Understand the private banks levels of NPA performence..

1. “A comparative study
On
Non-performing assets of top five private
sector banks in India”
Submitted
By
B.VENKATESWARA RAO
Regd. No 14481E0050
Under
The guidance of
Mr. G.KAMAL
Asst. Professor

2. The objective of the project was to find how Non-
Performing Assets impact the profitability of the banks and
how it can be reduced.
 The study is addressed to the following objectives:
 Understand the concept of nonperforming assets of top
five private sector banks.
 To study the trend of NPAs during last five years.
Objectives of the study

3.  To evaluate NPAs (Gross and Net) in private sector banks.
 To determine the factors affecting NPA.
 To evaluate NPAs (Gross and Net) in private sector banks.
 To analyse financial performance of banks at different level
of NPA.
 The Problems caused by NPAs.
Cont.

4.  The methods which are to use for collect the information to
study and analyze that procedure of methods is called methodology.
 Primary data
 Secondary data
 Primary data
The data which is not already published &personally that data are
collected through using of personal interviews. The data is called “primary
data”.
 Secondary data
The data which is already published that is called “secondary
data”.it is mainly two kinds of data collected ways. They are as follows.
Methodology of the study:-

5.  Data Collection:
The present study is mainly based on secondary
data. The required data were collected from the annual
reports of the banks through their websites.
 Secondary data
The secondary data have been collected from
National Institution of Bank Management, Books, articles
published in financial newspapers and internet.
Cont..

6. Top 5 Private Sector Banks in India:
Private Sector Banks are the banks in which larger equity share is held by the
private shareholders. These Banks are growing swiftly due to the excellent customer services
offered by them.
There are a large number of private sector banks in India that delivers customer
centric services and offer quality products.
For the purpose of the study top five private banks has been selected.
 HDFC
 ICICI
 Axis bank
 Kotak Mahindra bank
 IndusInd bank
Company profile

7.  “Housing Development Finance Corporation Limited”
(HDFC), popularly known as HDFC Bank was incorporated
in the year 1994. Headquartered in Mumbai, HDFC was
founded by Hasmukhbhai Parekh.
Among all the private sector banks, HDFC was the
first to receive approval from Reserve Bank of India to set up
a bank and started its operations in the year 1995. It provides
various products like Insurance, Credit cards, Loans, FOREX
services, Premium Banking, Private Banking etc.
HDFC

9.  HDFC Bank caters to a wide range of banking services
covering commercial and investment banking on the
wholesale side and transactional / branch banking on
the retail side. The bank has three key business
segments
BUSINESS PROFILE:

10. MANAGEMENT:

11. Mrs.ShyamalaGopinath holds a Master’s Degree in
Commerce and is a CAIIB. Mrs.Gopinath has 39 years of experience
in financial sector policy formulation in different capacities at RBI.
As Deputy Governor of RBI for seven years and member of
the Board.Mrs.Gopinath had been guiding and influencing the national
policies in the diverse areas of financial sector regulation and
supervision, development and regulation of financial markets, capital
account management, management of government borrowings, forex
reserves managementand payment and settlement systems.
Management

13.  HDFC Bank’s mission is to be a World Class Indian
Bank. The objective is to build sound customer
franchises across distinct businesses so as to be the
preferred provider of banking services for target retail
and wholesale customer segments, and to achieve
healthy growth in profitability, consistent with the
bank’s risk appetite.
BUSINESS FOCUS:

15. As on 31st March, 2015 the authorized share capital of the Bank
is Rs. 550 crore. The paid-up share capital of the Bank as on the said date
is Rs501,29,90,634/- ( 2506495317 ) equity shares of Rs. 2/- each).
The HDFC Group holds 21.67 % of the Bank's equity and about
18.87 % of the equity is held by the ADS / GDR Depositories (in respect
of the bank's American Depository Shares (ADS) and Global Depository
Receipts (GDR) Issues). 32.57 % of the equity is held by Foreign
Institutional Investors (FIIs) and the Bank has 4,41,457 shareholders.
CAPITAL STRUCTURE:

16.  Industrial Credit and Investment Corporation of India, popularly
known as ICICI was originally formed in the year 1994 by the
initiative of the World Bank and ICICI. Headquartered in Vadodara,
Gujarat, it’s an Indian Multinational Bank, which is a wholly
owned subsidiary of ICICI Limited.
 ICICI Bank won the award for the Best Bank – Global Business
Development in 2014. It offers various services like Privilege
Banking, Loans, NRI Accounts, Insurance, Credit cards, etc.

17.  ICICI Group Companies:
ICICI Bank offers a wide range of banking products and
financial services to corporate and retail customers through a variety
of delivery channels and through its group companies.
 Investor Relations:
All the latest, in-depth information about ICICI Bank's
financial performance and business initiatives.
Corporate Social Responsibility:
ICICI Bank is deeply engaged in human and economic
development at the national level. The Bank works closely with
ICICI Foundation across diverse sectors and programs

18. Axis Bank is the third largest private sector bank in India. The Bank
offers the entire spectrum of financial services to customer segments covering
Large and Mid-Corporates, MSME, Agriculture and Retail Businesses.
Axis Bank is one of the first new generation private sector banks to have
begun operations in 1994. The Bank was promoted in 1993, jointly by Specified
Undertaking of Unit Trust of India (SUUTI) (then known as Unit Trust of India),
Life Insurance Corporation of India (LIC), General Insurance Corporation of India
(GIC), National Insurance Company Ltd., The New India Assurance Company
Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company
Ltd.

19. Axis Bank Ltd. has been promoted by the largest
Financial Institutions of the country, UTI, LIC, GIC and its
subsidiaries. The Bank was set up in 1993 with a capital of
Rs. 115 crore, with UTI contributing Rs. 100 crore, LIC -
Rs. 7.5 crore and GIC and its four subsidiaries contributing
Rs. 1.5 crore each
Promoters:

20.  The Bank has authorized share capital of Rs. 850 crores comprising
4,250,000,000 equity shares of Rs.2/- each.As on 31st March 2016, the Bank
has issued, subscribed and paid-up equity capital of Rs. 476.67 crores,
constituting 2,38,28,31,826 equity shares of Rs.2/- each.
 The Bank’s shares are listed on the National Stock Exchange of India Limited
and the BSE Limited. The GDRs issued by the Bank are listed on the London
Stock Exchange (LSE).
 The Bonds issued by the Bank under the MTN programme are listed on the
Singapore Stock Exchange.
Capital Structure:

21. The Bank has a large footprint of 2904 domestic branches (including
extension counters) and 12,743 ATMs spread across the country as on 31st March 2016.
The Bank has a network of 2402 domestic branches (including extension counters) and
12,922 ATMs spread across the country as on 31st March 2014.
The overseas operations of the Bank are spread over its seven international offices with
branches at Singapore, Hong Kong, DIFC (Dubai International Financial Centre),
Colombo and Shanghai and representative offices at Dubai and Abu Dhabi. During the
year, the Bank’s overseas subsidiary namely Axis Bank UK Ltd. commenced banking
operations, Subsidiaries.
Distribution Network:

22.  Kotak Mahindra Bank, previously known as Kotak Mahindra
Finance Limited is a non-banking financial company,
which was established in the year 1995. This bank got the
license to carry out the banking operations in the year 2003.
 The bank is not only present in Metro Cities but also in Tier-2
cities. Some of the services provided by this bank are
Wholesale Banking, Privileged Banking, NRI Banking,
Insurance and Finance.

23.  Kotak Mahindra Bank Ltd. operates as a banking company
that provides financial services such as Home Loans, Mutual
Funds, Life Insurance, Term Deposits, Personal Loans, Credit
Cards, Net banking, Mobile banking, ATM, Loan against
property, Business banking solutions..etc. The company was
founded in 1985 and was formerly known as Kotak Mahindra
Finance Limited.
Company Description:

24. IBA Banking Technology Awards
 Best Customer Relationship Achievement – Winner 2008 &
2009
 Best overall winner, 2007
 Best IT Team of the Year, 4 years in a row from 2006 to 2009
 Best IT Security Policies & Practices, 2007
Awards:

25. Products and Services:
The bank offers complete financial solutions for infinite
needs of all individual and non–individual customers depending on
the customer's need – delivered through a state of the art technology
platform. Investment products like Mutual Funds, Life Insurance,
retailing of gold coins and bars etc are also offered.
BONUS ISSUE OF SHARES:
During the year, pursuant to approval of the shareholders of
the Bank at the Annual General meeting held on 29th June 2015,
your Bank issued 91,28,41,920 Bonus shares in the ratio of 1:1 i.e.
one equity share for every one equity share held on the Record Date,
to the Members on 10th July 2015.

26. DIVIDEND:
Your Directors are pleased to recommend a dividend of
Rs. 0.50 per equity share entailing a payout of Rs. 110.53 crore
including dividend distribution tax. The dividend would be paid
to all the shareholders, whose names appear on the Register of
Members/Beneficial Holders list on the Book Closure date.
CAPITAL:
During the year, your Bank has allotted 99,91,715
equity shares (adjusted for bonus) arising out of the exercise of
Employees Stock Options granted to the employees and whole–
time directors of your Bank and its subsidiaries.

27. IndusInd Bank started its operations in the year 1994
and has it’s headquarter in Mumbai, Maharashtra. The bank
derived its name from the Indus Valley Civilization.
IndusInd Bank has a specialization in the retail
banking and its clients are Corporate & Investment, Financial
Institutions and Private and Government Banking Institutions.

28.  Products and Services:
In personal panking it offers a wide range of products and services like
deposits, loans, investments, insurance, forex services, demat services, online
services and wealth management services.
In NRI banking it offers money transfer, investment products such as
international deposits, mutual funds, online share trading, etc. The bank also offers
property solutions and insurance loana.
 Dividend:
The Earning Per Share (EPS) of the Bank rose to Rs. 39.68 during the
year 2015–16, from Rs. 33.99 in the previous year. Considering the overall
improvement in performance as well as the need to conserve capital for continued
growth, the Directors recommend Dividend of Rs. 4.50 per Equity Share of Rs.
10/– each for the year ended March 31, 2016. (Dividend for the year 2014–15 was
Rs. 4.00 per Equity Share of Rs.10 each).

29.  Share Capital:
The Paid–up Equity Capital of the Bank as at March 31,
2016 consisted of 59,49,86,335 Equity Shares of Rs. 10/– each.
During the year under review, the Bank allotted
5,12,18,640 Equity Shares of Rs. 10/– each at a price of Rs.
845.00 per share aggregating Rs. 4,327.98 croresthrough a
Qualified Institutions Placement (QIP).
Besides, the Bank also allotted 87,81,360 Equity Shares
of Rs. 10/– each to the Promoters of the Bank at a price of Rs.
857.20 per share, aggregating Rs. 752.74 crores through a
Preferential Allotment.

31.  Gross Advances and Net Advances of the banks are increasing trend
this because of increase in size of operations.
 Gross non-performing asset (NPA) of the ICICI bank is high when
compared with rest of the private banks.
 Bad and doubt debt reserve created of the bank are increases year by
year, and it is taking away the profit.
 Total nonperforming asset provision created during 2014-15 is
negative. When compared with rest of the year generated by the bank
during those year.
FINDINGS

32.  During the period of the study positive net Non-Performing
Asset (NPA) ratio is observed for all the banks.
 Quality of services provided by the staff is satisfactory, in all
these banks.
 Easy repayment and fewer formalities are the main factors
determining customer’s selecting these banks.
Cont…

34.  Effective inspection system should be implemented. While selection
the loan.
 Operating staff should scrutinize the level of inventories/receivables
regularly.
 Uneven scale of repayment schedule with higher repayment in the
initial years normally is preferred.
 There should be proper monitoring of the restructured accounts
because there is every possibility of the loans slipping into NPAs
category again
SUGGESTION

35.  The banks should provide training and awareness programme
regarding the repayment of loans, effective use of funds,
repercussions of non-payment etc., for effective utilization of
available funds and for smooth recovery.
 The banks should improve the customer services of the bank
to a better extent.
 Large exposure on big corporate or single project should be
avoided.
Cont..