Bad Credits (Non-Performing Assets) in Banking Industry’For the training undergone at ‘PUNJAB NATIONAL BANK’

1. ‘Bad Credits (Non-Performing Assets) in Banking
Industry’
For the training undergone at
‘PUNJAB NATIONAL BANK’

2. Banking System in India
• Organised Sector
–RBI,
–Commercial Banks,
–Co-operative Banks &
–Specialized Financial Institutions (IDBI, ICICI, IFC etc).
• Unorganised sector
–Money lenders &
–Indigenous bankers

3. STRUCTURE OF SCHEDULED BANKS
IN INDIA

4. MARKET SIZE OF INDIA BANKING
SYSTEM
• 27 public sector banks,
• 21 private sector banks,
• 43 foreign banks,
• 56 regional rural banks,
• 1,589 urban cooperative banks &
• 93,550 rural cooperative banks.

5. • Registered on -
–19th may 1894 (Baisakhi)
–6543 branches across the 3404 cities
–Branches in Hong Kong and Kabul
Punjab National Bank
( 2nd largest govt. owned commercial bank
in India)

6. PUNJAB NATIONAL BANK
Vision
“To be a Leading Global Bank with Pan India footprints and become
a household brand in the Indo-Gangetic Plains providing entire
range of financial products and services under one roof."
Mission
“Banking for the unbanked”

7. GROWTH HISTORY OF PNB
• In 1940, the bank absorbed Bhagwan Dass Bank.
• PNB Acquired -
– 39 branches of bharat bank In 1951
– Universal bank of India In 1961
– Hindustan commercial bank, with its 142 branches In 1986.
– New bank of India in 1993
– Kazhikode- based Nedungali bank ltd (NBL) in 2003.

8. Product Range
• Punjab National Bank offers variety of services to their
customers including:
1) Personal Banking
2) Corporate Banking
3) International Banking
4) Capital Services
5) E-Services

9. ORGANIZATIONAL STRUCTURE
OF PNB

10. Punjab National Bank Circle Office,
Kurukshetra
• Started on 20th January 1986
• Covers 4 districts
– Kurukshetra,
– Kaithal,
– Jind &
– Yamunanagar (later on)
• With a total of 114 branches
• DGM – P.S. CHAUHAN &
• AGM-A.K. GOYAL
• Address: Chatha Complex, Pipli
Road, Kurukshetra, Haryana
• Pin Code: 136118
• Telephone Number: 01744-
226464, 01744-
220593(Fax)
• Email-Address:
Cokkr@Pnb.co.in
• Website:
https://www.pnbindia.in

11. Functional structure of PNB Circle
Office

12. SWOT ANALYSIS
1. Strong I.T support with “best fit” approach
2. It is the second largest state-owned commercial bank in India with about 5000
branches across 764 cities
3. Its 56,000+ workforce serves over 37 million customers•
1. Less penetration in the urban areas
2. Inadequate advertising and branding as compared to other banks
3. Legal issues regarding employees caused a bad name of PNB
1. Small scale business banking across India
2. International banking
3. Installation of more ATM’s
1. Economic crisis and economic fluctuations
2. Highly competitive environment
3. Stringent Banking Norms by the RBI and the Govt
THREATS (–)
STRENGTHS (+)
WEAKNESSES (–)
OPPORTUNITIES (+)

13. CONTRIBUTION & LEARNING FROM
THE TRAINING

14. NPA
A ‘non-performing asset’ (NPA)
was defined as a credit facility in
respect of which the interest and/
or installment of principal has
remained ‘past due’ for a specified
period of time (90 days).

15. NPA
 A Non-Performing Asset (NPA) shall be a loan or an advance where:
i) Interest and/ or instalment of principal remain overdue for a period of more
than 90 days in respect of a term loan,
ii) The account remains ‘out of order’ for a period of more than 90 days, in
respect of an Overdraft/Cash Credit (OD/CC),
iii) The bill remains overdue for a period of more than 90 days in the case of bills
purchased and discounted,
iv) Interest and/or instalment 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 purposes

16. Classification of Assets
Assets
Non-
performing
Assets
Loss Assets
Doubtful
Assets
Sub-
standard
Assets
Performing
Assets
Standard
Assets

17. Factors for rise in NPAs
• External Factors
–Ineffective recovery tribunal
–Willful Defaults
–Natural calamities
–Industrial Sickness
–Lack of Demand
–Change on Govt. policies
• Internal Factors
–Inappropriate technology
–Improper SWOT analysis
–Poor credit appraisal
system
–Absence of regular
industrial visit

18. Types of NPA
1)
2)
Gross NPAs Ratio = Gross NPAs / Gross
Advances*100
Net NPAs Ratio = Gross NPAs – Provisions /
Gross Advances – Provisions*100

23. Reasons Behind Rise In NPA
• Lack of proper enquiry.
• Non performance of the business.
• Willful defaulter.
• Change in govt. policies leads to NPA.

24. Suggestions for Reducing Non-
Performing Assets
1) Proper selection of borrower/activity
2) Regular post-sanction follows up
3) Establishment of a recovery cell
4) Publishing the name of defaulters in local newspapers

25. Suggestions for Reducing Non-
Performing Assets
5) Set up a group of auctioneers
6) Constant touch with persons trading with the borrower
7) Setting up of credit investigation and information agency
8) Interest discounts for prompt repayments

26. Tools for recovering NPA
• SARFAESI Act, 2002
• Debt recovery tribunal
• SARC
• Special Mention Account
• Recalled assets
• Agents appointed for recovery

27. Slippage/Degrade Report
Sr.
No.
Distt
Branch
Code Branch Name
Customer
Id
Customer Name
Customer
Balance Balance CAD NPAReason Name Main Default Account
1 YNR 326000 CHHACHHRAULI EVJ013172 RAJBIR 3,16,995.00 2,03,311.00 3311
Degrade by stock stmt not
submitted_OLD
2 KTL 407200 KAITHAL, KARNAL ROAD GAP003013 M M TRADERS 6,16,057.16 6,16,057.16 16057.16
Degrade by stock stmt not
submitted_OLD
3 JIND 411600 PILLUKHERA GCH004293 PARVEEN KUMAR 1,63,182.36 1,63,182.36 0
Degrade by stock stmt not
submitted_OLD
4 KKR 328700 KURUKSHETRA,RATGAL D10836086 SATPAL 1,50,582.26 1,50,582.26 0
Balance outstanding is
greater than security value
for more than 90
5 KKR 457100 BABAIN GTU005738
GANGA JAMUNA
SSS BABAI 86,235.00 287.00 0
Degrade by Account Not
Reviewed_OLD
6 YNR 172200 SADHAURA AIK025830 AMERJEET, STAFF 8,66,209.84 3,02,113.84 2113.84 PERCOLATION 1722005000000340.00
7 YNR 172200 SADHAURA AIK025831 AMERJEET, STAFF 8,66,209.84 16,000.00 4000
Degrade by Continous
Excess_OLD
8 YNR 172200 SADHAURA AIK025832 AMERJEET, STAFF 8,66,209.84 74,700.00 2305 PERCOLATION 1722005000000340.00
9 KKR 467300 KURUKSHETRA,GURUKUL 458224568 RAMSWAROOP 2,67,867.61 75,640.00 16445
Degrade by Degfault On
Reference Date_OLD

28. Reference
• https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=8996
• https://www.pnbindia.in/En/ui/Profile.aspx
• https://pnbindia.in/new/Upload/En/Analyst_presentation_March16.pdf
• http://economictimes.indiatimes.com/opinion/interviews/expect-npas-to-come-
down-post-june-quarter-kv-brahmaji-rao-pnb/articleshow/52326003.cms
• http://www.business-standard.com/article/finance/pnb-to-implement-loan-
data-software-104052701041_1.html
• http://www.thehindubusinessline.com/portfolio/beyond-stocks/key-ratios-
related-to-banks-balance-sheets/article6386137.ece