non performing asset swathymol jacob Rajagiri Kochin

1. NPA
B Y
S W AT H Y J A C O B

2. WHAT ARE THE ASSETS OF BANK?
• PHYSICAL ASSETS
• RESERVES
• INVESTMENT SECURITIES
• LOANS / ADVANCES

3. NON PERFORMING ASSET
• According to UBD.BPD.(PCB) MC No.3 /09.14.000/2014-15 ,RBI circular,
all advances where interest and/or instalment of principal remains due
for more than 90 days, would be classified as a “nonperforming asset”
• A “nonperforming asset” is a debt obligation where the borrower has
not paid any previously agreed upon interest and principal repayments
to the designated lender for an extended period of time.

4. ASSET QUALITY REVIEW
• AQR – ASSET QUALITY REVIEW
• Reserve Bank of India (RBI) inspectors check bank books every year as
part of its annual financial inspection (AFI) process. However, a special
inspection was conducted in 2015-16 in the August-November period.
This was named as Asset Quality Review (AQR).
• Why ? - The RBI believed that asset classification was not being done
properly and that banks were resorting to ever-greening of accounts.
• This has resulted in mounting losses for the banking sector.

5. ASSET CLASSIFICATION
(1) STANDARD ASSETS
(ii) SUB-STANDARD ASSETS
(iii) DOUBTFUL ASSETS
(iv) LOSS ASSETS
NPA

6. ASSET CLASSIFICATION
1. Standard Assets : Standard Asset is one which does not disclose any
problems and which does not carry more than normal risk attached
the business. Such an asset should not be an NPA.
2. Sub-standard assets: A sub standard asset is one which has been
classified as NPA for a period not exceeding 12 months.
3. Doubtful Assets: A doubtful asset is one which has remained NPA for
a period exceeding 12 months.
4. Loss assets: A doubtful asset after 3 years becomes a Loss asset.
Where loss has been identified by the bank, internal or external
auditor or central bank inspectors.

7. HOW NPA AFFECTS THE BANK ?
• Provisions for bad loans will reduce the net profit.
• Banks profit will come down which they earn in the form of interest.
• Bank will become reluctant to lend thus affecting the borrowers.
• Affects the liquidity position of banks.
• Service to good customers may get affected
• Adverse effect on banks balance sheet. Etc.

8. PROVISION RATES
Loss assets - outstanding 100%
Doubtful assets 25% (up to 1 yr in doubtful category)
40% (more than 1 yr &up to 3 yr in
doubtful category)
Standard asset & Sub -standard - ( secured ) 15% of o/s
Sub -standard ( unsecured) 25% OF O/S

9. ICICI PROFIT & LOSS A/C

10. AQR RESULT…………
1. ICICI Bank’s net profit shrank 76 per cent to Rs.702 crore for the
quarter ended 31 March 2016, the lowest quarterly profit in a decade,
owing to a sharp rise in bad loans.
2. HDFC- Gross non-performing assets (GNPA) for the bank rose to 1.04
per cent at the end of June quarter from 0.94 per cent in the March
quarter. The bank made provisions of Rs.867 crore in the June quarter,
up from Rs.662.40 crore.
3. KOTAK MAHINDRA- NPA rises from 2.31% to 2.5%
4. SBBJ- Net Loss 221.56 Cr. Provision for bad loans & Contingencies-
995.09 Cr in June 2016 from 212.94 Cr.