Npa management in J & K Bank

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Npa management in J & K Bank

  1. 1. Presented To:Mr. H.S Sidhu Lec:- DBIMCS Presented By:Ab. Raouf Naikoo MBA-3rd Sem Roll No :- 81
  2. 2.    The Jammu and Kashmir Bank was founded on October 1, 1938 under letters patent issued by the Maharaja of Jammu And Kashmir, Hari Singh. Jammu & Kashmir Bank is the only Bank in the country with majority ownership vested with a state government – the Government of Jammu & Kashmir. It is the sole banker to the Government of Jammu & Kashmir. The Bank commenced business on July 4, 1939 and was considered the first of its nature and composition as a State owned bank in the country.
  3. 3.   The bank had to face serious problems at the time of independence when out of its total of ten branches two branches of Muzaffarabad, Rawalakot and Mirpur fell to the other side of the line of control (now Pakistan-administered Kashmir) along with cash and other assets. Mushtaq Ahmed is the new Chairman & CEO of Jammu & Kashmir Bank.
  4. 4.      All those Assets which do not generate periodical income are called as NPA. An amount due under any credit facility is treated as “past due “when it is not been paid within 30 days from the due date. Interest and/or installment of principal remain overdue for a period of more than 180 days in respect of a term loan. The bill remains overdue for a period of more than 180 days in case of bill purchased or discounted. If the customers do not repay principal amount and interest for a certain period of time then such loans become NPA. Nonperforming assets are basically non-performing loans.
  5. 5.       Interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a term loan. The account remains ‘out of order ‘for a period of more than 90 days in respect of an overdraft/cash credit (OD/CC). Interest and/or principal remains overdue for two harvest season but for a period not exceeding two half years in case of an advance granted for agricultural purpose, and Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts. Interest and/or principal remains overdue for two harvest season but for a period not exceeding two half years in case of an advance granted for agricultural purpose, and Any amount to be received remains overdue for a period of more than 180 days in respect of other accounts.
  6. 6.  1. 2. 3. 4. NPA can be further classified as:Standard Assets:- it generates continuous income and repayment as and when they fall due. Sub-standard assets:-it is one which has been classified as NPA for a period not exceeding 12 months. Doubtful Assets:- It is one which has remained NPA for a period exceeding 12 months. Loss Assets:- where loss has been identified by the bank, internal or external auditor or central bank inspector but the amount has not been written off, wholly or partly.
  7. 7.     Owners do not receive a market return on their capital in the worst case, if the banks fails, owners lose their assets. In modern times this may affect a broad pool of shareholders. Depositors do not receive a market return on saving. In the worst case if the bank fails, depositors lose their assets or uninsured balance. Banks redistribute losses to other borrowers by charging higher interest rates, lower deposit rates and higher lending rates repress saving and financial market, which hamper economic growth. Nonperforming loans epitomize bad investment. They misallocate credit from good projects, which do not receive funding, to failed projects. Bad investment ends up in misallocation of capital, and by extension, labour and natural resources.
  8. 8.  Nonperforming asset may spill over the banking system and contract the money stock, which may lead to economic contraction. This spillover effect can channelize through liquidity or bank insolvency: ◦ When many borrowers fail to pay interest, banks may experience liquidity shortage. This can jam payment across the country. ◦ Illiquidity constraints bank in paying depositors.
  9. 9.         OBJECTIVES OF THE STUDY:To know the policies that the J&K Bank follows to cover its NPA,s. To know the relative efficiency of J&K Bank. To know the NPA level of J&K Bank and other Indian Banks. To know the ill effects of NPAs on the performance of the banks. To get aware of the confidence among the customers of the J&K Bank regarding the performance of the bank in recovery of NPAs. To get aware of the services provided by J&k Bank and the level of satisfaction among its customers. To study the NPA coverage of J&k Bank in different financial years and its effect on the overall efficiency of the bank at different points of time.
  10. 10.  A research design is the framework or plan for a study that guide the collection and analysis of data. In this research report the descriptive research method is applied.
  11. 11.     Data collection is very important for conducting any research. Success or failure of a research primarily depends on data collection. Data may be collected by any of the following methods: Primary sources Secondary sources The primary sources of collecting data in this project include: ◦ Personal interviews ◦ Questionnaire ◦ Telephonic interviews
  12. 12.      The secondary sources through which data have been collected for this project include the following: Internet Newspapers Information brochures of the bank Books and magazines
  13. 13.      The sampling plan in this project is as follows: Population: The customers of the bank. Sampling unit: Any individual residing in district Kulgam of J&K state. Sample size: 100 Sampling procedure: convenience sampling
  14. 14.      Time allowed for the study was short. This limitation narrowed the scope of the study. Political instability in the region prevented to conduct the research in the manner in which it could have been conducted. Negative responses from some of the respondents made it difficult to interpret the data easily. The survey is limited to district Kulgam only. So the respondents were of this district only. This limitation may have brought biasness in the study. Some of the ambiguous replies which I omitted by taking them as unnecessary could generate wrong results.
  15. 15.       Q.1) Are you satisfied with the ways J&K Bank grants loans? Yes Chart 1 NO No. of respondents 100 Yes 80 No 20 20.00% YES NO 80.00%
  16. 16.  Q.2) Is the NPA level of JKB controllable?  YES NO CAN'T SAY       No. of respondents 100 YES 50 NO 25 CAN'T SAY 25
  17. 17.         Q.3) Are the profits of J&K Bank effected by NPA's? YES NO CAN'T SAY No. of respondents YES 30 NO 15 CAN'T SAY 55 100
  18. 18.         Q.4) Are the NPA reduction techniques of JKB standardized? YES NO CAN'T SAY No. of respondents 100 Yes 45 No 20 Can’t say 35
  19. 19.       Q.5) Comparing with other Indian banks do you think that the asset quality of J&K Bank has been appreciable always? YES Chart 7 75 NO 70 No. of respondents 100 YES 75 NO 25 65 60 55 50 45 40 35 30 25 20 15 10 5 0 75 25 YES NO
  20. 20.       Q.6) Which bank is the role modal of banking in J&k? SBI Chart 8 PNB 5.00% 10.00% JKB 5.00% ICICI Respondents 100 SBI PNB JKB ICICI 80.00%
  21. 21. Q.7) Which bank provides best services in the state? 1 SBI 2 J&K BANK 3 OTHERS      No. of respondents 100 SBI 10 Others 5 J&K Bank 85
  22. 22.      The bank has brought a good improvement in NPA recovery by increasing the NPA Coverage Ratio to 68.79% in 2009-10. People of the state mostly prefer J&K Bank over other banks. The asset quality of J&K Bank is being appreciated by the people as well as by the RBI. Performance of the bank in recovery of NPAs has been appreciated even though it needs further improvement. The NPA reduction techniques of have J&K Bank have been rated well by most of its customers.
  23. 23.    Most of the people rated the NPA level of J&K Bank as controllable still lot of improvement is needed to lower down the NPA level further and further. The ways through which the bank offers loans to the general public has been appreciated by most of the respondents. This has increased the image of the bank in the eyes of the people. The bank has a great business opportunity in the future as its people friendly policies make the bank quite popular in the state as well as the national market.
  24. 24.     Special training programmes should be conducted to make the employees more skilled. Before setting up any new branch the bank should make efforts to make it online because online banking will make supervision easy and increase the bank’s performance. The bank should make efforts to be at top at national level because this bank has a great customer strength and people friendly policies. The bank should adopt reward system for employees so that the confidence among them may be increased and they will put more efforts.
  25. 25.   One important suggestion is that the bank should not ignore advertising at any point of time because present business is the business of advertising and advertising has an important role in the growth of business. One more suggestion is that the bank should take initiatives to increase the daily working hour’s time so that it can get maximum amount of working days as Kashmir remains closed most of the times due to strikes.
  26. 26.  In this report the purpose was to study the management of NPAs in J&K Bank. The overall analyses leads to the conclusion that J&K Bank’s performance regarding the coverage of NPAs has been good but the performance has not been consistent. Though the bank’s current performance is better as compared to its past performance still there is a need to improve asset quality and bring consistency in the performance and eliminate NPAs totally because the performance of the Bank has been affected by the NPAs in the past.
  27. 27.      Research Methodology Marketing Management Bank Watch Marketing Management      BOOKS Navdeep Aggarwal Philip kotler Sajad Bazaz T.N. Chabra MAGAZINES AND NEWSPAPERS Business world Economic Times Rising Kashmir India today Greater Kashmir Times of India
  28. 28.  WEBSITES           www.rbi.com www.cab.org.in www.jkbank.net www.scribd.com www.livemint.com www.ezinearticles.com www.coolavenues.com www.financialexpress.com www.asiapacificforum.com www.indiastudychannel.com

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