Analysis of NPA Management in Commercial Bank

1. A PROJECT ON
ANALYSIS OF NPA MANAGEMENT
AT CANARA BANK
Submitted By
Purushottam Kumar Karna
Internal Guide External Guide
Prof. Mohammed Arif Pasha
HOD,MBA Dept Manager, NPA cell
BCE, Bangalore Canara Bank

2. INDUSTRY PROFILE
 The ancient Banking in India is tracced back in
Maurya dynasty (321 to 185 BC)
 The establishment of modern type of bank in India
dates back to 18th century, called as General Bank of
India.
Milestones:
 1949 : Enactment of Banking Regulation Act.
 1955 : Nationalisation of State Bank of India.
 1969 : Nationalisation of 14 major Banks.
 1980 : Nationalisation of seven banks with deposits
over 200 Crores.
 1990 : Liberalization of Banks
 2011 : RBI decided to issue new licenses for more Pvt
Banks.

3. COMPANY PROFILE
 Established in 1906 in Mangalore as Canara
Hindu Permanent Fund by Visionary Shree
A.S.R Pai through 2000 shares of capital
having Rs.50 each.
 Nationalized with other 14 major bank in
1969.
 In 1995-96 First bank with ISO 9002 in India.
 In 2004-05 Complete Computerized Bank
 In 2010-11 Bank scored 5lakh crore
benchmark of business and earned SIFI
status

4. NATURE OF BUSINESS CARRIED
Commercial Banking & Financial Services:
 Personal Banking
Corporate Banking
NRI Banking
Internet Banking
Priority & SME Banking
Mutual Fund Business
CanBank Venture Capital
 Factoring Subsidiary

5. VISION, MISSION & QUALITY POLICY
VISION STATEMENT:
“To emerge as a „Best Practices Bank‟ by pursuing global
benchmarks in profitability, operational efficiency, asset
quality, risk management and expanding the global reach”.
MISSION STATEMENT:
“To provide quality banking services with enhanced customer
orientation, higher value creation for stakeholders and to
continue as a responsive corporate social citizen by effectively
blending commercial pursuits with social banking”.
CORPORATE OBJECTIVE :
E- Efficiency.
P- Profitability and Productivity.
O- Organization Effectiveness.
C- Customers centric
H- Hi Tech Banking

6. PRODUCT/SERVICE PROFILE
Personal Banking
 CASA products
 Loan Products
 Mutual Funds
 Corporate Banking
 Deposit, Credit & OD
 Merchant Banking services (IPO)
 Syndication Services
 NRI Banking
 Remittance Facilities
Priority Banking
 SME & Social/Agri Banking
 Asset Management
 Retail Banking

7. AREA OF OPERATION
GLOBAL/ NATIONAL/DOMESTIC
Domestic/National Operation:
 Network of 3046 Branch Nationwide
over 25 states/4 Union territories
 HO : Bangalore Circle Office: 33
 Global Operation:
 Concept of Financial Supermarket
 London, Shanghai, HongKong, Doha, Dubai,
Moscow as financial subsidiary and foreign
branch.

8. OWNERSHIP PATTERN
No. of Shares
15%
1 Govt of India
5% 2 Banks & FI
1% 0%
1% 3 Mutual Funds
4 Bodies Corporate
10%
5 NRIs/OCBs
6 Resident
68% Individuals/HUF/Trust
7 Foreign Institutional
Investors

9. COMPETITOR‟S INFORMATION
Major competitors from Public sector Banks: -
SBI and its Associates
Bank Of Baroda
Punjab National Bank
Bank Of India
IDBI Bank
 Major Competitors from Private Sector Banks:-
ICICI Bank
HDFC Bank
AXIS Bank
Major Competitors from Foreign sector Banks:-
Standard Chartered Bank
HSBC Bank
Citi Bank

10. WORKFLOW MODEL OF BANK
Maintain CRR
Canara Bank Reserve Bank of
India
Saving & Mobilize Loan
Deposit Money & Credit products
Deposit or Saving
Loan A/c Holders
A/c Holders

11. MCKINSEY‟S 7 S FRAMEWORK
Canara Bank „s 7 Model:

12. SWOT ANALYSIS
Internal Analysis External Analysis
OPPORTUNITY
STRENGTH 1. Mutual Fund
1. Full Core Banking 2.Customer centric
approach
2. Pan-India Branches 3. Loan Mobilization
3. Robust Asset Quality
WEAKNESS
THREATS
1.Traditional staffing skill
1. Pvt Sector Banks
2. 4th rank in PSB Banks
2.Innovative Banking
3. Weak Research team 3. Competitive market

13. ANALYSIS OF FINANCIAL STATEMENT

14. ANALYSIS OF FINANCIAL STATEMENT

15. GENERAL INTRODUCTION OF PROJECT
RESEARCH
Problem Statement:
“ To access & analyze Credit Risk Management Policy
of Bank through NPA Analysis in post Credit Crisis
World ”
Objective of Study:
- To Analyze statistical correlation between different
factors of NPA measures.
Scope of Study:
- Statistical Analysis of NPA factors in Canara banks
through annual reports data provided from 2007-2011.
 Methodology: Analytical Research
- Statistical Analysis using MS Excel 2007
 Limitation of Study:
- The NPA information of bank is top secret unless it
is reported in financial statements.

16. FINDINGS :1
1.2
1
0.8
0.6 PSB Net NPA ratio Average
Net NPA ratio of Canara
0.4
0.2
0
2011 2010 2009 2008 2007
Correlation Coefficient -0.3 (loose correlation)
Correlation between PSB Average NPA ratio and Canara
Bank net NPA ratio

17. FINDINGS:2
4500
4000
3500
3000
2500
Net NPA (in Crores)
2000 Net Profit(In Crores)
1500
1000
500
0
2011 2010 2009 2008 2007
Correlation Coefficient 0.98 (strong correlation)
Correlation between Net Profit Earned and Canara Bank
net NPA

18. FINDINGS:3
Capital Adequacy Ratio
16
15.5
15.38
15
14.5
14.1
14
Capital Adequacy Ratio
13.5 13.43 13.5
13.25
13
12.5
12
2011 2010 2009 2008 2007
Comfortable CAR as per Basel II calculation
Mandated CAR : 9%

19. SUGGESTION & RECOMMENDATION
1) The credit generation procedure, monitoring credit
accounts and treatment of substandard assets must be
dealt at routinely basis to further movement of account
into NPA.
2) It is also wise for the banks to carryout special
investigative audit of all financial and business
transactions and books of accounts of the Retail &
Corporate client when there is possibility of the
diversion of the funds and mismanagement.
3) It is commendable to monitor and supervise
stressful assets and initiate proper support to not to
deteriorate further NPA trench.
4) The modern practice of NPA management like
CDR, CDS and Recovery Tribunal proceedings can be
adopted thoroughly to reduce NPA more aggressively.

20. CONCLUSION
 The Credit management Practice is standard as per
international norm in Bank.
 The Risk appetite of Bank is moderate along with its
high growth offensive marketing strategy and NPA
quality measurement.
 Most of the NPA factors contributed in bank is from
Macro economic reasons and particular year 2009 FY
is worst case in NPA management point of view.
 The profitability of bank is not impacted by NPA.
 The competitive NPA management among peers PSB
is satisfactory
 The CAR is adequately comfortable.

21. LEARNING EXPERIENCE
First 5 Weeks
 Research on Banking Industry
 Identification of Indian Financial System
 Banking Company Preview
 Canara Bank‟s profile study
 Second 5 Weeks:
 Problem Study in Canara Bank for research purpose
 NPA topic Literature study
 Statistical Analysis & Modeling
 Business interpretation & Conclusion