This document compares the non-performing assets (NPAs) of State Bank of India and HDFC Bank for the years 2008-2012. It defines NPAs and outlines categories and provisioning norms. SBI had higher gross and net NPA ratios compared to HDFC Bank for all years. While SBI's gross NPA ratio ranged from 4.43% to 4.61%, HDFC Bank's ratio was lower at 1.02% to 1.05%. Similarly, SBI's net NPA ratio was between 1.63% to 1.82% versus 0.18% to 0.19% for HDFC Bank, indicating better asset quality and loan recovery rates at HDFC Bank. The document concludes with a

1. NON – PERFORMING ASSETS
State Bank of India VS HDFC Bank

2. LIABILITIES
ASSETS
MONEY BANK MONEY

3. CLASSIFICATION
OF
ASSETS
Performing Non-Performing
Assets Assets

4. WHAT IS AN ‘NPA’?
A NPA is a loan or an advance where;
 Interest and/ or installment of principal remains
overdue for a period of more than 90 days in respect
of a term loan,
 The account remains “out of order” in respect of an
overdraft/ cash credit.
 The bill remains overdue for a period of more than 90
days in the case of bills purchased and discounted.
 The installment or interest remains overdue for two
crop seasons in case of short duration crops and for
one crop season in case of long duration crops.

5. CATEGORIES OF NPA
 Substandard Assets – Which has remained
NPA for a period less than or equal to 12
months.
 Doubtful Assets – Which has remained in
the sub-standard category for a period of 12
months (mainly up to 3 years).
 Loss Assets – where loss has been
identified by the bank or internal or external

6. PROVISIONING NORMS
 Standard Assets – general provision of a minimum
of 0.25%
 Substandard Assets – 10% on total outstanding
balance, 10 % on unsecured exposures identified as
sub-standard.
 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 sub-standard.

7. IMPACT OF NPA ON BANKS
 They erode current profits through provisioning
requirements.
 They result in reduced interest income.
 They require higher provisioning requirements
affecting profits and accretion to capital.
 Bank’s rating gets affected.
 Bad effect on Goodwill & equity value.

8. REASONS FOR NPA
Internal Factors
 Inefficiency in management.
 Slackness in credit management and
monitoring.
 Lack of co-ordination among lenders.
 Problem of bad credit appraisal.
 Poor recovery of receivables.

9. REASONS FOR NPA
External Factors
 Recession.
 Exchange rate fluctuation.
 Accidents and natural calamities.
 Liberalization of Economy/ removal of
restrictions/reduction of tariffs.
 Scarcity of raw material, labour and other
resources.

10. PREVENTIVE MEASUREMENTS FOR NPA
Early Recognition of the Problem
Identifying Borrowers with Genuine Intent
Timeliness and Adequacy of response
Focus on Cash Flows
Management Effectiveness

12. STATE BANK OF INDIA
Gross NPA Ratio:
Gross NPA Ratio = (Gross NPA/Gross
advances)*100
From the Balance sheet of SBI: (Rs in Crores)
Gross NPA Ratio = (39676/893604)*100
For FY 2012 = 4.43%
For FY 2011 = (25326/549371)*100
= 4.61%

13. NET NPA RATIO
Net NPA Ratio:
NET NPA RATIO =
[(Gross NPA – Provisions)/(Gross Advances –
Provisions)]*100
For FY 2012 = [(39676 – 24884)/ (893604 – 24884)]*100
= 1.82%
For FY 2011= [(25326 – 22060)/ (549371 – 22060)]*100
= 1.63%

14. HDFC BANK
Gross NPA Ratio:
Gross NPA Ratio = (Gross NPA/Gross
advances)*100
From the Balance sheet of HDFC: (Rs in
Lakhs)
Gross NPA Ratio = (200317/20031700)*100
For FY 2012 = 1.02%
For FY 2011 = (169848/16176000)*100
= 1.05%

15. NET NPA RATIO
Net NPA Ratio:
NET NPA RATIO =
[(Gross NPA – Provisions)/(Gross Advances –
Provisions)]*100
For FY 2012 = [(200317 – 164898)/ (20031700 –
164898)]*100
= 0.18%
For FY 2011= [(25326 –139986)/ (16176000 –
139986)]*100
= 0.19%

16. COMPARISION OF NET NPAs
STATE BANK OF
FINANCIAL YEAR HDFC BANK(%)
INDIA(%)
2008 1.78 0.47
2009 1.79 0.63
2010 1.72 0.31
2011 1.63 0.19
2012 1.82 0.18

17. COMPARISION CHART
2
1.8
1.6
1.4
1.2
1 SBI
0.8 HDFC
0.6
0.4
0.2
0
2008 2009 2010 2011 2012

18. Huh! Where am I
supposed to Invest my
1 Million???

19. Presented by:
P. S. Krishna Kanth