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Rahul22 10-2013
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Rahul22 10-2013

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  • 2. CONTENT 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Introduction of co-operative bank The punjab state cooperative bank Network of punjab state cooperative bank Mission statement Co-operative banking products Introduction about topic Objectives of the study Review literature Research methodology Data analysis and intrepretation Findings Suggestions Conclusion
  • 3. INTRODUCTION OF CO-OPERATIVE BANK  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. Co-operative bank regulated by Reserve Bank of India, NABARD.
  • 4. CONT…… The co-operative banks in rural areas mainly finance agricultural based activities including farming, cattle, milk, personal finance etc. along with some small scale industries and self-employment driven activities, the co-operative banks in urban areas mainly finance various categories of people for selfemployment, industries, small scale units, home finance, consumer finance, personal finance, etc. Though registered under the Co-operative Societies Act of the Respective States 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.
  • 5. The Punjab State Cooperative Bank  The Punjab State Cooperative Bank Ltd.(PSCB) was established & registered under Punjab Cooperative Societies Act on 31st august 1949 with Registration No.720 as principal financing institution of the cooperative movement in the state. It is an Apex institution of the District Central Cooperative Banks (DCCBs) functioning in the state. The governance of village level Primary Agriculture Cooperative Societies, District Central Cooperative Banks & PSCB is ensured by elected board through a democratic election system under The Punjab Cooperative Societies Act.
  • 6. NETWORK OF PSCB        Punjab State Cooperative Bank (PSCB) with its 5 Regional and 19 local Branches in the State. There are 20 district Central cooperative banks having 804 branches and 29 extension counters in the state of Punjab are affiliated with the bank. Creating innovative financial products for the poorest of the poor Personal accidental insurance scheme Crop insurance scheme KISAN Credit card Commercial loan scheme
  • 7. MISSION STATEMENT  Co-operative Bank Corporate Mission Is to Become A Strong And Competitive Cooperative Banking Network Which Offers Innovative Financial Product Along with different Range Of Services To Serve Rural Masses With Short-Term Cooperative Credit Structure To Serve The People Of PUNJAB.
  • 8. Education al Loans. Vehicle Loans. Kisan Credit card Scheme Home Loan Saving A/c Prodect Micro Finance Current A/c Personal Loans. Fixed A/c Recurring Deposit A/c
  • 11. Why Loan accounts go bad ? BORROWER-SIDE         Lack of Planning Diversion of Funds Disputes within No contribution No modernization Improper monitoring Industrial Relations Natural Calamities BANKER – SIDE      Defective Sanction No post-sanction supervision Delay in releases Directed lending Slow decision making process
  • 12. Performing Asset  An account does not disclose any problems and carry more than normal risk attached to the business  All loan facilities which are regular !
  • 13. Non Performing Assets (NPA)  NPA is defined as a credit facility in respect of which the interest and/or installment of principal has remained „past due‟ for a specified period of time.  An asset, including a leased asset, becomes nonperforming when it ceases to generate income for the bank.  In accounting, originally Bad & Doubtful Debts
  • 14. TYPES OF NPA Gross NPA: Gross NPAs are the sum total of all loan assets that are classified as NPAs as per RBI guidelines as on Balance Sheet date. Gross NPA reflects the quality of the loans made by banks. It consists of all the non standard assets like as sub-standard, doubtful, and loss assets.  Gross NPAs Gross NPAs___ Gross Advances 
  • 15.  Net Gross NPA: Net NPAs are those type of NPAs in which the bank has deducted the provision regarding NPAs. Net NPA shows the actual burden of banks. Net Gross NPAs = NPAs – Provisions Gross Advances - Provisions
  • 16. CATEGORIES OF NPA  Standard Assets: Arrears of interest and the principal amount of loan does not exceed 90 days at the end of financial year  Substandard Assets – Which has remained NPA for a period less than or equal to 12 months.  Doubtful Assets – Which has remained in the substandard category for a period of 12 months  D1 i.e. up to 1 year : 20% provision is made by the banks  D2 i.e. up to 2 year: 30% provision is made by the bank  D3 i.e. up to 3 year : 100% provision is made by the bank.  Loss Assets – 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.
  • 17. PROVISIONING NORMS  STANDARD ASSETS – general provision of a minimum of 0.40 percent on standard assets  SUBSTANDARD ASSETS – 10% on total outstanding balance, 10 % on unsecured exposures identified as substandard & 100% for unsecured “doubtful” assets.  DOUBTFUL ASSETS – 100% to the extent advance not covered by realizable value of security. In case of secured portion, provision may be made in the range of 20% to 100% depending on the period of asset remaining substandard  LOSS ASSETS – 100% of the outstanding
  • 18. FACTORS FOR RISE IN NPAs  The banking sector has been facing the serious problems of the rising NPAs. But the problem of NPAs is more in public sector banks when compared to private sector banks and foreign banks. • INTERNAL FACTORS • EXTERNAL FACTORS
  • 19. EXTERNAL FACTORS Ineffective recovery tribunal Willful Defaults Natural calamities Industrial sickness Lack of demand Change in Govt. policies
  • 20. INTERNAL FACTORS Defective Lending process Inappropriate technology Analyze the balance sheet. Purpose of the loan Poor credit appraisal system Managerial Problems Absence of regular industrial visit
  • 21. IMPACT OF NPA Profitability Liquidity Involvement of management Credit loss Bad effect on goodwill Bad effect on equity value
  • 23. LOK ADALAT To settle disputes involving account in “doubtful” and “loss” category.  Outstanding balance of Rs.5 lakhs for compromise settlement.  Proved to be quite effective for speedy justice and recovery of small loans.  Progress through this channel is expected to pick up in the coming years 
  • 24. DEBT RECOVERY TRIBUNALS (DRT)  To recover their bad Debt quickly and efficiently.  33 Debt Recovery Tribunal and 5 Debt Recovery Appellate Tribunal  It is the special court established by central government for the purpose of bank or any financial institutions recovery.  The judges of this court are the retired judges of high court.  In this court only the recovery cases of Rs.10 lakhs and above can be filed.
  • 25. OBJECTIVES OF THE STUDY To study Non-Performing asset which are create a bad debts for bank.  To identified composite of the loan products.  To study the status of NPA in fatehgarh Sahib Co-operative bank. 
  • 26. REVIEW LITERATURE S. AUTHOR’S NO NAME TITLE FINDINGS 1. Dr. N.M.Bachhawa t (2003), in his article “Review of Important Aspects of NPAs of Banks in India in The Post Reform Period” An assets would be considered non-performing assets if interest on such assets remains past due for a period exceeding 180 days at the balance sheet date.. Dr. N.M.Bachhawat (2003)
  • 27. CONTD…….. S.N O AUTHOR’ S NAME TITLE FINDINGS 2. Y.V. Reddy (2009) Y.V. Reddy (2009), in his article “Reforming India‟s Financial SectorChanging Dimensions and Emerging Issues” The Committee believes that the balance sheet of banks and financial institutions should be made transparent and full disclosures made in the balance sheets as recommended by the International Accounting standards Committee.
  • 28. CONTD….. S.N O AUTHOR’S NAME 3. P.N.Joshi (2003) TITLE FINDINGS P.N.Joshi (2003), in his article “NonPerforming Assets Causes, Extent and Remedies” In fact, the internationally accepted norm is to relate the ratio to total assets. In our country loans form barely 52 per cent of the total creditdeposit ratio being around 54 per cent. The remaining 48 per cent of the 43 assets are held in CRR (5 per cent) and actual SLR (38 per cent) 5 per cent being other assets. 43 percent of the assets (CRR+SLR) are the safest and risk free being funds with the RBI.
  • 29. RESEARCH METHODOLOGY  Sources of Data Collection: PRIMARY DATA: In this study, personal interviews with senior officials of different departments of and various members of finance and accounts department of the bank. SECONDARY DATA: The secondary data are those data which have already been collected by someone else and which have already been passed through statistics process. The published data as maintained by bank like company manuals, annual reports balance sheets of bank, NPA management last Four years.
  • 30. LIMITATIONS: The study is based on the data of past three or four years only.  The data for study covers only a single bank  As majority of the customers are employees of the bank, they might be biased in giving the information  The time period of the research was limited to 6 weeks. 
  • 31. DATA ANALYSIS AND INTREPRETATION I have last year balance sheet of 2012-13 according to data bank have total liabilities is Rs.287725882.32 and total property & assets is same balance but total loan on balance sheet is Rs.261359974 and this is different types of loan. TOTAL 261359974 Cash credit societies 1074463 Loan to individuals 106808064 Short term loan Other loan Cash credit societies Other loan 300362 Short term loan 153177085 Loan to individuals
  • 32. Loan to individuals Personal loan 18315980 Vehicle loan 5626181 Non farming sector(Composite) 918961 TYPES OF LOANS Personal loan Vehicle loan Non farming sector(Composite) Loan against team deposit Loan against team deposit 624610 S.R.T.O. 378565 Self help group 178000 Urban house loan 1138016 Rural house loan 1044060 Cow loan 111697 Consumer loan/salary persons 1794911 Consumer loan/Non salary 622348 S.R.T.O. Self help group Urban house loan Rural house loan Cow loan Consumer loan/salary persons 1%1% 18% 5% Cash credit farmers 67927999 Cash credit traders 631071 Two wheeler to farmers 1125268 0% 1% 1% 1% 0% 68% persons 0% 1% 1% 2%
  • 33. DATA ANALYSIS AND INTREPRETATION Status of NPA on March 2008 Total Loan Outstanding 31031 1451.34 28516.14 SubStandard Assets 91.95% Overdue 3 to 4 Years 201.29 Total NPA 2493.86 Overdue 4 to 6 Years 304.25 % of NPA 8.042% Overdue Above 6 Years 225.34 Standard Assets % of Standard Assets Loss Assets 311.64
  • 34. Classification of NPA Chart Title Sub-Standard Assets Overdue 3 to 4 Years Overdue 4 to 6 Years Overdue Above 6 Years Loss Assets 13% 9% 12% 8% 58% This chart shows the position of NPA in KDCB. In 2008 the contribution of sub- standard assets in NPA is 58% and the overdue 3-4 year is 8%, 4 to 6 years 12% and overdue above 6 years is 9%. The loss assets of the bank are 13% of the total NPA. Standard assets in 2008 are 91.95% of the total assets and NPA is 8.042%. In 2008 NPA has been decreased than 2007 in KDCB.
  • 35. Status of NPA on March 2009 Total Loan Outstanding Standard Assets 22450.20 20300.45 SubStandard Assets 1290.35 90.42% Overdue 3 to 378.85 4 Years Total NPA 2149.75 Overdue 4 to 100.94 6 Years % of NPA 9.57% % of Standard Assets Overdue Above 6 Years 150.54 Loss Assets 229.07
  • 36. Classification of NPA Chart Title Sub-Standard Assets Overdue 3 to 4 Years Overdue 4 to 6 Years Overdue Above 6 Years Loss Assets 11% 7% 5% 17% 60% This chart shows that in the year 2009 sub-standard Assets are 60% of the total NPA .The assets with overdue 3 to 4 Years are 17%, 4 to 6 years are 5% and assets with overdue above 6 years are 7% of the total NPA. The amount of loss assets has decreased in 2009, which is 11%. Standard assets are 90.42 % in this year and NPA is 9.57 % in 2009, which is less than last years. Thus 9.57 % has been reduced in the profit of KDCB In 2009.
  • 37. Status of NPA on March 2010 Total Loan Outstanding 24848.77 1033.31 23224.90 SubStandard Assets 93.46% Overdue 3 to 4 Years 81.24 Total NPA 1623.87 Overdue 4 to 6 Years 141.96 % of NPA 6.54% Overdue Above 6 Years 129.75 Standard Assets % of Standard Assets Loss Assets 237.61
  • 38. Classification of NPA Overdue Above 6 Years 8% Overdue 4 to 6 Years 9% Overdue 3 to 4 Years 5% Loss Assets 14% SubStandard Assets 64% In 2010 the contribution of substandard assets in NPA is 64% and the overdue 3-4 year is 5%, 4 to 6 years 9% and overdue above 6 years is 8%. The loss assets of the bank are 14% of the total NPA. Standard assets in 2010 are 93.46% of the total assets and NPA is 6.54%
  • 39. Status of NPA on March 2011 Total Loan Outstanding 27145.77 Standard Assets 1060.93 25238.03 SubStandard Assets % of Standard Assets 92.97% Overdue 3 to 4 Years 318.25 115.59 Total NPA 1907.71 Overdue 4 to 6 Years % of NPA 7.03% Overdue Above 6 Years 105.37 Loss Assets 307.57
  • 40. Classification of NPA Overdue Above 6 Years 5% Overdue 4 to 6 Years 6% Overdue 3 to 4 Years 17% Loss Assets 16% SubStandard Assets 56% This chart shows that in the year 2011 sub-standard Assets are 56 % of the total NPA .The assets with overdue 3 to 4 Years are 17 %, 4 to 6 years are 6 % and assets with overdue above 6 years are 5 % of the total NPA. The amount of loss assets has increased in 2011, which is 16 %. Standard assets are 92.97 % in this year and NPA is 7.03 % in 2010, which is less than last years. Thus 7.03% has been reduced in the profit of KDCB In 2010.
  • 41. FINDINGS Most of the people prefer to take long loan which is more than 3years.  Easy repayment and less formalities are the main factors determining customers selection of loans  Quality of services provided by the staff is satisfactory because the number of customers visiting in this branch are very so that the customers are properly dealt with.  Customers are satisfied with the mode of payment of installments.  Average time for the processing of loan is less than the other banks i.e between 7 days. 
  • 42. SUGGESTIONS The bank should adopt the modern methods of banking like internet banking, credit cards, ATM, etc  The bank should plan to introduce new schemes for attracting new customer and satisfying the present ones.  The bank should improve the customer services of the bank to a better extent.  Improve dept recovery tribunals take legal action. 
  • 43. CONCLUSION   The PSCB is facing a serious problem of NPA. To conclude with, till recent past, corporate borrowers even after defaulting continuously never had any real fear of bank taking any action to recover their dues despite the fact that their entire assets were hypothecated to the banks. This is because there was no legal Act framed to safeguard the real interest of banks To improve the efficiency and profitability, the NPA has to be scheduled. In order to bring the situation under control, some steps have been taken recently