NPA

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NPA

  1. 1. Non Performing Asset means an asset or account of borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset, in accordance with the directions or guidelines relating to asset classification issued by The Reserve Bank of India. Contents 1 Thirty days past due 2 Ninety days overdue 3 Out of order 4 Overdue Thirty days past due An amount due under any credit facility is treated as "past due" when it has not been paid within 30 days from the due date. Due to the improvement in the payment and settlement systems, recovery climate, upgradation of technology in the banking system, etc., it was decided to dispense with 'past due' concept, with effect from March 31, 2001. Accordingly, as from that date, a Non performing asset (NPA) shall be an advance where: 1. interest and /or installment of principal remain overdue for a period of more than 180 days in respect of a Term Loan,
  2. 2. 2. the account remains 'out of order' for a period of more than 180 days, in respect of an overdraft/ cash Credit(OD/CC), 3. the bill remains overdue for a period of more than 180 days in the case of bills purchased and discounted, 4. interest and/ or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purpose, and 5. any amount to be received remains overdue for a period of more than 180 days in respect of other accounts. Many institutions now try to sell their non-performing assets thru companies like KIM-LAR, INC. which helps facilitate the sale of these bundled portfolios. The non- performing assets often include mortgage loans, car loans, credit card debt and installment loans. Ninety days overdue With a view to moving towards international best practices and to ensure greater transparency, it has been decided to adopt the '90 days overdue' norm for identification of NPAs, form the year ending March 31, 2004. Accordingly, with effect form March 31, 2004, a non-performing asset (NPA) shell be a loan or an advance where: 1. interest and /or installment of principal remain overdue for a period of more than 90 days in respect of a Term Loan,
  3. 3. 2. the account remains 'out of order' for a period of more than 90 days, inrespect of an overdraft/ cash Credit(OD/CC), 3. the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, 4. interest and/ or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purpose, and 5. any amount to be received remains overdue for a period of more than 90 days in respect of other Out of order An account should be treated as 'out of order' if the outstanding balance remains continuously in excess of the sanctioned limit/ drawing power. In case where the outstanding balance in the principal operating account is less than the sanctioned limit/ drawing power, but there are no credits continuously for six months as on the date of balance sheet or credits are not enough to cover the interest debited during the same period, these account should be treated as 'out of order'. Overdue Say the due date for any pament is 4 th of September 2008 but the customer is not paying the amount by this date, this amount will be shown as overdue in the cibil.
  4. 4. China Development Bank (the "Bank" or "CDB") is under the direct leadership of the State Council. It is dedicated to the mission of strengthening the competitiveness of our country and improving the living standards of our people. CDB has always been a strong supporter of the State's macroeconomic policies and has assumed an active role in raising and channelling funds to alleviate the bottleneck restraints to the development of the economy and society. The Bank is dedicated to promoting the development of the market through well-planned and balanced financing efforts that support development of the State's key projects and construction in the infrastructure sector, basic industries, pillar industries and high-technology industry. In support of the State's policies to implement disciplined development and build a harmonious society, the Bank's funding efforts also go to constrained sectors, including urbanization, SMEs, agriculture, rural communities and farmers, education, medical and health care and environmental protection. In answer to the call of the State to encourage domestic enterprises to "Go Global", the Bank engages in a wide range of international cooperative activities.
  5. 5. Summary of 2004 Operating Performance In 2004 CDB maintained and strengthened its market performance in the process of resolutely carrying out national macroeconomic adjustment policies and measures, with major operation indicators standing at internationally advanced levels for three consecutive years. As of the end of 2004, the bank's credit assets amounted to RMB1378.6 billion, with current principal and interest recovery ratio of 99.77%, the indicator having maintained world-leading performance for 20 consecutive quarters; the bank's non- performing loan ratio stood at 1.21%, down a year-on-year 0.13 percentage points; the coverage ratio of its risk reserves against non-performing loans hit 285%, and; its capital adequacy ratio reached 10.51%. "Double reductions" of nonperforming asset percentage and nonperforming loan percentage were achieved on the basis of the leading level in 2004. CDB achieved "double reductions" in nonperforming loan percentage and amount
  6. 6. for 4 successive years from 1998 to 2002. From 2002, nonperforming loan percentage of CDB gradually acquires stability, fluctuating slightly within the scope of 3% to 0.5% for 3 successive years, which coincides with the situations of the international leading banks after entering a stable period. In the past six years, CDB continuously reduced its nonperforming loan percentage and nonperforming asset percentage, and reached the international leading level in terms of major operation indicators. In 2004, CDB was ranked as one of the most profitable banks in Asia by International Finance. As the development financing institution of the government, CDB actively developed new thoughts, promoted asset management, and brought along other financial institutions and social capital to jointly support the construction of key projects that concerned the regional development in the past year. In 2004, in order to solve the "bottleneck" that chocked the development of economy, 66% of the new loans of CDB were extended to "coal, electricity, oil and transportation areas". In promised loans that were examined, those of electricity, railway, telecom, highway, public facility, oil, petrifaction and other main industries accounted for 82% in the whole year. Loans extended to middle-western areas and old industrial centers in the northeast amounted to nearly 52% of the total. The key credit projects CDB supported include: national petroleum storage, South-to-North Water Transfers, Beijing Olympic, and Shanghai World Expo. At the same time, CDB reinforces its cooperation with relevant departments, and plays an active role in the development & planning of
  7. 7. the cities in the western area of China such as the Yangtze delta region, Beijing, Tianjin and Hebei, etc. Summary of 2003 Operating Performance In 2003, CDB firmly carried out the macro-economic policies of the state, aggressively deployed its development financing role in the state's macro-regulation work, energetically supported national economic development and restructuring, and consistently promoted credit building and financing and investment system building. CDB has maintained and solidified its leading market-based performance, and has made new progress in all of its work, achieving its best ever operating results. Asset quality at the bank has been improving continuously. As of the end of 2003, the NPL ratio, measured under the five-class assets classification method, stood at 1.34%, down 0.44% from the beginning of the year. The NPA ratio stood at 1.88%, down 0.61% from the beginning of the year. CDB continues to deliver a high standard of asset management performance. In 2003, the current principal and interest recovery ratio and the cumulative principal and interest recovery ratio hit 99.88% and 99.19%, respectively. The current principal and interest recovery ratio has maintained
  8. 8. world-leading performance for 16 quarters in a row. For the first time in its history, the current and cumulative principal and interest recovery ratios of the bank have both exceeded 99%. CDB has further enhanced its risk prevention capability. Risk reserves to NPAs and risk reserves to NPLs have posted a coverage ratio of 159% and 229%, respectively. Capital adequacy ratio stands at 10.11%. ACCOUNTS ASSIGNMENT REPORT OF NON PERFORMING ASSETS OF CHINA DEVELOPMENT BANK IN THE YEAR 2003 AND 2004
  9. 9. BY Joseph Thomas Mechery 07DO806 Mathews Varghese Tharakhan 07D0810 Nirmal Antony 07D0812 Philip Cyriac 07D0814 Rachna.R.Belagodu 07DO848
  10. 10. BY Joseph Thomas Mechery 07DO806 Mathews Varghese Tharakhan 07D0810 Nirmal Antony 07D0812 Philip Cyriac 07D0814 Rachna.R.Belagodu 07DO848

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