COMPARATIVE STUDY OF NPA BETWEEN PUBLIC AND PRIVATE SECTOR BANK

1. 1
Comparative Study of NPA Between Public and
Private Sector Bank
A DISSERTATION SUBMITTED TO
ST.XAVIERS COLLEGE, KOLKATA FOR THE
DEGREE OF BACHELOR OF COMMERCE
(HONS)
SUBMITTED BY: SUBHAMKUNDU
ROOM NO-12
ROLL-340
SUPERVISED BY: PROF KUSHAL DEY
SUBMITTED ON APRIL: APRIL2021

2. 2
Annexure – II
St. Xavier’s College (Autonomous)
Department of Commerce (Morning)
PROJECT COMPLETION AND PLAGIARISM VERIFICATION CERTIFICATE
Student Name: Subham Kundu
Room No.: 12 Roll No.: 340
Title of the dissertation: Comparative Study of NPA Between Public and Private
Sector Bank The above dissertation was scanned using iThenticate for
similarity detection and the similarity index is as follows:
Similarity Index:10%
The dissertation may be considered for submission.
Name of the Supervisor: KushalDey Signature:

3. 3
Annexure – III
Student’s Declaration
I hereby declare that the Project Work with the title Comparative Study of
NPA Between Public and Private Sector Bank submitted by me for the
partial fulfilment of the degree of B.Com. (Honours) at St. Xavier’s College
(Autonomous), Kolkata is my original work and has not been submitted
earlier to any other Institution for the fulfilment of the requirement for any
course of study.
I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me.
However, extracts of any literature which has been used for this report has
been duly acknowledged providing details of such literature in the
references.
Signature:
Name: Subham Kundu
Address :Nutan Palli,Bardhaman
Pin-713101
Place: Bardhaman Room No: 12
Date: 20/04/2021 Roll No: 340

4. 4
ACKNOWLEDGEMENT
“Gratitude is not a thing of expression; it is more a matter of feeling”.
I would like to thank Fr. Dr., S.J.JOSEPH KULANDAI(Vice Principal), for
rendering enormous support and providing the grand opportunity to me to
present this project.
I extend my sincere gratitude to Prof. Kushal Dey, my Project guide, for the
successful completion of the project. I gratefully acknowledge my
indebtedness to numerous writers, researchers, authors whose work I
screened, read, admired, assimilated & have liberally drawn upon to make
my own judgment & interpretation. I am also thankful to my other teachers,
librarian for their coordination and assistance for completion of the project.
Thank you all for rendering your valuable time and proper guidance in
helping me to accomplish my objective of finishing this project on time.
Finally, I express my heartfelt gratitude to my family who has been a source
of constant inspiration for me. I am equally indebted to my senior & friends
for their forbearance at my indulgence in academic pursuit.

5. 5
TABLE OF CONTENTS
Chapter Name Particulars Page No.
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Introduction
Background of the Study
Rationale of the Study
Literature review
Objective of the Study
Research Methodology
Limitations
Chapter Planning
3-9
4-6
6
6-7
7
7-8
8
9
2 ConceptualFramework 10-13
3 Presentation, Analysis and Findings of
Data
14-22
4 Findings,
Suggestions, and
conclusion
23-25
5 Bibliography 26-27

6. 6
Comparative Study of Non-Performing Asset between Public and
Private Sector Bank in India
CHAPTER- 1
INTRODUCTION

7. 7
1.1 BACKGROUND
For a growing economy nothing is more important than a strong banking sector. Banks are the
backbone of any economy. The most important work of a bank is to owe money. Due to this
money is transferred from one source to another resulting in overall growth of economy,
infrastructure and healthcare. As with higher risk comes higher reward the same is with banking
business which carries credit risk, that arises from the failure of debtor to repay the principal
amount or interest during or in future transaction(s), failure of which has an adverse effect on
the other sectors of a country. One of the serious problems for banks in India is a NON-
PERFORMING ASSET. Thorough the balance sheet of a bank, we can understand its
performance by the amount of NPA it has occurred during the Financial Year. In a Layman’s
term high level of NPA means a large number of credit default. This will affect the net Profit
and will also devalue the other assets. The concept of NPA involves creation of provisions
which reduces the Net Profit. Nonperforming Asset are serious threat for any financial system
in a country. Indirectly NPA affects the whole country like in India NPAs reflect the state of
health of India’s industry and trade.
My project deals with the concept of NPAs, its reason and how upon becoming Non performing
an Asset gradually corrodes a country’s economy from inside.
Banking Activities
Retail banking, which deals with small firms and businesses.
Business banking, offering types of assistance to mid-market organizations.
Corporate banking, coordinated everywhere business elements.
Private banking, giving abundance the board administrations to high total assets people.
Investment banking, exercises in the monetary business sectors, for example, "guarantee"
Merchant banking is the private value movement of venture banks
Public Sector Banks
PSBs are banks in which a greater stake (i.e. more than 50%) is purchased by a government
and the rest is generally Privatized. We have 12 Public Sector Bank and 2 Public sector bank
in Indian Economy
Private Sector Banks

8. 8
The "private-area banks" will be banks where larger pieces of state or value are held by the
private investors and not by government. There are 21 private Sector Bank in India.
Definition of NPA
An asset became NPA when it ceases to generate income for the bank
A non-performing asset (NPA) is loan or advance where –
 Interest and/or instillment of principal remain overdue for a period of more than 90 days
in respect of term loan,
 The account remains out of order in respect of an Overdraft/Cash credit
 The bill remains overdue for a period more than 90days in case of bills
purchased and discounted
 Source: http://www.rbi.org.in
For an example- Type equation here.
If Ram taken loan from SBI for Rs-10, 00,000. From bank perspective “loan to Ram is an asset.
As per agreement Ram will pay Rs10,000 per month with an interest now if Ram fails to pay
either interest or principle it will fall under NPA.
There are categories of Non-performing Asset
1) Substandard Assets
2) Doubtful Assets
3) Loss Assets
Substandard Assets would be one which has remained NPA for a period less than or
equal to 12 months, the bank need to make provision @15%
Doubtful Assets would be one which has remained in the substandard category for a
period of 12 months.
Sub-categories:
SECURED (%) UNSECURED (%)
Doubtful up to 1 year 25 100
Doubtful up to 1 to 3 years 40 100
Doubtful more than 3 years 100 100
Loss Assets would be one where loss has been identified by the bank or the internal or
external auditor or RBI inspection but the amount has not been written off wholly.
Example-

9. 9
If the bank given loan Rs10,000 and it falls under substandard assets categories then it
will need to make provision of Rs10,000*15%=Rs1500 which will reduce the net profit
of the bank by Rs-1,500. Eventually the chances of fall in share prices will also increases
Types of NPA
1 Gross NPA
2 Net NPA
1. Gross NPA: These are the aggregate of all loan of credit that has turn bad for Bank
Gross NPAs ratio=
𝐺𝑟𝑜𝑠𝑠 𝑁𝑃𝐴
𝐺𝑟𝑜𝑠𝑠 𝐴𝑑𝑣𝑎𝑛𝑐𝑒𝑠
2. Net NPA:
NNPA refers any GNPA- any Provision made by the bank.
Net NPAs ratio=
𝑮𝒓𝒐𝒔𝒔 𝑵𝑷𝑨−𝑷𝒓𝒐𝒗𝒊𝒔𝒊𝒔𝒐𝒏𝒔
𝑮𝒓𝒐𝒔𝒔 𝑨𝒅𝒗𝒂𝒏𝒄𝒆𝒔−𝑷𝒓𝒐𝒗𝒊𝒔𝒊𝒐𝒏𝒔
1.2 Rationale of the Study
 In every country the banking system plays an important role in the development of its
economy and Indian Banking System is not an exception
 It will be the 5th largest banking sector by 2021 and 3rd largest sector by 2025
 Nonperforming Asset (NPA) is a serious concern for the liquidity position of the bank.
It can destroy strong financial position of bank.
 The problem is that the NPA is affecting both the economy and the banks
simultaneously. Higher the level of NPA in India Bank shows the state of health of the
industry and state
 It involves the necessity provisions, which reduces the overall profit and Shareholder’s
value.
 An amount of approx. Rs-6,80,000 crores was found as the aggregate amount of gross
NPA in case of schedule commercial bank in the fiscal year 2020.
 Numerous methods and steps have been introduced to curb the existing number of NPA
by the Government
 It is highly impossible to have ZERO percentage of NPA
 In recent occasions the banks have turned out to be extremely wary in broadening
advances, the purpose for mounting non performing resource, NPA had been the single
biggest reason for disturbance of the financial area in India In recent times the banks
have become very cautious in extending loans, the reason behind mounting non
performing asset, NPA had been the single largest cause of irritation of the banking
sector in India.

10. 10
1.3 Literature Review
• Khosla and Kumar (2017): tracked down that the Indian banks were facing more than
Rs. 90,000 crores NPAs issue and were running under loss of advantage. The regular laws of
the country were exorbitantly off-kilter, making it difficult to manage in order to recover the
terrible credits.
• Sengupta and Bhardhan (2017): contended that administrative abstinence doesn't
work with goal and can really demolish the financial emergency by giving motivating forces
to the banks to concede NPA acknowledgment and postpone activity. Rebuilding of a credit
ought to be the business choice of a bank and ought to not consequently meet all requirements
for administrative concessions regarding postponement of acknowledgment of NPAs.
• Dutta.A(2014): This paper contemplated the development of NPA in the general
population and private area banks in India, and broke down area astute non-performing
resources of the business banks. With the end goal of the examination information has been
gathered from auxiliary sources like report on Trend and Progress of Banking in India, RBI,
Report on Currency and Finance, RBI Economic Surveys of India
• Kumar, M.,Singh, G. (2012): The paper centres around the main components, which
contribute towards the non-performing resources issue from the view point of the top investors
of public area banks and, some unfamiliar banks in India and the actions needed for dealing
with the NPAs
1.4 Objectives
 To investigation the proficiency in overseeing Nonperforming Assets of Public
Sector and Private Sector through comparative examination.
 To study the effect of Non-Performing Assets on productivity of Public and
private Sector Bank.
 To study the explanation and effect of NPA in India and give significant
suggestion.
1.5 Research Methodology
RESEARCH DESIGN
The examination plan that will be use is Descriptive Research.
• Involves gathering information that describe event and afterward puts together,

11. 11
• Uses description as an apparatus to coordinate information into designs that arise
•
Sources OF DATA
Secondary data refers to the data which has already been generated and is accessible for
use. The information about NPAs and its composition, classification of loan assets profit,
advances taken from The Reserve Bank of India and some other financial websites. In this
exploration study the student need to take all Public Sector Banks and all Private Sector
Banks from the authorized published data of RBI.
DATA ANALYSIS
The gathered data has been arranged, examined has been shown up based on
STATISTICAL ANALYSIS. Information preparing and examination have been done both
physicallyand by utilizing software. RatioAnalysis and correlation analysis havebeen used
using EXCEL WORK SHEET.
PERIOD OF STUDY
This study covers the period of five years from 2014-15 to 2018-19
1.6 LIMITATION OF STUDY
 AsmystudydependsonSecondaryinformation,the practical tasksasrelatedwithNPAsdone
by the banks are not educated.
 NPAs are changing with time. The investigation is done in the current scnerio without
predicting future events.
 The studydependsonsecondaryinformationaspublishedinRBIwebsitesandotherbanking
reports.These informationdependonrecordedbookkeepingidea,whichdisregardsthe effect
of rising of price level(i.e.-inflation).
 The studyis based on period of years as publishedinRBI websites 2014-15 to 2018-19 latest
data is not finalize due to Covid period.

12. 12
1.7 CHAPTER PLANNING
Chapter1-Introduction
It consists of introductory part about the credit risk of Indian banking System that is NPA, it
has not only have negative effect on Indian Banks but also the whole economy. It explains the
significance of conducting research work through rationale of the study moreover it
comprises of extensive literature review of Comparative Analysis of NPA between Private and
Public Bank it also involves research methodology opted it terms of fulfilment of objective of
research, period of study, source of data collection and certain limitation of study.
Chapter 2-Conceptual framework
It comprises of Public and Private Bank overview with respect to NPAs their impact on the
economy, reason for such NPAs and various initiative taken by Government for reduction of
NPAs
Chapter3-Analysis and Findings
The analysis part consists of graphical representation of NET NPAs, Gross NPAs, classification
of loan assets Composition of NPAs with respect to Public and Private Banks with the help of
MS EXCEL
Chapter 4-Conclusion and Recommendation
It reflects the overview of NPAs in Indian Banking System, conclusion, limitation of the study
and recommendation for future studies.

13. 13
CHAPTER 2 -
CONCEPTUAL
FRAMEWORK

14. 14
INDIAN BANKING SECTOR-A BRIEF HISTORY
Modern day banking in India began in the last decade of the eighteenth century. Among the
principal banks were the Bank of Hindustan, which was set up in 1770 and wind up in 1829–
32; and the General Bank of India, set up in 1786 but fizzled in 1791.
The biggest and the most established bank in India is the State Bank of India (SBI). It started
as the Bank of Calcutta in mid-June 1806. In 1809, it was renamed as the Bank of Bengal. This
was one of the three banks established by a presidency government, the other two were the
Bank of Bombay in 1840 and the Bank of Madras in 1843. The three banks were converged in
1921 to frame the Imperial Bank of India, which upon India's independence, turned into the
State Bank of India in 1955. For a long time, the presidency banks had gone about as semi
national banks, until the Reserve Bank of India was set up in 1935, under the Reserve Bank of
India Act, 1934.
Why Assets Become NPA
The Indian banking industry has one of the greatest percent of NPAs contrasted with global
levels. A few explanations behind assets turning out to be NPAs are as under:
 Lack of legitimate observing and follow-up measures.
 Lack of genuine corporate culture.
 Inadequate lawful arrangements.
 Change in financial arrangements
 Lack of coordination between banks/FIs.
 Classification of agricultural and non-agricultural advances is need to be disbursed
An internal and external investigation led by RBI shows the factor contributing to NPA
 Internal Factor
 Diversion of assets for
 Expansion/broadening/modernization
 Taking up new venture
 Inefficiency in administration
 Slackness in credit the executives and checking
 Inappropriate Innovation/specialized issue
 Lack of coordination among moneylenders.

15. 15
 External Elements
 Recession
 Input/power stockpiling
 Price acceleration
 Exchange rate variation
 Accidents and natural disasters, and so forth
Impact of NPA
1. Profitability
NPA is nothing but a bad Asset which happens when the banks money is blocked by the
customer. Because of this the income of the bank reduces by the amount of NPA along with
the opportunity cost of the owed money. Thus, NPA affects both the current year profits and
future years estimated profit
2. Liquidity:
Since money is being blocked, profit is being decreased leading to a lack of Cash in Hand
ultimately leading to an addition Cost to the Bank. Due to NPA routine payments and dues of
the bank also being affected
3. Involvement of management:
An indirect cost which is payable by the bank due to increase in NPA is time and efforts of the
management teams. To counter these banks now have special employees to handle NPAs but
at the cost of an additional expense.
4. Credit loss:
A bank loss its goodwill, credit and brand image in front of other financial institution due to
NPAs leading to an adverse impact in the existing customers of the banks.
Preventive Measurement for NPA
 Identifying Borrowers with Genuine Intent:
One of the biggest challenges faced by the banks are the identification of genuine
borrowers, who are serious and have an intention to pay back the principal amount with
interest in allotted time. For this the basic officer of the bank are important as they are
the once who have sufficient information with regards to customers capability to
achieve a specific turn around. Based on the data collected by the officials the bank
should decide if its profitable to make an investment. The bank should consider
“Special Investigation” to ascertain factors that may contribute to the degradation of
Financial health of the borrower. For example, the bank may investigate financial
transaction or business transaction or books of accounts to estimates the present
financial condition of the borrowers.
Borrowers may have genuine problems like mismatch of fund flow this risk may be
taken by the bank at branch level and for these types of cases a special limit should be
decided. This will eliminate the risk of banking losses due to non-genuine borrowers

16. 16
 Timeliness and Adequacy of response:
Time is an important factor for any banking activity like restructuring or rehabilitation
activity. The response to this is decided through the economic study and the study of
customers last financial records under the restructuring scheme. The scheme proposed
by the bank should flexible and should provide an outgoing option
 Emphasis on Cash Flows:
While collecting funds the scheme of restructuring, banks may prefer other source than
conventional sources like Cash Flow Analysis which may possibly provide a
misleading picture. Fresh credit requirement may also be done in conjunction with the
Cash Flow Analysis
 Management Effectiveness:
We generally believe that an NPA is caused due to lack of Funds with the borrowers.
Although the funds are an important factor in deciding the development of NPAs but
other factor might also contribute towards the development of an NPA.
Management efficiency in tackling harsh business conditions also plays an important
role in affecting a customer’s fortunes. A bank may fund a unit which looks after
management effectiveness and quality of the borrower’s business and may perform
investigative audit where it feels suspicious regarding borrowers’ assets. It may also
appoint a consultant to examine this further. A proper study of techno economy viability
should become the base of any bank’s future actions

17. 17
CHAPTER-3
Presentation, Analysis,
and Finding of Data

18. 18
For the purpose of the Comparative Analysis, we have taken the following Public and Private
Bank data which is available in RBI website.
PUBLIC BANK
ALLAHABAD BBANK OF BARODAANK
ANDHRA BANK
BANK OF BARODA
BANKN OF INDIA
BANK OF MAHARASTRA
CANARA BANK
CENTRAL BANK OF INDIA
CORPORATION BANK
INDIAN BANK
INDIAN OVERSEAS BANK
ORIENTAL BANK OF COMMERCE
PUNJAB AND SIND BANK
PUNJAB NATIONAL BANK
STATE BANK OF INDIA
SYNDICATE BANK
UCO BANK
UNION BANK OF INDUA
UNITED BANK OF INDIA
AXIS BANK OF INDIA
BANDHAN BANK LIMITED
CITY UNION BANK LIMITED
CSB BANK LIMITED
DCB BANK LIMITED
FEDRAL BANK LIMITED
HDFC BANK LIMITED
ICICI BANK LIMITED
IDBI BANK LIMITED
IDFC FIRST BANK LIMITED
INDUSIND BANK LIMITED
JAMMU AND KASHMIR BANK LIMITED
KARNATAKA BANKLIMITED
KARUR VYSYA BANK LIMITED
KOTAK MAHINDRA BANK LIMITED
LAKSHMI VIALS BANK LIMITED
NAINITAL BANK LIMITED
RBL BANK LIMITED

19. 19
PRIVATE BANK
Source:http://www.rbi.org.in
NET NPA OF BANK 2014-15 to 2018-19
Fig:1 Source: http://www.rbi.org.in
Interpretation
From the above Bar Chart, we can see NET NPA of Public Sector bank in every
financial year is higher than Private Sector Bank It is also in increasing trend from
2014-15 to 2018-19. It is maximum in the FY 2017-18, which have negative effect to
the shareholders.
The reason of low NPA in private Sector is due to Good Loan disbursing and Recovery
management.
SOUTH INDIAN BANK LIMITED

20. 20
GROSS NPA AS PERCENTAGE OF GROSS ADVANCES
FIG:2 Source: http://www.rbi.org.in
INTERPRETATION
 The above figure shows GNPA ratio of Public Sector Banks to Private Sectors Banks
from 2014-15 till 2018-19. Higher ratio of Public Sector Bank to Private Sector banks
puts the banks in a dangerous position.
 The chart clearly shows the growth of Gross NPA of Public Sector Banks is growing
from 2014-15 to 2017-18 which equal 5% to 14.6% but in but later on it falls to 11.6
Private Sector Banks is always increasing 2014-15 to 2018-19 but it is all the time less
than public sector bank.
 We can conclude that increase in Gross NPA ratio of Private Sector Banks shockingly
increased from 2.1% to 5.2% whereas in Public Sector Banks
it rises then it has falls massively
2018-19 2017-18 2016-17 2015-16 2014-15
PUBLIC SECTOR 11.6 14.6 11.7 9.3 5
PVT SECTOR 5.3 4.7 4.1 2.8 2.1
11.6
14.6
11.7
9.3
5
5.3 4.7 4.1
2.8
2.1
0
2
4
6
8
10
12
14
16
GNPA/GROSS
ADVANCES
GROSS NPA as percent of Advance
PUBLIC SECTOR PVT SECTOR

21. 21
NET NPA AS A PERCENTAGE OF NET ADVANCES
FIG:3 Source: http://www.rbi.org.in
Interpretation
 The graph shows the Net NPA Ratio of Public Sector Banks and Private Sector
Banks from 2014-15 till 2018-19. Higher ratio of Public Sector Bank to Private Sector
banks puts the banks in a dangerous position.
 The above analysis clearly indicates that percentage of growth of Net NPA of
Public and Private Sector Banks is growing from 2014-15 to 2017-18 which is 2.9%
to 8.0% and 0.9% to 2.4%.
 In conclusion, that Net NPA Ratio of Public Sector Banks is very
Shocking which has ascended by 5.1%whereas in Private Sector Banks it rises by
1.1% from the year2014-15 to 2018-19.
 After 2017-18 there is good sign in both the sector. NNPA ratio falls whereas falling
rate in Public sector is high than Private sector
2018-19 2017-18 2016-17 2015-16 2014-15
PUBLIC BANK 4.8 8 6.9 5.7 2.9
PVT SECTOR 2 2.4 2.2 1.4 0.9
4.8
8
6.9
5.7
2.9
2
2.4 2.2
1.4
0.9
0
1
2
3
4
5
6
7
8
9
NNPA/NET
ADVANVE
Net NPA as percent of Advance
PUBLIC BANK PVT SECTOR

22. 22
CLASSIFICATION OF LOAN ASSET OF PUBLIC BANK
FIG:4 Sources: http://www.rbi.org.in
Interpretation:
 The chart(above) summarizes the decrease of standard asset every consecutive year
while the substandard, doubtful and loss-making asset are increasing.
Hence, public sector banks are unable to reduce NPA over the years
 Various measures are incorporated by the Public Banks to reduce and convert Sub
Standard, Doubtful and Loss asset to Standard Asset. The rise in doubtful advances is
a major concern for public sector bank
75
80
85
90
95
100
105
2018-19 2017-18 2016-17 2015-16 2014-15
88.4
85.4
88.3 90.7
95
2.2
3.5
3
3.4
1.9
8.2 10.2
8.4 5.5
2.9
1.2 0.9 0.4 0.3 0.2
CLASSIFICATION OF LOAN OF PUBLIC SECTOR
BANK
STANDARD ASSET SUB STANDARD ASSET DOUBTFUL ADVANCES LOSS ADVANCES

23. 23
FIG:5 sources:http://www.rbi.org.in
Interpretation:
 We can understand the reduction in Standard Asset (by the above chart) which makes
up for the reduction in other three types of Assets
 It is very alarming for the private sector banks since the standard asset decreasing and
substandard asset and doubtful asset increasing
 Therefore, the private sector should be more cautions while disbursing loans.
ASSESSMENT OF CO-RELATION
92
94
96
98
100
2018-19 2017-18 2016-17 2015-16 2014-15
94.7 95.4 95.9
97.2 97.9
1.3
1.2 1.4
0.9 0.7
3.7 3.2 2.3 1.6 1.1
0.3 0.2 0.4 0.3 0.3
CLASSIFICATION OF LOAN OF PRIVATE
SECTOR BANK
STANDARD ASSET SUB STANDARD ASSET DOUBTFUL ADVANCES LOSS ADVANCES

24. 24
It is used to understand the co-relation between two variables. The variable is NetNPA
and Net profit.
The researcher has tried to identify the co-relation between two variables i.e.
Net NPA and Net profit of Public and Private sector Bank.
For this purpose, we have taken three popular Public and Private Sector Bank
PUBLIC SECTOR- 1) BANK OF BARODA
2)BANK OF INDIA
3)CANARA BANK
PRIVATE SECTOR-1) AXIS BANK
2)ICICI BANK
3)HDFC BANK
Interpretation
There is strong negative co-relation between the Profit and NPA (r=-0.854) in Public
Sector Bank which indicates that if there is increase in NPA by Rs 100, then Profit
would come down by Rs 85
Similarly, r=-0327 in Private Sector Bank which indicates that if there is increase in
NPA by Rs 100, then Profit would come down by Rs 32
Hence, we can conclude the profitability of Public Sector Bank is affected more than
Private sector Bank
NPA RECOVERY ANALYSIS

25. 25
Percentage of Net Amount Recovered
Lok Adalat (%) DRTs(%) SARFAESI(%)
2013-14 6 10 27
2014-15 3 7 16
2015-16 4 9 17
2016-17 4 24 7
Source: http://www.rbi.org.in
Interpretation:
 The above analysis clearly shows the NPAs of scheduled commercial banks
not recovered from the study period of 2013-14 to 2016-17.
 SARFAESI Act is the most reliable channel of bad debt recovery of banks.
Rs32,000 Crores were recovered through SARFAESI ACT in 2013-14.
 As per current data published by RBI. DRTs is performing well which
recovered Rs 27,954 crores in 2016-17.
6
3 4 4
10
7 9
24
27
16 17
7
0
10
20
30
2013-14 2014-15 2015-16 2016-17
RECOVERRATE
LOK ADALAT(%) DRTs(%) SARFAESI(%)

26. 26
CHAPTER-4
FINDINGS, SUGGESTIONS
AND
CONCLUSION

27. 27
4.1 FINDINGS
 The percentage change in gross NPA to gross advances ratio & net NPA to net
advances ratio grows over the years.
 Although Public sector banks have managed to decrease the standard assets over the
years but the Private Sector Banks have an increase in their Standard Assets, which is
not a good sign.
 The sub-standard assets of both the banks are lessening day by day.
 Doubtful assets of Public Banks are ascending but they are at hold with Private Sector
Banks
 Loss assets of both, Private and Public sector banks are showing decreasing trend.
 There is a decreasing negative relation between NPA & profits of private sector banks
which is due to better effectiveness of management.
 There is an adverse effect on the Cash flow of Banks.
 Banks are not capable to give loans to the new borrowers due to lack of funds which
arises due to increase in NPA.
 Ineffective recovery, wilful defaults and Defective lending process are the leading
factors which results in growing of NPAs in banks.
 NPAs halts the earning capacity of banks and badly affects the net profits of banks.
 The following have adjudicated insolvency resolution for Companies and individuals
respectively-
The NCLT (National Company Law Tribunals)
The DTR (Debt Recovery Tribunals)
4.2 SUGGESTION
 Bank should keep an eye on the advances made.
 RBI should revise existing methods and rules for classifying NPAs.
 Banks should revise and introduce new loan recovery methods.
 Credit appraisal and post–loan monitoring is under rated methods which need more
attention and regulation
.
 Personal visits should be made after sanction and disbursal of credit. Close
monitoring of the accounts of borrowed customer should be done
regularly.
 Effective Management should be done by the banks to reduces NPA
 For timely payment, borrowers with genuine intention should be choose by the banks
and Follow up required

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4.3 CONCLUSION
The most roaring problem faced by Indian banking system is none other than NPA.
Effective management of NPAs is required from Banking sides to prevent destruction
of the business of Indian Bank. NPAs are an existential threat for the Indian banks It
is ill advisable to take them lightly. The NPAs would halt or decrease the present profit;
interest income, and would hamper the regular operation along with the recycling of
the funds. Banks can divide the losses among different borrowers by charging higher
interest rates from productive customers. Savings and Financial Markets are affected
due to lower deposits rate and higher lending rates of bank
The Non-Performing Assets are an existential threat for the banking system of India.
It not only affects the banks but indirectly creates an economy problem too. The money
due to NPAs has a direct impact on Net Profit of the bank since Indian banks are highly
dependent on income from interest on money lent.
My assignment presents the relatively high NPAs of Public banks over Private banks
Different measures to curb the presence of NPA from the Indian Banks are taken by
the Government like IBC code Indra Dhanush Scheme but still a lot needs to be
achieved to uproot the problem from basic level.
The level of NPA in Indian banking System is relatively more compared to foreign
Banking System.
In my research I found that NPA administration of Private Bank is healthier than public
bank, the negative correlation between Net Profit and NNPA is more in Public bank
compared to Private bank. Complete eradication of NPA in bank is impossible, but the
bank can make strict rule while disbursing he loan.
While disbursing good amount loan to the business entity the official must go through
their previous and current financial statement
Regarding wilful defaulter Fasttracktribunal should take necessaryaction against the defaulter

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CHAPTER-5
BIBLOGRAPHY

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WEBSITE
 www.rbi.org
 www.moneycontrol.com
NEWS PAPER
 THE TIMES OF INDIA
 ECONOMIC TIMES