA
25000
20000
15000
10000
5000
0
2018 2019 2020 2021 2022
Gross NPA Net NPA
49
Interpretation:
The Nashik Merchants Co-operative Bank has more of standard assets than that of doubtful
assets and loss assets from, which depicts that the bank has loyal borrowers who pay back
the credit availed by them on time.
Particulars Percentage Percentage Percentage Percentage Percentage

2018 2019 2020 2021 2022
Standard Assets 91.75% 93.50% 93.80% 94.25% 92.90%
Sub-standard Assets 6.87% 5.18% 4.84% 5.17% 5.39%
Doubtful Assets 1.38% 1.32% 1.36% 0.58% 1.71%
Loss Assets 0% 0% 0% 0% 0%
Total 100% 100% 100% 100% 100%
Percentage of Non-Performing Assets

100%
98%
96%
94%
92%
90%
88%
86%
2018 2019 2020 2021 2022
Standard Sub-standard Doubtful Loss
Interpretation:
The Nashik Merchants Co-operative Bank has been proficient in maintaining its doubtful
assets and has no loss assets as per data obtained for previous five years, the standard &
sub-standard NPA of the bank has been rising from 2018 to 2022. In order to recover its
NPA, the bank has to maintain rigorous norms and carry out measures to make recovery of
the loan amount.
50
Year Gross NPA Gross Advances Gross NPA Ratio
[in lakhs] [in lakhs]
2018 24,107.29 908905.76 2.65%
2019 14233.63 849085.85 1.67%
2020 24889 860012.79 2.89%
2021 5137.44 659576.07 0.77%
2022 9520.47 747434.14 1.27%
Comparative Gross NPA of the bank with other banks from 2018-
20212(Rs. In Lakhs)
Particulars 2020 2021 2022
NAMCO Bank 2.89% 0.77% 1.27%
Saraswat Co.operative Bank 4.62% 4.93% 4.57%
51
Comparison of Gross NPA of both banks
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2020 2021 2022
NAMCO Bank Saraswat Bank
Interpretation:
The above comparative of The Nashik Merchants Co-operative Bank and Saraswat
Co.operative Bank shows that the NPA of other banks are greater than that of NAMCO Bank
which is a good sign to the bank and will help the bank grow in the forthcoming years.
NAMCO bank should maintain the NPA ratios and take preventive measures to minimize
the NPA in the upcoming years as well.
Comparative Net NPA of the bank with other banks from 2020- 2022 (Rs. In Lakhs)
Particulars 2020 2021 2022
NAMCO Bank 0% 0% 0%
Saraswat Co.operative Bank 1.75% 1.50% 1.00%
52
Comparison of Net NPA of both banks
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2020 2021 2022
NAMCO Bank Saraswat Bank
Conclusion:
1. The Gross NPA Ratio of the bank in the year 2022 has comparatively reduced in comparison of previous
four financial years. Sub-Standard Assets have increased respectively.
2. The bank’s Doubtful Assets Ratio and Provision Ratio has been decreased constantly which depicts that
the bank is progressing recovering the loans well from the borrowers and has also been balancing well
between the over provision and under provision.
3. The Credit to Deposit Ratio in the year 2018 was 74.31% when compared to that of 69.95% in
20212which shows that there is raise in the credit as against that of the bank’s deposits.
4. The comparison with Saraswat Co- operative Bank, the Nashik Merchant Co-operative Bank Ltd has the
minimum percentage of Gross NPA Ratio. The Net NPA Ratio of the Nashik Merchants Co-operative Bank
Ltd is zero as compared to that of other banks.
5. The Total Advances of the bank in the year 2018 was Rs. 90,890.57 lakhs which has now decreased to Rs.
74743.41 lakhs in the year 2022. This indicates that the bank should have effectual control measures on its
sanction policies
6. The total NPA of bank stood at Rs. 24107.29 lakhs in 2018 as against that of Rs. 9520.47 lakhs in 2022
and in the year 2021, 2020 and 2019 it was 5137.44 lakhs, 24889 lakhs and 14233.63 respectively. This
depicts decrease in the total Non-Performing Assets of the bank.
53
WORKING NOTE
Total substandard Assets

Substandard assets = x 100
Gross NPA
Total doubtful assets

Doubtful Asset = × 100
Gross NPA
Loss asset ratio = Total loss assets × 100

Gross NPA
Gross NPA ratio = Gross NPA

× 100
Gross Advances
(in lakhs)
Particulars Percentage Percentage Percentage Percentage Percentage
2018 2019 2020 2021 2022
Standard 22118.43 13308.44 23345.88 4842.04 8844.52

x100 x100 x100 x100 x100
Assets 24107.29 14233.63 24889 5137.44 9520.47
= 91.75% = 93.50 % = 93.80% = 94.25% = 92.90%
Sub- 1656.17 737.30 1204.62 265.61 513.15
x100 x100 x100 x100 x100
standard 24107.29 14233.63 24889 5137.44 9520.47
Assets
= 6.87% = 5.18% = 4.84% = 5.17% = 5.39%
Doubtful 332.68 187.88 338.49 29.80 162.80
x100 x100 x100 x100 x100
Assets 24107.29 14233.63 24889 5137.44 9520.47
= 1.38% = 1.32% = 1.36% = 0.58% = 1.71%
Loss Assets 0.00 0.00 0.00 0.00 0.00
x100 x100 x100 x100 x100
24107.29 14233.63 24889 5137.44 9520.47
= 0.00% = 0.00% = 0.00% = 0.00% = 0.00%
Total 24107.29 14233.63 24889 5137.44 9520.47
x100 x100 x100 x100 x100
24107.29 14233.63 24889 5137.44 9520.47
= 100.00% = 100.00% = 100.00% = 100.00% = 100.00%
54
FINANCIAL STATEMENTS
55
BALANCE SHEET OF NAMCO BANK FOR YEAR ENDING 2021-2022
56
57
BIBLIOGRAPHY
1. Last three years (2010, 2011, 2012) Annual Reports of the NAMCO bank and Saraswat
cooperative Bank
2. NABARD guidelines (Norms for NPAs)
3. Reserve bank of India (2010) impact of NPAs and guidelines and policies
WEBSITES:
www.namcob
ank.com
www.moneyc
ontrol.com
www.rbi.com
www.npa.com
www.sbi.com
www.saraswat
bank.com
58

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“A STUDY ON NON-PERFORMING ASSETS”

DR. NAMRATA DESHMUKH

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF

MET’S INSTITUTE OF MANAGEMENT

Department of Master of Business Administration

Title: “A STUDY ON NON-PERFORMING ASSETS AT NAMCO BANK”

Dr. Namrata Deshmukh Dr. Atul Thombre Dr. Nilesh R. Berad

I undersigned hereby declare that, the project entitled, “ A STUDY ON NON-

Serial No. Particulars Page

3 Data analysis and Interpretation 48

Table Table Name Page

Statement of the problem

Need for the study

To investigate the performance of a bank Non-Performing Asset is a significant constraint as it result in

Objectives of the study

Scope of the study

• Annual report of The Nashik Merchant Co-operative Bank ltd.

• Other necessary theoretical requirement

“Non-Performing Assets in co-operative banks” By K Ravichandran and R. Mayilsamy (2008) Non-

Banks give two assurances to the depositors:

b. Withdrawal of deposit, whenever needed

They are as mentioned below:

• Early phase from 1786 to 1969 of Indian Banks

• 1949: Enactment of Banking Regulation Act.

• 1955: Nationalization of State Bank of India.

• 1959: Nationalization of SBI subsidiaries.

• 1961: Insurance cover extended to deposits.

• 1969: Nationalization of 14 major banks.

• 1971: Creation of credit guarantee corporation.

• 1975: Creation of regional rural banks.

• 1980: Nationalization of seven banks with deposits over 200 Cr

The commercial banking structure in India consists of:

• Scheduled Commercial Banks

(1) Public sector banks

(2) Private sector banks

Cooperative banks in India finance rural areas under:

Cooperative banks in India finance urban areas under:

• Small scale units

1. Primary co-operative credit societies.

2. Central / district co-operative banks.

3. State co-operative banks (also called as apex banks) at the top.

Types of co-operative bank:

Primary co-operative credit societies:

State Co-operative Banks:

Commercial Banks Regional Rural Banks Co- operative Banks

Public Sector Banks Private sector Banks State co-operative Bank

Central co- operative Bank

State Bank Group Other Nationalised Banks

Primary Credit Societies

SBI Associate Banks

(a) A union, consisting of primary societies;

(b) The central banks; and

(c) Provincial banks.

There are 4 types of co-operative banks in India:

1. Central Co-operative Banks:

• Co-operative Banking Union

• Mixed control Co-operative Bank

2. State Co-operative Banks:

3. Primary Co-operative Banks:

4. Land Development Banks:

ROLE OF CO-OPERATIVE IN INDIAN ECONOMY