A

Comprehensive Project Report

on

“A COMPARETIVE STUDY OF HDFC AND ICICI BANK’S NPA”

Submitted To
CVM UNIVERSITY
VALLABH VIDHYANAGAR

UNDER THE GUIDANCE

Of
DR. Ashok Gaur
Assistance Professor

In partial fulfilment of the requirement for the award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

(SEMESTER-VI)

Submitted by

HARSH AJITKUMAR BACHANI

UNIVERSITY EXAM NO:- 6301027

At

SEMCOM
(S G M ENGLISH MEDIUM COLLEGE OF COMMERCE AND MANAGEMENT)

APRIL 2023

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 Preface

I always give thanks for the presence of God Almighty who has given us the gift of the
opportunity to learn. The completion of this research report does not mean the end of
our duties as learners. In fact, this report is a first step towards consistently studying
what we have reviewed and written here.
It is a great opportunity for us to have the BACHELOR OF BUSINESS
ADMINISTRATION COURSE at SEMCOM COLLEGE, VALLABH
VIDHYANAGAR. In the accomplishment of this degree, I am submitting a project
report on "A COMPARETIVE STUDY OF HDFC AND ICICI BANK’S NPA".
Subject to the limitation of time efforts and resources, every possible attempt has been
made to study the research deeply. The whole project is measured through the
information, facts & secondary data and the data further analyzed and interpreted and
the result was obtained.
As part of this curriculum, we will prepare a report on our understanding of non-
Profiting assets of HDFC Bank and ICICI Bank. Therefore, the course fills the gap
between theoretical study and practical management, and it’s application in the daily
routines of companies.

Date:
Place: Vallabh Vidhyanagar Harsh Bachani

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 ACKNOWLEDGEMENTS

I would like to take the opportunity to express my sincere gratitude to all people who
have helped me with sound advice and able guidance. I would like to express my
gratitude to all the faculties of the College for their interest and cooperation in this
regard.
I am eternally thankful to the Almighty God for a resounding success. With his
blessings and grace, we are able to make this project. Secondly, I would like to
express my gratitude towards our family members, friends and teachers for their kind
co-operation and encouragement which help us in completion of this project. I am
obliged to have such positive and stimulating influence while preparing this project.
I would like to extend our full-hearted respect and gratitude to our Principal, Dr.
Swati Parab for giving us this manifesto in view of gifted schooling. Due to this we
gain more knowledge and ideas, new methods and policies, new perspective of market
regarding the current affairs of the World Economy and its changing dynamics.
Lastly, I (Harsh Bachani) student of BBA of SEMCOM COLLEGE profoundly
expressing my courtesy and gratitude to my esteem project guide Dr. Ashok Gaur
who assisted us in completion of project and also gave the guidance for making the
resources available at right time and providing valuable insights leading to
successfully completion of my project.

Date:
Place: Vallabh Vidhyanar Harsh Bachani

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 Table of Content
Sr. No. Content Page no.

I Preface -

II Acknowledgment -

III Certificate -

IV Table of Content -

CHAPTER – 1 INTRODUCTION 6-15

CHAPTER – 2 COMPANY 16-20

PROFILE

CHAPTER – 3 LITRETURE 21-26

REVIEW

CHAPTER – 4 RESEARCH 27-29

METHODOLOGY

CHAPTER – 5 DATA ANALYSIS 30-39

AND
INTERPRETATION
CHAPTER – 6 FINDINGS 40-44

V BIBLIOGRAPHY 45-46

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 Chapetr-1 Introduction

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 Finance is the study and discipline of money, currency and capital assets. It is related
to, but not synonymous with economics, which is the study of production, distribution,
and consumption of money, assets, goods and services (the discipline of financial
economics bridges the two). Finance activities take place in financial systems at various
scopes; thus, the field can be roughly divided into personal, corporate, and public
finance. In a financial system, assets are bought, sold, or traded as financial instruments,
such as currencies, loans, bonds, shares, stocks, options, futures, etc. Assets can also be
banked, invested, and insured to maximize value and minimize loss. In practice, risks
are always present in any financial action and entities.

In business, though, assets need to provide positive economic value — the resource
must create or produce something that the company can sell for cash, or the resource
itself must hold resale value. Most things a company owns or controls are assets in one
way or another. For example, employees are assets because companies need people to
keep things running, create products, or offer services. The building the employees work
in is also an asset, as well as any piece of machinery and the inventory employees make
or use.

Assets are at the heart of any business’ finances, so business owners and members of a
company’s finance team need to understand their company’s assets intimately.
Accountants, in particular, must have a strong understanding of assets and how they
affect a company’s finances. Accounting often involves looking at the relationships
between assets and other key metrics of a business’s finances, like revenue, liabilities,
and equity.

An asset is a resource owned or controlled by an individual, corporation, or government

with the expectation that it will generate a positive economic benefit. Common types of
assets include current, non-current, physical, intangible, operating, and non-operating.
Correctly identifying and classifying the types of assets is critical to the survival of a
company, specifically its solvency and associated risks.

Properties of an Asset
There are three key properties of an asset:

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  Ownership: Assets represent ownership that can be eventually turned into cash and cash
equivalents.
 Economic Value: Assets have economic value and can be exchanged or sold.
 Resource: Assets are resources that can be used to generate future economic benefits.

Classification of Assets
Assets are generally classified in three ways:
 Convertibility: Classifying assets based on how easy it is to convert them into cash.
 Physical Existence: Classifying assets based on their physical existence (in other words,
tangible vs. intangible assets).
 Usage: Classifying assets based on their business operation usage/purpose.

Classification of Assets: Convertibility

If assets are classified based on their convertibility into cash, assets are classified as
either current assets or fixed assets. An alternative expression of this concept is short-
term vs. long-term assets.

1. Current Assets
Current assets are assets that can be easily converted into cash and cash equivalents
(typically within a year). Current assets are also termed liquid assets and examples of
such are:
 Cash
 Cash equivalents
 Short-term deposits
 Accounts receivables
 Inventory
 Marketable securities
 Office supplies
2. Fixed or Non-Current Assets
Non-current assets are assets that cannot be easily and readily converted into cash and
cash equivalents. Non-current assets are also termed fixed assets, long-term assets, or
hard assets. Examples of non-current or fixed assets include:

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  Land
 Building
 Machinery
 Equipment
 Patents
 Trademarks

Classification of Assets: Physical Existence

If assets are classified based on their physical existence, assets are classified as either
tangible assets or intangible assets.

1. Tangible Assets
Tangible assets are assets with physical existence (we can touch, feel, and see them).
Examples of tangible assets include:
 Land
 Building
 Machinery
 Equipment
 Cash
 Office supplies
 Inventory
 Marketable securities
2. Intangible Assets
Intangible assets are assets that lack physical existence. Examples of intangible assets
include:
 Goodwill
 Patents
 Brand
 Copyrights
 Trademarks
 Trade secrets
 Licenses and permits

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  Corporate intellectual property
 Classification of Assets: Usage

If assets are classified based on their usage or purpose, assets are classified as either
operating assets or non-operating assets.
1. Operating Assets
Operating assets are assets that are required in the daily operation of a business. In other
words, operating assets are used to generate revenue from a company’s core business
activities. Examples of operating assets include:
 Cash
 Accounts receivable
 Inventory
 Building
 Machinery
 Equipment\
 Patents
 Copyrights
 Goodwill
2. Non-Operating Assets
Non-operating assets are assets that are not required for daily business operations but
can still generate revenue. Examples of non-operating assets include:
 Short-term investments
 Marketable securities
 Vacant land
 Interest income from a fixed deposit

Importance of Asset Classification

Classifying assets is important to a business. For example, understanding which assets
are current assets and which are fixed assets is important in understanding the net
working capital of a company. In the scenario of a company in a high-risk industry,
understanding which assets are tangible and intangible helps to assess its solvency and

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 risk. Determining which assets are operating assets and which assets are non-operating
assets is important to understanding the contribution of revenue from each asset, as well
as in determining what percentage of a company’s revenues comes from its core
business activities.

What is non-performing assets: -

Loans or advances in default or arrears are called NPA or non-performing assets. Arrears
is when the payments are delayed or missed. A loan defaults when the loan agreement
is broken and the individual who has taken the loan cannot meet the financial
obligations.

Non-performing assets are listed on the balance sheet of a bank or some other financial
institution. After an extended period of non-payment, the lender forces the borrower to
liquidate any assets that were vowed as part of the debt agreement. If there are no such
assets, the lender might write off the asset as a bad debt and sell it at a discount to any
collection agency.In most cases, debt is classified as non-performing when loan
payments have not been made for 90 days. While 90 days is usually the standard, the
amount of passed time may be shorter or longer based on the terms and conditions of
each loan. A loan can be classified as a non-performing asset at any point during the
term of the loan or at its maturity.

Categories of NPAs: -
Banks are required to classify non-performing assets further into the following three
categories based on the period for which the asset has remained non-performing and the
realisability of the dues:
 Sub-standard Assets

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  Doubtful Assets
 Loss Assets

1 Sub-standard Assets
A sub-standard asset was one, which was classified as NPA for a period not exceeding
two years. With effect from 31 March 2001, a sub-standard asset is one, which has
remained NPA for a period less than or equal to 18 months. In such cases, the current
net worth of the borrower/ guarantor or the current market value of the security charged
is not enough to ensure recovery of the dues to the banks in full. In other words, such
an asset will have well defined credit weaknesses that jeopardise the liquidation of the
debt and are characterised by the distinct possibility that the banks will sustain some
loss, if deficiencies are not corrected.

2 Doubtful Assets
A doubtful asset was one, which remained NPA for a period exceeding two years. With
effect from 31 March 2001, an asset is to be classified as doubtful, if it has remained
NPA for a period exceeding 18 months. A loan classified as doubtful has all the
weaknesses inherent in assets that were classified as sub-standard, with the added
characteristic that the weaknesses make collection or liquidation in full, – on the basis
of currently known facts, conditions and values – highly questionable and improbable.

3 Loss Assets
A loss asset is one where loss has been identified by the bank or internal or external
auditors or the RBI inspection but the amount has not been written off wholly. In other
words, such an asset is considered uncollectible and of such little value that its
continuance as a bankable asset is not warranted although there may be some salvage
or recovery value.

How NPAs affect banks?

We know banks are the driving wheels of the Indian economy. They take money from
the public as a deposit offering them an interest. They lend the collected money to the
public and companies as loans at an interest rate higher than the interest rate offered to

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 depositors. The difference in the interest or net interest income is used towards the
functioning of the bank.
When the money lent becomes uncollectible the banks come under a financial burden
affecting their functioning as a whole. So, NPAs directly impact the performance of the
bank.

The impact of rising NPAs can be as follows:

 Rising NPAs undermine the bank’s image, making the public lose trust in banks. The
depositors may withdraw their deposits causing liquidity issues for banks.

 The lack of liquidity prevents banks from lending for other productive activities in the
economy. The curb in investments may slow down the economy leading to
unemployment, inflation, bear market, etc.

 To maintain their profit margins, banks will be forced to increase interest rates which
again hurt the economy.

What caused the NPA crisis in India?

 The Indian economy enjoyed a booming phase in 2000s. Businesses and companies
borrowed extensively from the Indian banks to fund their projects. Banks funded a lot
of projects in the infrastructure and power sectors which became unviable later due to
multiple reasons like rising costs, 2008 recession after effects, etc. All these led to the
impairing of balance sheet of banks with scaling NPAs by 2013.

 When RBI started cleansing the books of the banks, the cases of wilful defaulting with
thousands of crores came out. This was when the negligence of banks in assessing the
creditworthiness came into light and the corruption involved in a few cases.
All these factors led to the mounting NPAs in Indian Banks which almost doubled by
2021.

Methods on how to reduce NPA in banking sector:

1) Debt Recovery Tribunals

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 The Act, which was passed by the Indian Parliament in 1993, empowers financial
institutions to quickly collect debts of ten lakhs or more. DRTs are able to handle a
higher number of cases than conventional courts by reducing delays in the beginning
procedures.

2) Lok Adalats
According to RBI guidelines announced in 2001, small loans of less than 5 lakhs can
be recovered through Lok Adalats. This alternate conflict resolution system applies to
both lawsuits and non-suit instances.

3) Compromise Settlement
This scheme assists in the recovery of NPAs up to ten crores through such a
straightforward non-discretionary mechanism.

4) Credit Information Bureau

CIBIL is a third-party agency that provides banks with data about your financial
condition. Personal defaulter records are kept by the Credit Information Bureau, which
shares them with banks to help them make more informed credit decisions. A fee may
be imposed on banks for this service.

5) Sarfaesi Act, 2002

The SARFAESI gives banks three options for dealing with nonperforming assets
(NPAs) without having to go to courts such as asset reconstruction, security
enforcement and securitization. SARFAESI can deal with any unpaid amount of more
than Rs. 1 lakh. Under the Act, however, an amount less than 20% of the principal and
interest amount is not recognized. The Act also gives banks the authority to send a
notification to you (and your guarantor) requesting that the payment be released within
60 days of receipt of the notice.
How to reduce NPA in Indian banks?
The bank should do a comprehensive investigation of the company to which it is lending
money. Loans to failing businesses will result in a shortage of funds for excellent
investments. It is preferable to make the defaulters’ name list public. This creates fear
and serves as a deterrent. After granting a loan, the bank should regularly monitor the

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 company’s capacity and be able to determine whether it is likely to go bankrupt. As a
result, the bank will sell the assets before the debts become non-performing.

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 Chapter-2 Company profile

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 The selected 2 banks for this research
1. HDFC Bank
2. ICICI Bank

HDFC Bank Limited (also known as HDB) is an Indian banking and financial services
company headquartered in Mumbai. It is India's largest private sector bank by assets
and world's 10th largest bank by market capitalisation as of April 2021. It is the third
largest company by market capitalisation of $127.16 billion on the Indian stock
exchanges. It is also the fifteenth largest employer in India with nearly 150,000
employees.

 History
HDFC Bank was incorporated in 1994 as a subsidiary of the Housing Development
Finance Corporation, with its registered office in Mumbai, Maharashtra, India. Its first
corporate office and a full-service branch at Sandoz House, Worli were inaugurated by
the then Union Finance Minister, Manmohan Singh. As of 31 March 2023, the bank's
distribution network was at 7,821 branches across 3,203 cities. It has installed
430,000 POS terminals and issued 23,570,000 debit cards and 12 million credit cards
in FY 2017. It has a base of 1,52,511 permanent employees as of 30 June 2022.

 Product and service

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 HDFC Bank provides a number of products and services including wholesale
banking, retail banking, treasury, auto loans, two-wheeler loans, personal loans, loans
against property, consumer durable loan, lifestyle loan and credit cards. Along with
these various digital products are Payzapp and SmartBUY.

 Investments
In March 2020, Housing Development Finance Corporation, parent company of HDFC
Bank, made an investment of ₹1,000 crores in Yes Bank. As per the scheme of
reconstruction of Yes Bank, 75% of the total investment by the corporation would be
locked in for three years. On 14 March, Yes Bank allotted 100 crore shares of the face
value of ₹2 each for consideration of ₹10 per share (including ₹8 premium) to the
Corporation aggregating to 7.97 percent of the post-issue equity share capital of Yes
bank.

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 ICICI Bank Limited is an Indian multinational bank and financial services company
headquartered in Mumbai. It offers a wide range of banking products and financial
services for corporate and retail customers through a variety of delivery channels and
specialized subsidiaries in the areas of investment banking, life, non-life
insurance, venture capital and asset management.

This development finance institution has a network of 5,900 branches and 16,650 ATMs
across India and has a presence in 17 countries. The bank has subsidiaries in the United
Kingdom and Canada; branches in United States, Singapore, Bahrain, Hong
Kong, Qatar, Oman, Dubai International Finance Centre, China and South Africa; as
well as representative offices in United Arab
Emirates, Bangladesh, Malaysia and Indonesia. The company's UK subsidiary has also
established branches in Belgium and Germany.

 History
The Industrial Credit and Investment Corporation of India (ICICI) was a government
institution established on 5 January 1994 and Sir Arcot Ramasamy Mudaliar was
elected as the first Chairman of ICICI Ltd. It was structured as a joint-venture of

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 the World Bank, India's public-sector banks and public-sector insurance companies to
provide project financing to Indian industry.
ICICI Bank was established by ICICI, as a wholly owned subsidiary in 1994
in Vadodara. The bank was founded as the Industrial Credit and Investment
Corporation of India Bank, before it changed its name to ICICI Bank. In October 2001,
the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two
of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services
Limited and ICICI Capital Services Limited, with ICICI Bank. The merger of parent
ICICI Ltd. into its subsidiary ICICI Bank led to privatization.
In the 1990s, ICICI transformed its business from a development financial institution
offering only project finance to a diversified financial services group, offering a wide
variety of products and services, both directly and through a number of subsidiaries and
affiliates like ICICI Bank. ICICI Bank launched Internet Banking operations in 1998.

 Product and services

ICICI Bank offers products and services such as online money transfers, tracking
services, current accounts, savings accounts, time deposits, recurring deposits,
mortages, loans, automated lockers, credit cards, prepaid cards, debit cards and digital
wallets called ICICI pocket.
ICICI bank launched 'ICICIStack' which provides online services such as payment
options, digital accounts, instant car loans, insurance, investments, loans and more.

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 Chapter-3 LITERATURE REVIEW

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 1. Garg, A. (2015)

this study was Descriptive research and based on secondary data. They use data from
2001- 2011.major focus on the analyze the nature, extent and magnitude of NPAs of
Public sector banks, Private sector bank and Foreign Banks. And determine the possible
correlation among the Profitability of this banks and NPA levels. For analysining they
use Hypothesis Testing Using T-test. Test is use for find correlation between Net NPA
and Net Profit of Public, Private and Foreign sector banks. And find that NPA of foreign
banks and private sector banks reduced and while public sector banks increased. And
suggest that by effective management NPA may be control.

2. Shah, V., & Sharma, S. (2016)

the research paper identifies that how working of NPA in Private Sector bank and how
to decrease NPA. For that they use ratio analysis and check that bank gross NPA is
increase or not. NPA give ideas about performance of bank. And also give Reasons for
a loan become NPA. They analyze data of ICICI and HDFC bank. And find that no one
control NPA but we can reduce by proper policy appraisal, supervision.

3. Bhandari, M. (2019)
this study aim was known that how efficiently public sector banks and Private sector
banks are handling their NPAs. They analyze position of NPAs. For that they collect
data from year 2005- 06 to 2017-18. For data collection they use secondary method.
And conclude that NPAs of banking sector also effect on economy. And required some
measure take care for control of NPAs like Credit risk management, Credit Monitoring,
Handling Corporate Governance Issues, Strict NPA recovery, Asset Reconstruction
Companies.

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 4. Mohnani, P., & Deshmukh, M. (2013)
this paper aim for evaluate the operational performance of selected public sector and
private sector bank in India. And they also analyze the efficiency of management of
NPAs of those selected banks. For the analyzing they collect secondary data. It includes
Articles and papers relating to NPA published in different business journals, magazines,
newspaper and data available on internet were also used. They collect Public Sector’s
bank SBI and PNB bank’s data and Private Sector bank’s ICICI and HDFC bank data.
They use Measure of central tendency, frequency distribution, Standard Deviations,
coefficient of variation for the interpretation. And give conclusion that that impact of
NPAs on operations by many ways like increase cost of capital, return on investment
reduce, also effect on bank’s profitability. NPAs suggests bank performance so its need
to reduce it.

5. Misra, S. K., & Rana, R.

This study descriptive in nature. Study focus on analyze NPAs in top private sector
banks in India. They take 5 bank samples from private bank in India it includes (ICICI
Bank, HDFC Bank, Axis Banks, Yes Bank, Kotak Mahindra Bank).and check that any
impact on profitability of NPAs in those private sector bank. For that they collect data
year from 2014-15 to 2018-19.and ratio analysis used for analyze trend of NPAs in those
private sector banks. They collect data from RBI website and moneycontrol.com and
also used correlations for testing hypothesis. And conclude that NPAs is big problem of
Indian banking system. it effects goodwill of bank. And find that HDFC bank having
good NPA management and ICICI banks, axis banks, yes banks are having negative
correlations that means their NPA increase and profit decrease.

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 6. Karunakar et al. (2008)
discuss the various factors that boost NPAs, their size, their effect on Indian banking
operations and suggest measures to control the curse on the banking industry. Use of
suitable credit assessment and risk management methods is the key to solve the problem
of NPA accumulation.

7. Rajeev and Mahesh (2010)

in their article deal with the issue of NPAs after the global financial crisis. They suggest
that mere recognition of the problem and self-monitoring can help to manage the NPA
problem to a great extent. Self-help groups can also play an important role in the
recovery of the loans.

8. Barge (2012)
examines that early monitoring and management of lent funds is the necessity of the
hour. The study suggests several measures like better supervision of end use of funds,
information about the credit history of the borrower and assisting the borrowers to
develop entrepreneurial skills to ensure that the asset does not convert into a non-
performing asset.

9. Gupta (2012)
makes a comparative study of the position of NPAs of State Bank of India (SBI) and
associates and other public sector banks. The researcher concludes that for evaluation
of the solvency of borrowers each bank should set up a separate credit rating agency. It
also suggests the need for a committee comprising of financial experts to supervise and
monitor the issue of NPAs.

10. Shalini (2013)

has analysed the causes and suggested remedies for reducing NPAs in Indian public
sector banks with special reference to the agricultural sector. The analysis of the
different problems faced by the Indian farmers deduces the conclusion that banks should
follow some measures before lending the loan. Prior collection of reports regarding the
goodwill of the farmers, post sanction inspection, educating the farmers regarding the
effects and consequences of defaulting are some of the suggested measures.

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 11. Dr. Ashok Kumar Gupta and Priyanka Gautam (Jan 2017)
The of study is to evaluate the performance of the Punjab National Bank with reference
to the problem of non-Performing to examine the trend of NPA in PNB. To investigate
the impact of NPAs on profitability of PNB Assets (NPA) The level of NPAs is one of
the drivers of money related security and development of the saving money division.

12. Kumar, S. and Singh, R. (Feb 2016)

analysed the non-performing assets in public division banks and a similar study is done
between priority sector lending and non-priority sector lending. The study broke down
patterns in Gross NPAs and Net NPAs of public sector banks, to examine whether there
is critical effect of priority sector bank loaning on the total NPA of open segment banks
and to discover the effect of recovery on NPAs of the PSBs amid from 2003-04 to 2013-
14.

13. Vivek Rajbahadur Singh (mar 2016)

A Study of Non-Performing Assets of Commercial Banks and its recovery in India has
analysed to the overall performance of all Indian banks especially commercial banks on
the NPAs. It’s used by impact and various channels of NPAs on banks. For has
considered Non-Performing Assets in Scheduled Commercial Banks which includes
public sector banks, private sector banks and foreign banks which are listed in the
Second Schedule of the Reserve Bank of India Act, 1934. The study is based on
secondary data.

14. Dixit (2016)

conducted research on "Performance Analysis of Private and Public Sector Banks with
Reference To ICICI Bank and State Bank of India." The researcher used different
statistical and mathematical tools such as ratio, trend analysis, and tabulation to conduct
this study, which is based on secondary data. The analysis concludes that SBI's
performance is worse in comparison to ICICI due to its negative growth rate. In
comparison to ICICI bank, however, SBI has higher absolute values. SBI must

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 concentrate on its region in order to improve efficiency, profitability, and liquidity in
order to achieve favourable outcomes in the following year. ICICI Bank, the largest
private sector bank, has a higher positive growth rate than SBI, with complete efficiency
and profitability in all areas.

15. Jaiswal & Jain (2016)

conducted research on "A Comparative Study of Financial Performance of SBI and
ICICI Bank in India. “The current research is based on secondary data, and the
researcher used a variety of statistical and mathematical tools such as ratios, graphs,
correlations, regressions, and tabulations. In comparison to ICICI bank, the analysis
concludes that SBI is financially healthy. Again, SBI has fewer bad debts than ICICI.
The reason behind this is because ICICI has advanced more money to its customers than
SBI. Another reason is that SBI is a public sector bank, but ICICI is a private sector
bank, thus it provides more advance to customers in order to preserve its market image.

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 Chapter-4 RESEARCH METHODOLOGY

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 Data Sample Population

The targeted sample population of the study if 2 private sector banks with higher assets
compared to others:-
1. HDFC Bank
2. ICICI Bank

Data Sample Size

 The time of study is 3 years from 2018 to 2020

Tool For Analysis

 Graphs
 Charts
 Tabular presentation

Method of Data collection

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  The method of collecting data is secondary. The data collected is from the annual report
and balance sheets of the banks.

Limitation of the Study

 Limited data availability: Financial data are not always available to the public, and
occasionally only a little amount of information is given. As a result, it may be difficult
to draw reliable findings and the study's application may be constrained

 Historical data may not be indicative of future performance: Financial research

frequently relies on historical data, but there is no assurance that past trends will hold
true going forward

 External influences: The state of the economy and governmental policies are two
examples of external factors that frequently have an impact on financial research. These
variables are subject to quick change and may affect the study's conclusions.

 Limited ability to validate data: Since other parties gather secondary data source, the
researcher may not be able to independent confirm the data's accuracy.

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 Chapter-5 Data Analysis and Interpretation.

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 Gross NPA
Years HDFC ICICI

2018 8,606.97 54,062.51

2019 11,224.16 46,291.63

2020 12,649.97 41,409.16

Gross NPA
60,000.00
54,062.51

50,000.00 46,291.63
41,409.16
40,000.00

30,000.00

20,000.00
12,649.97
11,224.16
10,000.00 8,606.97

0.00
1 2 3 4 5 6

HDFC ICICI

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  The table provides information on the gross non-performing assets (NPA) for two
banks, HDFC and ICICI, for the years 2018, 2019, and 2020. Gross NPA refers to the
total value of non-performing assets held by a bank without taking into account any
provisions made for those assets.

 Looking at the table, we can see that HDFC had a higher gross NPA than ICICI for all
three years. In 2018, HDFC had a gross NPA of 8,606.97 crore rupees, while ICICI had
a gross NPA of 54,062.51 crore rupees. In 2019, HDFC's gross NPA increased to
11,224.16 crore rupees, while ICICI's gross NPA decreased to 46,291.63 crore rupees.
In 2020, HDFC's gross NPA further increased to 12,649.97 crore rupees, while ICICI's
gross NPA decreased to 41,409.16 crore rupees.

 Overall, this data provides insights into the level of non-performing assets held by
HDFC and ICICI for the years 2018, 2019, and 2020. While HDFC had a higher gross
NPA than ICICI for all three years, both banks experienced changes in their gross NPA
values over the period. The data suggests that HDFC may have had a higher level of
risk in their loan portfolio during these years, while ICICI's portfolio may have been
comparatively less risky.

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 Net NPA

Years HDFC ICICI

2018 2,601.02 27,886.27

2019 3,214.52 13,577.43

2020 3,542.36 10,113.86

Net NPA
60,000.00
54,062.51

50,000.00 46,291.63
41,409.16
40,000.00

30,000.00

20,000.00
12,649.97
11,224.16
8,606.97
10,000.00

0.00
1 2 3 4 5 6

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  The table represents the Net NAP (Net Asset Position) of two Indian financial
institutions, HDFC and ICICI, for the years 2018, 2019, and 2020.

 Net NAP is a measure of the net asset position of a financial institution, which is the
difference between the total assets and the total liabilities of the institution. In other
words, it represents the amount of money that the institution would have left over if it
were to sell all of its assets and pay off all of its liabilities.

 For HDFC, the Net NAP was 2,601.02 crores (Indian rupees) in 2018, 3,214.52 crores
in 2019, and 3,542.36 crores in 2020. This indicates that HDFC's net asset position has
been increasing over the years, which could be a positive sign for the institution's
financial health.

 For ICICI, the Net NAP was 27,886.27 crores in 2018, 13,577.43 crores in 2019, and
10,113.86 crores in 2020. This indicates that ICICI's net asset position has been
decreasing over the years, which could be a cause for concern for the institution's
financial health.

 It's important to note that these figures are just one aspect of a financial institution's
overall financial health, and other factors such as revenue, profitability, and risk
management should also be considered when evaluating their financial performance.

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 Year HDFC ICICI

Assets NPA Assets NPA

2018 10,63,934.30 8,606.97 8,79,189.16 54,062.51

2019 1189432.4 11,224.16 9,64,459.15 46,291.63

2020 1463116.86 12,649.97 10,98,365.15 41,409.16

COMPARISON

1463116.86
HDFC Assets HDFC NPA ICICI Assets ICICI NAP
1189432.4

1,098,365.15
1,063,934.30

964,459.15
879,189.16
54,062.51

46,291.63

41,409.16
12,649.97
11,224.16
8,606.97

1 2 3 4 5 6

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  The table represents the Assets and Non-Performing Assets (NPA) of two major Indian
banks, HDFC and ICICI, over the years 2018 to 2020.

 In 2018, HDFC had total assets worth 10,63,934.30 crores and NPA worth 8,606.97
crores, while ICICI had assets worth 8,79,189.16 crores and NPA worth 54,062.51
crores.

 In 2019, HDFC's assets increased to 11,89,432.4 crores, and its NPA also increased to
11,224.16 crores. Meanwhile, ICICI's assets grew to 9,64,459.15 crores, and its NPA
decreased to 46,291.63 crores.

 In 2020, both banks saw a further increase in assets, with HDFC's assets reaching
14,63,116.86 crores and ICICI's assets reaching 10,98,365.15 crores. HDFC's NPA also
increased to 12,649.97 crores, while ICICI's NPA decreased further to 41,409.16 crores.

 HDFC has consistently maintained a higher level of assets compared to ICICI, while
also having a lower level of NPA, except in 2018 where HDFC had a higher NPA. This
suggests that HDFC has been more effective in managing its loan portfolio and
minimizing credit risk. However, both banks have been able to grow their assets over
the years, indicating their strong market position and growth potential.

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  The Gross NPA of HDFC bank in 2018 was 8,606.97 crore, which means that out of
the total loans given by the bank, a portion of 8,606.97 crore had turned into bad debts.
The Net NPA of HDFC bank in 2018 was 2,601.02 crore, which is the amount of bad
debt that the bank has not been able to recover after taking into account the provisions
made for bad debts.

 A high NPA indicates that the bank is facing difficulties in recovering loans from its
borrowers. It could be due to various reasons such as economic slowdown, high interest
rates, or poor creditworthiness of borrowers. In the case of HDFC bank, the Gross NPA
was relatively low compared to ICICI bank in the same year, indicating better loan
recovery by HDFC bank. However, a slight increase in the NPA from 2018 to 2019 and
2020 should be a cause of concern for the bank, and it must take appropriate measures
to improve its loan recovery process.

 In 2018, ICICI bank's gross NPA was 54,062.51 crore rupees and its net NPA was
27,886.27 crore rupees. This indicates that a significant portion of the bank's loans had
turned bad or were not being paid back on time. The gross NPA ratio was 6.67% and
the net NPA ratio was 2.58%. These ratios indicate that the bank's asset quality was
under stress and it was facing challenges in recovering its loans. It is important for a
bank to have low NPA ratios as it affects the profitability and the financial health of the
bank. In summary, the high NPA of ICICI bank in 2018 indicates potential financial
risk and poor asset quality.

 In 2019, both HDFC and ICICI banks experienced an increase in their Gross NPA
values as compared to the previous year (2018). HDFC Bank's Gross NPA increased
from 8,606.97 crores in 2018 to 11,224.16 crores in 2019. ICICI Bank's Gross NPA
also increased from 54,062.51 crores in 2018 to 46,291.63 crores in 2019.

 These figures suggest that both HDFC and ICICI banks had to deal with an increase in
their non-performing assets in 2019, but ICICI Bank's efforts to resolve their bad loans
were more successful as their Net NPA decreased significantly.

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  In the year 2020, the gross NPA of HDFC Bank was 12,649.97 crore rupees, which was
higher than the previous year. However, the net NPA decreased slightly from the
previous year, indicating that the bank was able to recover some of its bad debts.

 On the other hand, in the year 2020, the gross NPA of ICICI Bank was 41,409.16 crore
rupees, which was lower than the previous year. The net NPA also decreased
significantly, indicating that the bank was able to improve its asset quality and reduce
its bad debts.

 Overall, these numbers suggest that HDFC Bank and ICICI Bank were both affected by
the economic slowdown and financial distress caused by the COVID-19 pandemic in
2020. However, HDFC Bank faced more challenges in managing its bad debts than
ICICI Bank, as its gross NPA increased while ICICI Bank's NPA decreased.

 The COVID-19 pandemic had a significant impact on the Indian economy, including
the banking sector. Both HDFC Bank and ICICI Bank reported an increase in their non-
performing assets (NPAs) or bad loans due to the pandemic.

 In the case of HDFC Bank, the gross NPAs increased from 1.26% in March 2020 to
1.47% in December 2020. The bank attributed the increase to the impact of the
pandemic on businesses and individuals, which led to loan defaults. However, HDFC
Bank's net profit still grew by 18% in the December 2020 quarter, indicating the bank's
resilience to the pandemic's impact.

 ICICI Bank also reported an increase in its gross NPAs from 5.42% in March 2020 to
4.38% in December 2020. The bank cited the impact of the pandemic and the
subsequent lockdowns as reasons for the increase in NPAs. However, the bank's net
profit increased by 19% in the December 2020 quarter, reflecting the bank's ability to
manage its operations effectively during the pandemic.

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  Both banks have taken measures to mitigate the impact of the pandemic on their
operations and customers. They have offered loan restructuring options to customers
and increased provisions for bad loans. Overall, while the pandemic had an impact on
the banking sector in India, the banks have shown resilience and the ability to adapt to
changing circumstances.

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 Chapter-6 FINDINGS, SUGGESTIONS CONCLUSIONS

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 Findings: -

 It can be observed that the COVID-19 pandemic had a significant impact on the Indian
economy, including the banking sector, leading to an increase in non-performing assets
or bad loans for both HDFC Bank and ICICI Bank. Despite this, both banks were able
to report growth in net profit for the December 2020 quarter, indicating their resilience
and ability to manage their operations effectively during the pandemic. Both banks have
also taken measures to mitigate the impact of the pandemic on their operations and
customers, such as offering loan restructuring options and increasing provisions for bad
loans. Overall, the data suggests that the pandemic had an impact on the banking sector
in India, but the banks have shown the ability to adapt to changing circumstances.

 HDFC Bank's gross NPAs increased from 1.26% in March 2020 to 1.47% in December
2020, while ICICI Bank's gross NPAs increased from 5.42% in March 2020 to 4.38%
in December 2020. However, both banks were still able to increase their net profit
during the December 2020 quarter, indicating their resilience to the pandemic's impact.

 it is evident that the COVID-19 pandemic had a significant impact on the Indian
economy, including the banking sector. Both HDFC Bank and ICICI Bank reported an
increase in their non-performing assets (NPAs) or bad loans due to the pandemic.
However, despite the increase in NPAs, both banks showed resilience and were able to
manage their operations effectively during the pandemic. HDFC Bank's net profit grew
by 18% in the December 2020 quarter, and ICICI Bank's net profit increased by 19% in
the same period, indicating the banks' ability to adapt to changing circumstances. Both
banks have also taken measures to mitigate the impact of the pandemic on their
operations and customers, such as offering loan restructuring options and increasing
provisions for bad loans.

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  The non-performing assets (NPAs) of banks HDFC and ICICI in India are affected by
various factors, including economic conditions, industry-specific factors, and
management decisions. While the COVID-19 pandemic did impact the banking
industry in India, there could be other reasons why HDFC and ICICI saw a boost in
their NPAs from 2018-2020.

 One of the reasons could be the impact of certain corporate loans that turned into NPAs
during this period. In 2018, the Reserve Bank of India (RBI) had mandated banks to
disclose their bad loans, and this resulted in a spike in NPAs reported by banks across
the industry. Additionally, there were some instances of corporate frauds and defaulters
that impacted the banking industry during this period, leading to an increase in NPAs.

 Another factor that could have contributed to the rise in NPAs for HDFC and ICICI is
their lending practices. These banks had been aggressively lending to the corporate
sector, especially in the infrastructure and real estate sectors, and the slowdown in these
sectors could have impacted their loan portfolios negatively.

 Overall, while the COVID-19 pandemic did impact the banking industry in India, there
could be multiple reasons why HDFC and ICICI saw a boost in their NPAs from 2018-
2020, and it would require a detailed analysis of their loan portfolios and lending
practices to understand the exact reasons.

 From 2018 to 2020, the NPA of both HDFC and ICICI banks improved significantly.
This improvement can be attributed to various factors such as the resolution of some
large NPA accounts, the implementation of the Insolvency and Bankruptcy Code (IBC),
and the overall improvement in the Indian economy. Additionally, both banks have also
taken measures to reduce their NPAs, such as tightening credit policies, increasing the
recovery mechanism, and improving asset quality.

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 Suggestions: -

1. Improve underwriting standards: Banks can improve their underwriting standards and
only lend to creditworthy borrowers. This will help reduce the likelihood of loans
turning into NPAs.

2. Diversify loan portfolio: Banks can diversify their loan portfolio and reduce their
exposure to any particular industry or sector. This can help reduce concentration risk
and limit the impact of any adverse developments in a particular industry.

3. Strengthen credit monitoring and recovery processes: Banks can strengthen their credit
monitoring and recovery processes to quickly identify potential delinquencies and take
proactive measures to prevent them from turning into NPAs.

4. Increase provisions: Banks can increase their provisions for bad loans to ensure that
they have adequate reserves to absorb any potential losses. This will help improve the
overall quality of their assets and reduce the impact of any future NPAs.

5. Enhance risk management: Banks can enhance their risk management frameworks and
improve their ability to identify and manage risks. This can help prevent future NPAs
and improve the overall quality of their assets.

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 Conclusion: -

 The COVID-19 pandemic had a significant impact on the Indian economy, including the
banking sector, leading to an increase in non-performing assets for both HDFC Bank and ICICI
Bank. However, both banks have shown resilience and adaptability in managing their operations
effectively during the pandemic. Despite the increase in NPAs, both banks reported growth in
net profit during the December 2020 quarter.

 While there could be multiple reasons for the boost in NPAs from 2018-2020, banks can take
various measures to mitigate the impact of NPAs and improve the overall quality of their assets.
These measures include improving underwriting standards, diversifying loan portfolios,
strengthening credit monitoring and recovery processes, increasing provisions for bad loans,
and enhancing risk management frameworks.

 Overall, the banking industry in India has shown resilience and adaptability in managing the
impact of the pandemic, and by implementing effective risk management practices and
improving asset quality, they can continue to navigate through challenging times and maintain
their financial stability.

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 Bibliography

45 | P a g e
 References: -

 https://www.google.com/search?q=full+information+of+hdfc+bank&rlz=1C1CHBF_enIN103
8IN1038&oq=&aqs=chrome.3.69i59i450l8.97619370j0j15&sourceid=chrome&ie=UTF-8
 https://en.wikipedia.org/wiki/ICICI_Bank
 https://www.google.com/search?q=literature+review+on+hdfc+and+icici+bank+npa&rlz=1C
1CHBF_enIN1038IN1038&oq=&aqs=chrome.0.69i59i450l8.100832345j0j15&sourceid=chro
me&ie=UTF-8
 https://ijcrt.org/papers/IJCRT2103027.pdf
 https://www.jetir.org/papers/JETIR2112353.pdf
 https://uijir.com/an-empirical-study-on-non-performing-assets-with-specific-reference-to-
hdfc-bank-ltd/
 https://ijariie.com/AdminUploadPdf/A_STUDY_ON_NON_PERFORMING_ASSETS_MAN
AGEMENT_WITH_REFERENCE_TO_ICICI_BANK_ijariie15099.pdf
 https://www.moneycontrol.com/financials/icicibank/results/yearly/ICI02/1#ICI02
 https://www.moneycontrol.com/financials/hdfcbank/results/yearly/HDF01/2#HDF01
 https://trendlyne.com/fundamentals/balance-sheet/533/HDFCBANK/hdfc-bank-ltd/

News Papers: -

 Economic Times
 The Times of India
 Business Standard

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