You are on page 1of 51


Non Performing Assets in Tirupati Urban Co-operative Bank Ltd. Submitted to: RASHTRASANT TUKDOJI MAHARAJ NAGPUR UNIVERSITY

An outline of research work to be submitted for Management Thesis in partial fulfillment of the requirement of the MBA program.
Research Student Rahul Jivtode Faculty Guide Mr. Aakash Agrawal Faculty DMIMS Nagpur


This is to certify that THE ABOVE MENTIONED NAMES are bonafide student of MBA (IIIrd Year) of Datta Meghe institute of management studies, Nagpur, during 2010-2011. The project entitled Non Performing Assets in Tirupati Urban Co-operative Bank Ltd. is been submitted to Datta Meghe Institute of Management Studies as a Summer Internship Project.

Dr. Amishi Arora Director

Mr. Aakash Agrawal Faculty


We hereby declare that the project report entitled on Non Performing Assets in Tirupati Urban Co-operative Bank Ltd.. Or any part there has not been submitted earlier to any Institute or University for the award of any other Degree or Diploma, not the data has been derived any thesis of any University. The sources of material, data used in this study have been duly acknowledged.


At the successful completion of project on Banking industries, We would like to express my gratitude and thanks to, Mr. Aakash Agrawal, lecturer, Datta meghe institute of management studies; for guidance, support and help without which the completion of project was not possible.

We would like to show our gratitude toward Dr. Amishi Arora & other teaching staff of our college who were the sources of inspiration and motivation all through the program.

Contents Title Page No.

Introduction of banking company.6 Bank Profile.14 Introduction of NPA22 Objective of study...30 Research Methodology .....32 Sector of non performing Asset and data Analysi..35 Conclusion ...47 Suggestion49 Bibliography.50


An organization, usually a corporation, chartered by a state or federal government, which does most or all of the following: receives demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes; certifies depositor's checks; and issues drafts and cashier's checks.

In general terms, The business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn a profit So we can say that Banking is a company, which transacts the business of banking. The Banking Regulations Acts defines the business as banking by stating the essential function of a banker. The term banking is defined as Accepting for the purpose of leading or investment, deposits of money from the public, repayable on demand or otherwise and withdrawal by cheque, draft, order or otherwise.


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 1991To make this write-up more explanatory, we divide scenario in Phase I, Phase II and Phase III

The General Bank of India was set up in the year 1786. Next were 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, Canara 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.

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 the country. Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th July, 1969, major process of nationalization was carried out. It was the effort of the then City Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were 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 crore. Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions.

This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalization of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more importance than money. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure.


The central bank of the country is the Reserve Bank of India (RBI). It was established in April 1935 with a share capital of Rs. 5 crores on the basis of the recommendations of the Hilton Young Commission. The share capital was divided into shares of Rs. 100 each fully paid which was entirely owned by private shareholders in the beginning. The Government held shares of nominal value of Rs. 2, 20,000 Reserve Bank of India was nationalized in the year 1949. The general superintendence and direction of the Bank is entrusted to Central Board of Directors of 20


members, the Governor and four Deputy Governors, one Government official from the Ministry of Finance, ten nominated Directors by the Government to give representation to important elements in the economic life of the country, and four nominated Directors by the Central Government to represent the four local Boards with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local Boards consist of five members each Central Government appointed for a term of four years to represent territorial and economic interests and the interests of co-operative and indigenous banks. The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank. The Bank was constituted for the need of following: regulate the issue of banknotes to maintain reserves with a view to securing monetary stability and . To operate the credit and currency system of the country to its advantage.
. To


Almost 80% of the business is still controlled by Public Sector Banks (PSBs). PSBs are still dominating the commercial banking system. Shares of the leading PSBs are already listed on the stock exchanges.The RBI has given licenses to new private sector banks as part of the liberalization process. The RBI has also been granting licenses to industrial houses. Many banks are successfully running in the retail and consumer segments but are yet to deliver services to industrial finance, retail trade, small business and agricultural finance. The PSBs will play an important role in the industry due to its number of branches and foreign banks facing the constraint of limited number of branches. Hence, in order to achieve an efficient banking system, the onus is on the Government to encourage the PSBs to be run on professional lines.






Co-operative bank

Regional Rural bank

Foreign bank

Sector bank sector bank

The Co-operative banks have a history of almost 100 years. The Co-operative banks are an important constituent of the Indian Financial System, judging by the role assigned to them, the expectations they are supposed to fulfill, their number, and the number of offices they operate. The co-operative movement originated in the West, but the importance that such banks have assumed in India is rarely paralleled anywhere else in the world. Their role in rural financing continues to be important even today, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of primary co-operative banks. Some of the co-operative banks are quite forward looking and have developed sufficient core competencies to challenge state and private sector banks. According to NAFCUB the total deposits & landings of Co-operative Banks is much more than Old Private Sector Banks & also the New Private Sector Banks. This exponential growth of Co-operative Banks is attributed mainly to their much better local reach, personal interaction with customers, and their ability to catch the nerve of the local clientele. Though registered under the Co-operative Societies Act of the Respective States (where formed originally) the banking related activities of the co-operative banks are also regulated by the Reserve Bank of India. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.


. Farming . Cattle . Milk . Hatchery


. Personal finance


. Self-employment . Industries . Small scale units . Home finance . Consumer finance . Personal finance


. Some cooperative banks in India are more forward than many of the state and private sector banks. . According to NAFCUB the total deposits & landings of Cooperative Banks in India is much more than Old Private Sector Banks & also the New Private Sector Banks. . This exponential growth of Co operative Banks in India is attributed mainly to their much better local reach, personal interaction with customers, and their ability to catch the nerve of the local client.




TIRUPATI URBAN CO-OP BANK LTD, a Primary Urban Co-op Bank, registered under Co-op. Societies Act 1960 and a licensed Bank by RBI, was established on 4th April 1996, at Nagpur, by Hon.Shri Dattaji Meghe, Member of Parliament.

The Banks Board consists of 20 Directors with two of its Directors, being Chartered Accountants, with highly professional experience in Banking and Bank Audit, The Bank is working under the leadership of Shri Samir Dattatrayaji Meghe, as Chairman of the Bank . Tirupati Urban Co-op Bank, one of the leading and best performer Bank in Co-op Banking Sector, is working with total 11 branches and Head office ( nine branches in city of Nagpur, one at Wardha and one at Airoli, New Mumbai) with its Area of Operation as Entire State of Maharashtra.

The Bank Branches are catering all types of Banking services, round the week, i.e. Morning, Evening, and even on Sunday, with modern infrastructure facilities, and amenities to the customers and showing best performance through, last fifteen years, such as:

Adequate and well furnished, and Air-Conditioned, premises.

All branches are fully computerized from the day one, and have been interred connected through Interconnectivity.

SMS mobile banking services are available to its customers, free of cost, on account of which a customer can get the balance in his Saving / Current account, and also five last transactions, on his mobile, instantly.


Bank has well experienced and trained Managerial & qualified employees, to provide prompt and satisfactory services to the customers.

To start with, Bank has provided ATM facilities, at its Shraddhanand peth, and YCCE Hingna Road, Nagpur Branches. Bank has been certified ISO 9001-2000, during 2003. Bank is in Grade One and rated as A grade in audits/Inspections during past. On account of its best performance, the Bank has been awarded Best Urban Co-op Bank Awards, and honored with Late Vasantdada Patil Puraskar successively for last seven years, by Maharashtra State Co-op Bank Association, Mumbai and Vidarbha Co-op Banks Association, Nagpur Bank has also been awarded by Frontiers Banking, Mumbai for 2008, and 2009, for innovation in Decision Support and Excellence in Marketing.

Bank is member of Deposit Credit Guarantee Corporation Of India, and as such deposits of the Customers are secured to the extent of Rs 1 lack, as per DICGC scheme,


Goals & Quality Objectives of the Bank

Area of operation being Entire State of Maharashtra, we propose to open Branches, in other Districts in State, in near future.

Bank has opened ATMs at two branches ( Main Branch and YCCE Branch) During the year, and propose to extend the facility at other branches in near future.

To provide Core Banking facility and achieve planned growth in principle parameters viz. Deposits, Credit ,Profit and to bring down the NPA to Zero %.

To work with complaint free performance, improve loyalty, confidence and ultimate satisfaction of our Share Holders , Depositors, and thus getting excellent rating from the customers.

To develop human resources and to ensure their optimal utilization by improving productivity for efficient customer service.

To sustain and improve shareholders loyalty, confidence and to ensure adequate value for money to the satisfaction of share holders.

To bring continuous improvement in the system and strive for up-gradation of technology for operational efficiency and ultimate customers satisfaction.

Quality Policy:


Tirupati Urban Co-op Bank Ltd, will strive for organizational excellence and endeavor to provide highest degree of satisfaction to its services, technology and resources within the framework of co-operative principles and statutory guidelines.

Banks Performance During Past Five Years : Rs in Lac Financial Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Deposit 9057.61 10681.46 13124.94 15107.14 18000.00 21011.12 Loans and Advances 5864.69 6438.69 7791.14 9149,45 11223.00 12502.73 Profit 89.98 185.00 157.10 * 264.87 * 319.00 * 373.15 * Share Capital 235.57 251.26 336.24 384.96 470.00 529.46 Net NPA % CRAR % 2.14% 1.92% 0.96% 2.20% 0.40% 0.73% 16.78% 14.58% 12.58% 14.35% 16.74% 17.65%

Net Profit is after Income Tax

Other Important Features of the Bank : Rs in Lac Particular Total Reserves Own Funds Investments Working Capital Per Employee Business March 2009 Rs 1111.96 Rs 1790.78 Rs 7757.23 Rs 20434.04 Rs 317.58 March 2010 Rs 1381.62 Rs 2132.91 Rs 10439.75 Rs 24218.25 Rs 351.78


Board of Directors
Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Name Shri Samir Dattarayaji Meghe Shri Pramod Vinayakrao Darne Shri Sagar Dattarayaji Meghe Shri Rajendra Bhausaheb Mulak, M.L.A. Shri Prem Grover Shri Prakash Sanghavi Dr. Shri Dilip Gode Shri B. J. Bajaj, C.A. Mohd. Kamil Ansari Shri Annaji Raut Shri Sudhakar Deshmukh, M.L.A. Shri Rajay Surana Shri Narayan Ahuja Shri Raghunath Malikar Shri Mahendra Thakur Smt Sushila Jadhav Smt Sumati Wankhede Mrs Archana Vaidya Shri M.L.Pande Shri Ramesh Borkute Shri Nitin Korke Chairman Vice - Chairman Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Employees Representative Designation

Shri. Rajendra Raut Chief Executive Officer


Head Office : 172, Shraddhanand Peth, South Ambazari Road, Nagpur-440010 Tel : 0712 - 2221120, 2221686, 2231696 Mob. : +91 9158884857, +91 9158884850, +91 9158884860 Website : E-mail : Gaindhibag, Nagpur : Inland Building Gitanjali Square, Central Avenue Road, Nagpur-440010 Tel : 0712 - 2727959, 2727650 Mob. : +91 9158884844 Sakkardara, Nagpur : Tajshree Towers, Umred Road, Sakkardara Chowk, Nagpur-440010 Tel : 0712 - 2757432, 2756716 Mob. : +91 9158884861 Narendra Nagar, Nagpur : 3/B, Vijayanand Society, Narendra Nagar, Ring Road, Nagpur-440010 Tel : 0712 - 2704335, 2704312 Mob. : +91 9158884847 Anant Nagar, Nagpur : Surana Bhavan ,Near Jafar Nagar Church, Borgaon Road, Nagpur-440010 Tel : 0712 - 2595210, 2592414 Mob. : +91 9158884859 Yashwantrao Chavan College of Engineering, Wanadongri : Hingna Road, Wanadongri, Nagpur Tel : 0712 - 9571042, 76886 Mob. : +91 9158884849 Vimaltai Tidke Convent, Nagpur : Laxmi Apartment, Plot No 3, Dindayal Nagar, Pratap Nagar, Ring Road, Nagpur Tel : 0712 - 2282214 Mob. : +91 9158884856


Kannamwar College of Engineering, Nagpur : New Nandanwan, Opposite KDK Engineering College, Nagpur Tel : 0712 - 2711489 Mob. : +91 9158884862

Ganeshpeth, Nagpur : 414, Rahul Complex, Wing No-1, 1st Floor Ganesh Peth, Nagpur Tel : 0712 - 6640341 Mob. : +91 9158884863 Wardha : Anaj Line, Wardha Tel : 07152 - 250422 Mob. : +91 9158884858 Airoli, New Mumbai : Plot No 30, Sector16, Airoli, New Mumbai Tel : 022 - 5884846 Mob. : +91 9158884846





. MEANING An asset becomes non-performing when it ceases to generate income for the bank. Earlier an asset was considered as non performing asset based on the concept of past due.

. DEFINITION A NPA was defined as credit in respect of which interest and/or installment of principal has remained past due for a specific period of time. The specific period of time was reduced in a phased manner as under:

Year ended March,31 1993 1994 1995 2004

Specific Period 4 Quarters 3 Quarters 2 Quarters 1 Quarters

An amount is considered as past due, when it remains outstanding for 30 days beyond the due date. However, with effect from March31, 2001 the past due concept has been dispensed with and the period is reckoned from the due date of payment.



With an intense to use the international best practice and to ensure greater transparency, 90 days overdue norms are accepted for the identification of NPA from the year ended March 31, 2004.

With effect from March 31, 2004, a NPA shall be counted on loan and advances where:

A. Interest and / or installment of principal remain overdue for a period of more than 90 days in respect of a term loan. B. The account remains out of order for a period of 90 days, in respect of an Overdraft/ Cash Credit (OD/CC). C. The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted. D. Any amount to be received remains overdue for a period of more than 90 days in respect of any other accounts.

Tier 2 bank like all the Urban Co-Operative Banks (UCBs) other than the Tier 1 bank i.e. Unit bank shall classify their loan accounts as NPA as per 90 day norm as hitherto.



. Improper selection of borrowers activities . Weak credit appraisal system . Industrial problem . Inefficiency in management of borrower . Slackness in credit management & monitoring . Lack of proper follow up by bank . Recession in the market . Due to natural calamities and other uncertainties


Gross NPAs (non-performing assets) in Indian banking sector have declined sharply to close to 3.0 per cent in 2006 (15.7 per cent at end-March 1997). Net NPAs of the banking sector are now at close to one per cent and the gap between the gross and net NPAs has narrowed over the years. Recovery of dues is also more than the fresh slippages. The decline in NPAs is particularly significant as income recognition, asset classification and provisioning norms were tightened over the years. For instance, banks now follow 90-day delinquency norm as against 180-day earlier. Banks are also required to make general provisioning (0.40 per cent) for standard advances. According to Reserve Bank of India, improved profitability, underpinned by robust macroeconomic environment and upturn in interest rate cycle, has enabled banks to reduce the backlog of NPAs.




The committee on financial system, also known as Narsimhan Committee, under the chairmanship of Shri M. Narsimhan, appointed by the RBI recommended the introduction of these prudential accounting norms by Indian Banks in its report submitted in December 1991. The committee was of view of that

A. If banks want to know the true and fair financial health of bank then they should observed the prudential accounting norms while making balance sheet and profit & loss account. B. Classification of assets has to be done on the basis of objective criteria. C. Provisioning should be made on the basis of classification into four different categories.

The income recognition, Assets Classification and provisioning norms also known as Prudential Accounting Norms, provided that a bank should not show profit which is merely a book profit by resorting to practice like debiting interest to a loan account irrespective of its chance of recovery and booking the same as income or by not making provisions towards loan losses. . NARSIMHAN COMMITTEES RECOMMENATIONS

@. Committee has suggested that banks should operate on the basis of financial autonomy and operational flexibility. @. It has recommended Capital Adequacy Norm of 8% @. These norms are applicable to all UCBs from 1st April, 1992. 26


The first committee had made recommendations in 1991, which had resulted in basic changes in the matter of treatment of income, assets classification and provisioning norms, etcit was considered necessary for government to continue the improvement with striker rules in future also and for that second committee was made to continue changes with certain modifications.

The second committee includes the following points: 1. If bank is working in foreign countries at presently then for them the Capital Adequacy Norm is 9% which was 8% earlier. 2. Banks cant classify the account as NPA which are guaranteed by the Central / State government, effective from the year 2000-2001. 3. As per the existing norms, no provisions for standard assets but from March 31st 2000, there is a norm of 0.25 percent on standard assets.

4. Banks have to make a provision of 2.5% on their investment in Government securities with effect from the year ending 31st March, 2000. In future, this provision is likely to be raised to 5%. 5. The present norm is of 180 days for the account to be treated as NPA but after 31st March, 2000, this period is reduced to 90 days only.

6. Banks have been asked to reduce the level of NPA to 5% of their total advances till 31st March, 2000. The percentage has to be brought down to less than 3% with effect from 31st March, 2002.














Reserve Bank of India (RBI) has issued guidelines on provisioning requirement with respect to bank advances. In terms of these guidelines, bank advances are mainly classified in to following categories:

1. STANDARD ASSETS: Standard assets are one which does not carry any problems and which does not carry more than normal risk attached to the business. Such assets should not be an NPA.

2. SUB-STANDARD ASSETS: These assets involved the two types of view as follows In respect to the norms of March 31, 2005 an asset would be classified as Sub standard if it remained NPA for a period less than or equal to 12 months. An assets where the terms of the loan agreement regarding interest & principal have been regenerated or rescheduled after commencement of production, should be classified as substandard and should remain in such category for at least 12 months of satisfactory performance under the re-negotiated terms.

3. DOUBTFUL ASSETS: In respect to the norms of March 31, 2005 an asset is required to be classified as doubtful, if it has remained NPA for more than 12 months. A loan which is classified as doubtful has all the weaknesses inherent as that classified as Sub-standard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently known facts, conditions and values, highly questionable and improbable. Some types of these assets are A. Less than 1 year B. 1 to 3 year C. 3 year and above 4. LOSS ASSETS


A loss asset is one where loss has been identified by the bank or internal or external auditors or by the Co-operation department or by the RBI inspection but the amount has not been written of, wholly or partly.

Objective of Study


The main objectives of the studies are:

To study and understand the concept of NPA

To study the NPA in different sector of the bank. To understand the effect of NPA on banks profit and its prestige

To understand how corrective measures taken by bank for NPA

To understand RBIS rules and regulations for the control of NPA

To understand the credit appraisal policy and NPA recovery policy of bank


Research Methodology


Research Methodology
In the complex arena of financial sector the new concept of Non performing assets was introduced by RBI. As per new guidelines the credit facility has divided as performing Assets and Non performing Assets. Non performing assets are those advances on which interest and principal amount remains due for more than two quarters i.e. 180 days.

Review of Literature
For the review of literature the researcher had referred to various books in collage library and collection relevant information required for Non performing assets. The researcher had also visited various internet sites for review of literature.

Selection of topic
The researcher had selected the topic Non Performing Assets of Tirupati Urban CO-operative Bank Ltd. Because non performing assets are the major cause of concern in the banking sector as reducing their profitability.

Rational or Significance


By going through the research project one can easily get the basic knowledge about Non performing Assets, Factors affecting the accumulation of Non performing Assets, securitization and reconstruction of financial assets and enforcement of security interest Act2002.

Coverage of or major valuables

1. Non Performing assets 2. Classification of assets 3. Provisioning of Non Performing Assets

Research Design
The research had described the fact and in a systematic way and hence designed is descriptive in nature.

Scope of the study Area

The researcher had conducted the research in the Tirupati urban cooperative bank ltd.

The researcher had completed the research within one month.

Data Collection
The researcher had personally contacted the respondents and asked for relevant information necessary for the study of non performing assets.


Limitation of research
The main limitation of the research conducted by the researcher is that he has limited his study to Tirupati urban co-operative bank ltd. only.


Tirupati urban cooperative bank ltd.


Sectors of NPA in Retail Loans

Vehicle loan

Housing loan

Mortgage loan

Tern loan

Personal loan

Educational loan


Vehicle Loan
Vehicle loan is considered for purchase of : Two Wheeler Purchase of Car Three Wheeler / Five Wheeler / Tempo Commercial Vehicles Like Truck etc

Eligibility : The applicant must have assured monthly income to repay the EMI Possess Driving License In case of Taxi / Auto Rickshaw, permit from RTO Extent of Loan : For New vehicles, for own personal use : Maximum 85% of the cost of the vehicle Maximum 70% of the vehicle which not more than three years old Rate of Interest : New Car loan @ 10.50% p.a. with monthly rest New two wheeler loan @ 11.50% p.a. with monthly rest Old Vehicles @ 11.50% p.a. with monthly rest Commercial new vehicles @ 11.50% p.a. with monthly rest Commercial old vehicles @ 15.00% p.a. with monthly rest

Repayment : Entire loan is to be repaid with maximum period of


Maximum 5 years in 60 equal monthly installment Security : Hypothecation of Vehicle, Registration of Charge with RTO with Bank Clause Insurance of the Vehicle with Bank Clause Guarantee from two suitable Guarantors Charges : Applicant Member shall purchase shares of the Bank 2.5% of the Loan Amount Insurance and other documentation charges

Documents Needed
Proof of income Salaried -your latest salary slip Self employed- your latest IT return Proof of residence Phone bill, Electricity bill, Driving license, Ration card Proof of Identity Latest Photograph of or copy of driving license-IT pan card\ Election ID card Signature Verification From your bank or copy of Driving license \ IT pan card.


Personal Loan
Eligibility : The persons having monthly source of income Purpose : o Medical treatment o Marriage purpose / House hold purpose o Education of their wards Extent of Loan : o Unsecured loan : Maximum Rs 50,000/o Secured Loans : Maximum Rs 100,000 Rate of Interest : o For Education purpose @ 12% p.a. with monthly rest o For others @ 15.50% p.a. with monthly rest Security : o Unsecured Loans : Guarantee from two suitable Guarantors o Post dated cheques towards Repayment of EMI Repayment : o Consumer Loan shall be recovered within maximum period of Five years ,in 36 monthly installments Loan Charges : o Documentation Charges 39

o o

Mortgage / legal, charges Processing fee @ 1.15% of the loan amount

Documents Needed
Proof of income Salaried -your latest salary slip Self employed- your latest IT return Proof of residence Phone bill, Electricity bill, Driving license, Ration card Proof of Identity Latest Photograph of or copy of driving license-IT pan card\ Election ID card Signature Verification Your latest banking statement


Financial Highlights

Banks performance during the past five years is as under

Rs. In lacs.
Financial Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Deposit 9057.61 10681.46 13124.94 15107.14 18000.00 21011.12 Loans and Advances 5864.69 6438.69 7791.14 9149,45 11223.00 12502.73 Profit 89.98 185.00 157.10 * 264.87 * 319.00 * 373.15 * Share Capital 235.57 251.26 336.24 384.96 470.00 529.46 Net NPA % CRAR % 2.14% 1.92% 0.96% 2.20% 0.40% 0.73% 16.78% 14.58% 12.58% 14.35% 16.74% 17.65%


Graph of Deposit, Loan and Invesments

25000 20000 15000 10000 5000 0 2007-08 2008-09 2009-10 Deposit Loan Investment


The above graph shows financial aspects of the bank in which there in a three consecutive financial years showing the deposits, loans and investments of the bank, shows the respective in three consecutive years.

Net Profit After Tax

2.50% 2.00% 1.50% percentage 1.00% 0.50% 0.00% 2007-08 2008-09 2009-10

The above graph shows the net profit after tax earned by the bank in last three consecutive years, which shows that the bank

has been earning proft in a progressive direction and which interprets the financial condition of the bank.


2009-10, 0.73%

2008-09, 0.40% 2007-08, 2.20%


The bank has 2.20% NPA in the year 2007-08 and that has been reduce 0.75%. at the year 2008-09 it has been 0.40%, and in year 2009-10 it has been 0.73% which is increase.

Reasons for NPA in banks

In liberalizing economy banking and financial sectoes get high priority. Banking sector of having a serious problem due to non performing. NPA is defined as an advance for which interest or repayment of principal or both remain out standing for a period of more than two quarters. The level of NPA act as an indicator showing the bankers credit risks and efficiency of allocation of resource.



Various studied have been conducted to analysis the reasons for NPA. Whatever may be complete elimination of NPA is possible. The reasons may be widely classified in two: 1. Over hang components 2. Incremental components

Over hang components is due to the environment reasons, business cycle etc. Incremental components may be due to internal bank management, credit policy, terms of credit etc.

Reasons for NPA in Tirupati Urban CO-Operative Bank Ltd.

Default customer Low paying capacity of customers Wrong intention of customers Accidents of customers

Comparison between NPAs of years 2006-07 and 2007-08

In the year 2007-08 NPA of vehicles loans decreased by 0.97% because of regular follow up of bank to customers than the year 2006-07.


In the year 2007-08 NPA of personal loans increased by 2.45% because of defaults customers than the year 2006-07 In the year 2007-08 NPA of education loan increased by 0.25% than the year 2006-07 because bank has just started to give these kind of loan.

Management of NPA:
Various steps have been taken by the bank to recover and reduce NPAs. some of them are: One time settlement Compromise scheme Debt recovery tribunal Credit information on defaulters and role of credit information bureaus. Lok adalats.




Now as we know that NON-PERFORMING ASSETS is like a black spot on diamond. They affect the profit of bank and also the financial health of bank. This NPA have number of effects on banks working.

During my training in bank I gathered as much as possible information about NPA from bank and on the basis my experience I conclude the following points: Tirupati urban Co. banks NPA level is decreasing year by year which good for bank. In year 2009 Tirupati urban Co. banks own NPA is very low but in year 2010 NPA was increase. Co. Bank has sound credit appraisal system and also sound recovery policy.


1. Tirupati Urban Co. banks NPA level is decreasing year by year which good for bank but bank should follow the recovery policy strictly.

2. In Tirupati Urban Co. bank there is no any special recovery department so bank should develop the department for the fastest recovery of NPA.

3. Bank should motivate the staff to do fast recovery NPA.




Books: Annual Report of Tirupati Urban Co-Operative Bank Bank Credit Management G. Viojayaragavan,Ph. D Money, Banking, International, trade and public finance- D.M. Mithani Website: