Impact Of NPA On Profitability of Public & Private Sector...

Impact Of NPA On Profitability of Public & Private Sector Banks

Management Research Project -II

Submitted

In the partial fulfillment of the Degree of Master of Business Administration

Semester-IV

By

Shikha Modi 12044311052

Priyanka Prajapati 12044311131

Dhara Shah 12044311146

Vishesh Shah 12044311147

Parth Upadhyay 12044311160

Under the Guidance of:

Prof. (Dr.) Mahendra Sharma

Prof. & Head,

V. M. Patel Institute of Management.

&

Jayesh D. Patel

Assistant Professor,

V. M. Patel Institute of Management.

Submitted To:

V. M. Patel Institute of Management

(April 2014)

Preface

As a partial fulfillment of the MBA Programme we need to make a Management Research Project-II, So we have prepared this project report on “Impact of NPA on profitability of public sector and private sector bank”.

This project work is basically meant to acquire knowledge about the Non Performing Asset.

This project report includes comparison of NPA of Public and Private sector bank, recovery management, reasons_ tools and methods of Non Performing Assets.

To understand measures taken by different banks for recovery management under take Bank’s executive survey.

Preparing this project report is a good learning experience for to us where in we came to know about the various new aspects Non Performing Assets.

We feel great pleasure in submitting this Management Research Project –II. We hope you will accept and appreciate our efforts.

ACKNOWLEDGEMENT

Acknowledgement is the expression of gratitude or appreciation for something. So, we would

like to express our sincere gratitude to all those supportive in this project work. First of all, we

would like to thank Dr. Mahendra Sharma for giving us this opportunity to do this project and

learn from it.

We express our sincere thanks to Prof. Jayesh Patel, our project guide for helping us in giving us

all relevant information and constant guidance throughout the project.

We would like to express our sincere thanks Prof. Jayesh Patel for conducting sessions for

comprehensive project and helping us throughout the project. We would also express our thanks

for providing their valuable suggestions and knowledge regarding project work.

Finally we would like to thank all lecturers, friends and our families for their kind of support and

to all who directly or indirectly helped us in preparing this project report.

Date:

Place: Kherva

List of Table

4.1.1 ANOVA for Public and Private sector banks 37 4.1.2 Coefficient for Public and Private sector banks 37 4.1.3 Model summary for Public and Private sector banks 38 4.2.1 Descriptive statistics for public sector banks 39 4.2.2 ANOVA for Public sector banks 39 4.2.3 Coefficient for public sector banks 40 4.2.4 Model summary for Public sector banks 40 4.3.1 Descriptive statistics for Private sector banks 41 4.3.2 ANOVA for Private sector banks 41 4.3.3 Coefficient for Private sector banks 41 4.3.4 Model summary for Private sector banks 42 8.1 Public sector bank (2013) 51 8.2 Private sector bank(2013) 52 8.3 Public sector bank (2012) 54 8.4 Private sector bank(2012) 55 8.5 Public sector bank (2011) 57 8.6 Private sector bank(2011) 58 8.7 Public sector bank (2010) 60 8.8 Private sector bank(2010) 61 8.9 Public sector bank (2009) 63 8.10 Private sector bank(2009) 64

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Chapter 1

Introduction

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1.1 Introduction of banking sector in India

India cannot have a healthy economy without a sound and effective banking system. The

banking system should be hassle free and able to meet the new challenges posed by

technology and other factors, both internal and external.

In the past three decades, India's banking system has earned several outstanding

achievements to its credit. The most striking is its extensive reach. It is no longer confined

to metropolises or cities in India. In fact, Indian banking system has reached even to the

remote corners of the country. This is one of the main aspects of India's growth story.

The government's regulation policy for banks has paid rich dividends with the

nationalization of 14 major private banks in 1969. Banking today has become convenient

and instant, with the account holder not having to wait for hours at the bank counter for

getting a draft or for withdrawing money from his account.

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1.2 Structure of banking sector in India

Commercial Banks can be classified in to :

1) Public Sector Bank

-State Banks & its associate banks

-Nationalized banks

2) Private Sector Banks

-Old Generation

-New Generation

-Local Area Banks

3) Foreign Banks

-Representative Office

4) Regional Rural Banks

5) Co-Operative Banks

The structure of the Indian banking system that developed during the pre-independence

period was without any purposive control and direction. There were no comprehensive

banking laws except the Bank Charter Act. 1876 which regulated the three presidency

bank and the Indian companies Act, 1913 provided some safeguards against bank

failures.

In India the British Government started a central Bank called the Reserve Bank of India

as a Private sector in 1935. After Independence, the new National Government

nationalized it by passing the Reserve Bank of India Act in 1949 has some provisions to

foster a sound and healthy banking system in India. To regulate the banking business the

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Act vested enormous powers of supervision and control in the hands of the reserve bank

of India.

Reserve Bank is the banker to the banks-commercial, co-operative and Regional Rural

Banks. This relationship is established once the name of a bank is included in the second

schedule to the Reserve Bank of India Act, 1934. Such banks, called the scheduled banks,

are entitled to avail of the facilities of refinance from the Reserve Bank.

Since 1966 the state co-operative Banks have also been made eligible or inclusion in the

second schedule to the Act. The Regional Rural Banks, established since 1975, also enjoy

the status of scheduled banks. The public sector banks have been notified as scheduled

banks by the central government. The category of scheduled banks thus includes.

Commercial banks – Indian and foreign

State co-operative Banks

Regional Rural Banks

A scheduled Bank means a bank included in the second schedule to the Reserve Bank of

India. Act, 1934. The Reserve Bank is empowered to include in the second schedule the

name of a bank which carries on the business of banking in India and which satisfies the

following conditions laid down in section 42(a).

It must have a paid-up capital and reserves of an aggregate value of not less than

Rs.5 lakhs;

It must satisfy the Reserve Bank that its affairs are not being conducted in a

manner detrimental to the interest of its depositors, and

It must be

(a) a state co-operative bank, or

(b) a company as defined in the companies Act, 1956, or

(c) an institution notified by the central government in this behalf, or

(d) a corporation or a company incorporation by or under any law in force in

any place outside India.

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1.3 History of Banking in India

The first bank in India, though conservative, was established in 1786. From 1786 till today, the

journey of Indian Banking System can be segregated into three distinct phases:

Early phase of Indian banks, from 1786 to 1969

Nationalization of banks and the banking sector reforms, from 1969 to 1991

New phase of Indian banking system, with the reforms after 1991

Phase 1

The first bank in India, the General Bank of India, was set up in 1786. Bank of Hindustan

and Bengal Bank followed. The East India Company established Bank of Bengal (1809),

Bank of Bombay (1840), and Bank of Madras (1843) as independent units and called them

Presidency banks. These three banks were amalgamated in 1920 and the Imperial Bank of

India, a bank of private shareholders, mostly Europeans, was established. Allahabad Bank

was established, exclusively by Indians, in 1865.

Punjab National Bank was set up in 1894 with headquarters in Lahore. Between 1906 and

1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank,

and Bank of Mysore were set up. The Reserve Bank of India came in 1935.

During the first phase, the growth was very slow and banks also experienced periodic

failures between 1913 and 1948. There were approximately 1,100 banks, mostly small. To

streamline the functioning and activities of commercial banks, the Government of India

came up with the Banking Companies Act, 1949, which was later changed to the Banking

Regulation Act, 1949 as per amending Act of 1965 (Act No. 23 of 1965).

The Reserve Bank of India (RBI) was vested with extensive powers for the supervision of

banking in India as the Central banking authority. During those days, the general public

had lesser confidence in banks. As an aftermath, deposit mobilization was slow. Moreover,

the savings bank facility provided by the Postal department was comparatively safer, and

funds were largely given to traders.

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Phase 2

The government took major initiatives in banking sector reforms after Independence. In

1955, it nationalized the Imperial Bank of India and started offering extensive banking

facilities, especially in rural and semi-urban areas. The government constituted the State

Bank of India to act as the principal agent of the RBI and to handle banking transactions

of the Union government and state governments all over the country. Seven banks owned

by the Princely states were nationalized in 1959 and they became subsidiaries of the State

Bank of India. In 1969, 14 commercial banks in the country were nationalized. In the

second phase of banking sector reforms, seven more banks were nationalized in 1980.

With this, 80 percent of the banking sector in India came under the government

ownership.

Phase 3

This phase has introduced many more products and facilities in the banking sector as part

of the reforms process. In 1991, under the chairmanship of M Narasimham, a committee

was set up, which worked for the liberalization of banking practices. Now, the country is

flooded with foreign banks and their ATM stations. Efforts are being put to give a

satisfactory service to customers. Phone banking and net banking are introduced. The

entire system became more convenient and swift. Time is given importance in all money

transactions.

The financial system of India has shown a great deal of resilience. It is sheltered from

crises triggered by external macroeconomic shocks, which other East Asian countries

often suffered. This is all due to a flexible exchange rate regime, the high foreign

exchange reserve, the not-yet fully convertible capital account, and the limited foreign

exchange exposure of banks and their customers.

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Reserve Bank of India (RBI)

The central bank of the country is the Reserve Bank of India (RBI). It was established in April

1935 with a share capital of Rs 5 crore on the basis of the recommendations of the Hilton Young

Commission. The share capital was divided into fully paid shares of Rs 100 each, which was

entirely owned by private shareholders in the beginning. The government held shares of nominal

value of Rs 220,000.

The RBI commenced operation on April 1, 1935, under the Reserve Bank of India Act, 1934.

The Act (II of 1934) provides the statutory basis of the functioning of the Bank. The Bank was

constituted to meet the following requirements:

Regulate the issue of currency notes

Maintain reserves with a view to securing monetary stability

Operate the credit and currency system of the country to its advantage

Indian Banks’ Association (IBA)

The Indian Banks‟ Association (IBA) was formed on September 26, 1946, with 22 members.

Today, IBA has more than 156 members, such as public sector banks, private sector banks,

foreign banks having offices in India, urban co-operative banks, developmental financial

institutions, federations, merchant banks, mutual funds, housing finance corporations, etc.

The IBA has the following functions:

Promote sound and progressive banking principles and practices.

Render assistance and to provide common services to members.

Organize co-ordination and co-operation on procedural, legal, technical, administrative,

and professional matters.

Collect, classify, and circulate statistical and other information.

Pool expertise towards common purposes such as cost reduction, increased efficiency,

productivity, and improving systems, procedures, and banking practices.

Project good public image of banking through publicity and public relations.

Encourage sports and cultural activities among bank employees.

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Banking Activities

Retail banking, dealing directly with individuals and small businesses.

Business banking, providing services to mid-market businesses.

Corporate banking, directed at large business entities.

Private banking, providing wealth management services to high net worth individuals.

Investment banking, activities in the financial markets, such as "underwrite" (guarantee

the sale of) stock and bond issues, trade for their own accounts, make markets, and advise

corporations on capital market activities like mergers and acquisitions.

Merchant banking is the private equity activity of investment banks.

Financial services, global financial institutions that engage in multiple activities such as

banking and insurance.

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1.4 Introduction of NPA

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. The

nonperforming asset is therefore not yielding any income to the lender in the form of principal

and interest payments.

For example, a mortgage in default would be considered non-performing. After a

prolonged period of non-payment, the lender will force the borrower to liquidate any

assets that were pledged as part of the debt agreement. If no assets were pledged, the

lenders might write-off the asset as a bad debt and then sell it at a discount to a

collections agency.

An asset becomes non-performing when it ceases to generate income for the bank. A

non-performing asset (NPA) is defined generally as a credit facility in respect of which

interest and / or installment of principal has remained “past due” for two quarters or

more. An amount due under any credit facility is treated as “past due” when it has not

been paid within 30 days from the due date. It was, however, decided to dispense with

„past due‟ .

concept with effect from 31 March 2001. Accordingly, as from that date, a NPA shall be

an advance where –

Interest and/or installment of principal remain overdue for more than 180 days in

respect of a term-loan.

The account remains „out of order‟ for more than 180 days, in respect of overdraft /

cash credit (OD / CC).

The bill remains overdue for more than 180 days in the case of bill purchased and

discounted.

Interest and / or installment 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 purpose.

Any amount to be received remains overdue for more than 180 days in respect of

other accounts.

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1.5 Why assets become NPA?

A several factors is responsible forever increasing size of NPAs in PSBs. The Indian

banking industry has one of the highest percents of NPAs compared to international

levels. A few prominent reasons for assets becoming NPAs are as under :

Lack of proper monitoring and follow-up measures.

Lack of sincere corporate culture. Inadequate legal provisions on foreclosure and

bankruptcy.

Change in economic policies/environment.

Non transparent accounting policy and poor auditing practices.

Lack of coordination between banks/FIs .

Directed landing to certain sectors .

Failure on part of the promoters to bring in their portion of equity from their own

sources or public issue due to market turning unfavorable.

Criteria for classification of assets

Classification of agricultural and non-agricultural loans is required to be done into

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1.6 Four categories, on the basis of age of overdue, as under

Standard Assets

Standard asset is one which does not disclose any problem and which does not carry more

than normal risk attached to business. Thus, in general, all the current loans, agricultural and

non-agricultural loans which have not become NPA may be treated as standard asset.

Sub-Standard Assets

A Non-performing asset may be classified as sub-standard on the basis of the following

criteria. (a) An asset which has remained overdue for a period not exceeding 3 years in

respect of both agricultural and non-agricultural loans should be treated as substandard. (b) In

case of all types of term loans, where installments are overdue for a period not exceeding 3

years, the entire outstanding in term loan should be treated as sub-standard. (c) An asset,

where the terms and conditions of the loans regarding payment of interest and repayment of

principal have been renegotiated or rescheduled, after commencement of production, should

be classified as sub-standard and should remain so in such category for at least one year of

satisfactory performance under the renegotiated or rescheduled terms. In other words, the

classification of an asset should not be upgraded merely as a result of rescheduling unless

there is satisfactory compliance of the above condition.

Doubtful Asset

A Non-Performing Asset may be classified as doubtful on the basis of following criteria: As

asset which has remained overdue for a period exceeding 3 years in respect of both

agricultural and non-agricultural loans should be treated as doubtful. In case of all types of

term loans, where installments are overdue for more than 3 years, the entire outstanding in

term loan should be treated as doubtful. As in the case of sub-standard assets, rescheduling

does not entitle a bank to upgrade the quality of advance automatically.

Loss Asset

Loss assets are those where loss is identified by the bank/ auditor/ RBI/ NABARD inspectors

but the amount has not been written off wholly or partly. In other words, an asset which is

considered unrealizable and/ or of such little value that its continuance as a doubtful asset is

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not worthwhile, should be treated as a loss asset. Such loss assets will include overdue loans

in cases (a) where decrease or execution petitions have been time barred or documents are

lost or no other legal proof is available to claim the debt, (b) where the members and their

sureties are declared insolvent or have died leaving no tangible assets, (c) where the members

have left the area of operation of the society (refers to the borrower in whose name the

respective Loan Account with SCB/ CCB) leaving no property and their sureties have also no

means to pay the dues (d) where the loan is fictitious or when gross misutilisation is noticed,

and (e) amounts which cannot be recovered in case of liquidated societies.

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1.7 Underlying reason for NPA in India

An internal study conducted by RBI shows that in the order of prominence ,the following

factor contribute to NPAs.

Internal Factor

Diversion of funds for

- Expansion/diversification /modernization

- Taking up new project

- Helping /promoting associate concerns time/cost overrun during the project

implementation stage

Business Failure

Inefficiency in management

Slackness in credit management and monitoring

Inappropriate Technology/technical problem

Lack of coordination among lenders

External Factor

Recession

Input/power storage

Price escalation

Exchange rate fluctuation

Accidents and natural calamities ,etc.

Changes in government policies in excise/ import duties, pollution control orders, etc.

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Some other factors also affected to NPA which are mention below in detail:

Liberalization of economy/removal of restriction/reduction of tariffs

A large number of NPA borrowers were unable to compete in a competitive market in

which lower prices and greater choices were available to consumers. Further, borrowers

operating in specific industries have suffered due to political, fiscal and social compulsions,

compounding pressures from liberalization.

Lax monitoring of credit and failure to recognize Early Warnings Signals

It has been stated that approval of loan proposal is generally thorough and each proposal

passes through many levels before approval is granted. However, the monitoring of

sometimes complex credit files has not received the attention it needed which meant that

early warning signals were not recognized and standard assets slipped to NPA category

without banks being able to take proactive measures to prevent this. partly due to this

reason, adverse trends in borrowers performance were not noted and the position further

deteriorated before action was taken.

Over optimistic promoters

Promoters were often optimistic in setting up large projects and in some cases were not fully

above board in their intentions. screening procedures did not always highlight these issues.

often projects were set up with the expectation that part of the funding would be arranged

from the capital markets which were booming at the time of the project appraisal. When the

capital markets subsequently crashed, the requisite funds could never be raised, promoter

often lost interest and lenders were left stranded with incomplete/unviable projects.

Directed lending

Loans to some segment were dictated by Governments policies than commercial

imperatives.

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Highly Leveraged borrowers

Some borrowers were under capitalized and over burdened with debt to absorb the changing

economic situation in the country. Operating within a protected marked resulted economic

situation in the country. Operating within a protected market resulted in low appreciation of

commercial/market risk.

Funding mismatch

There are said to be many cases where loans granted for short terms were used to fund long

term transactions.

High Cost of Funds

Interest rates as high as 20% were not uncommon. Coupled with high leveraging and falling

Denmark, borrowers could not continue to service high cost debt.

Willful Defaulters

There are a number of borrowers who have strategically defaulted on their debt service

obligation realizing that the legal resource available to creditors is slow in achieving results.

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1.8 NPA Rules for bank

General Rules

In line with the international practices and as per the recommendations made by the

committee on Financial system (Chairman Shri M. Narasimham), the Reserve Bank of

India has introduced, in a phased manner, prudential norms for income recognition,

asset classification and provisioning for the advances portfolio of the banks so as to

move towards greater consistency and transparency in the published accounts.

The policy of income recognition should be objective and based on record of recovery

rather than on any subjective considerations. Likewise, the classification of assets of

banks has to be done on the basis of objective criteria which would ensure a uniform

and consistent application of norms. Also, the provisioning should be made on the basis

of classification of assets based on the period for which the asset has remained non –

performing / overdue as also availability of security and its realizable value.

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1.8.1 Norms for treating loans / advances as NPA

Treatment of agricultural advances

In respect of advances granted for agricultural purposes where interest payment is on

half-yearly basis synchronizing with harvest, banks should adopt the agricultural season as

the basis. In other words, if interest has not been paid during the last two seasons of

harvest (covering two half-years) after the principal has become overdue then such an

advance should be treated as NPA. This norm is applicable to all direct agricultural

advances listed in the Annexure. In respect of agricultural advances other than those

specified in the Annexure, identification of NPA would be done on the same basis as non-

agricultural advances which at present is the 180 days delinquency norm. Crop loans for

each season, viz., Rabi and Kharif has to be treated as separate account and IRAC norms

have to be applied accordingly.

Treatment of advances for allied agricultural activities as well as non farm sector

Credit facilities granted for other allied agricultural activities as well as for non-farm

sector activities should be treated as NPA if amounts of installments of principal and / or

interest remain outstanding for a period of two quarters from the due date.

Project / Housing Loans, etc

In case of projects (industry, plantation, etc.) where moratorium is given for payment,

[loan becomes due only after moratorium or gestation period is over] such a loan becomes

overdue if installment is not paid on due date. Similarly, in the case of housing loans or

similar advances granted to staff members where interest is payable after recovery of

principal, such loans should be classified as NPA when there is a default in repayment of

principal on due date of payment and overdue criteria will be the basis for classification of

assets.

Consortium advances

In respect of consortium advances each bank is required to classify the borrowal accounts

according to its own recovery i.e., on the record of recovery of the individual member

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banks. The banks participating in the consortium should therefore, arrange to get their

share of recovery transferred from the lead bank of the consortium.

Treatment of different facilities to borrower as overdue (NPA)

Short-term agricultural advances are granted by SCBs / CCBs to CCBs PACS respectively

for the purpose of on-lending. In respect of such advances as well as advances for other

purposes, if any, granted under on-lending system, only that particular facility which

became irregular should be treated as NPA and not all the other facilities granted to them.

Crop loans for each season, viz., Rabi and Kharif have to be treated as separate account

and accordingly IRAC norms have to be applied. In respect of all other direct loans and

advances granted to a borrower, all such loans will become NPA even if one loan A/c

becomes NPA.

‘Out of order status’

In respect of cash credit / over draft facility an account should be treated as „out of order‟,

if the outstanding balance remains continuously in excess of the sanctioned limit / drawing

power. In cases where the outstanding balance in the principal operating account is less

than the sanctioned limit / drawing power, but there are no credits continuously for six

months as on the date of Balance Sheet or credits are not enough to cover the interest

debited during the same period, these accounts should be treated as „out of order‟.

‘Overdue’

Any amount due to the bank under any credit facility is „overdue‟, if it is not paid on

due date fixed by the bank.

Performance of the account as on the date of Balance Sheet

The performance of the account as on the date of Balance Sheet only has to be taken

into account for the purpose of NPA. Subsequent developments should not be

considered for determining NPAs. 2.10. If interest and / or installment of principle has

remained unpaid for any two quarters out of the four quarters ending 31 March of the

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year concerned, the credit facility should be treated as NPA although the default may

not be continuously for two quarters during the year.

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1.8.2 Provisioning Norms on the basis of Asset Classification

Need for provisioning

Provisioning is necessary considering the erosion in the value of security charged to

the banks over a period of time. Therefore, after the assets of CCBs / SCBs are

classified into various categories (viz., standard, sub-standard, doubtful and loss

assets) necessary provision has to be made for the same. The details of provisioning

requirements in respect of various categories of assets are mentioned below

Standard Asset

When the IRAC norms were introduced in the year 1996-97, no provisioning was

required in respect of standard assets. From the year ended 31 March 2000, banks are

required to make provision on Standard assets at a minimum of 0.25% of the total

outstanding in this category. The provision made on Standard assets may not be

reckoned as erosion in the value of assets and will form part of owned funds of the

bank. The advances granted against term deposits. National Savings Certificate

(NSC) eligible for surrender, Kisan Vikas Patra (KVP) Indira Vikas Patra (IVP), Life

policies, Staff loans would attract provision of 0.25% prescribed for Standard assets.

The provision towards standard assets need not be netted from gross advances and

should be shown separately as “Contingent provision against Standard Assets” under

“Other liabilities and provisions – others”.

Sub-standard Asset

A general provision of 10% of total outstanding in this category may be made.

Doubtful Assets

100% is to be made to the extent to which the advance is not covered by realizable

value of securities to which the bank has a valid recourse and the realizable value is

estimated on a realistic basis.

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Over and above item (a), provision is to be made depending upon the period for

which an asset has remained overdue, 20% to 50% of the secured portion on the

following basis :

Loss Asset

The entire loss asset should be written off. If the assets are permitted to be retained in

the books for any reasons, 100% of the outstanding thereof should be fully provided

for.

Provision for other assets/ outstanding liabilities

Loss in respect of cash balances/ deposits with other banks, amounts in branch

adjustment accounts, frauds and embezzlements, and depreciation on building, furniture

and vehicles, etc. may be assessed and fully provided for as per the existing practice.

With a view to ensuring full disclosure on the profitability and net worth of the bank,

Items not provided for or items of liabilities where inadequate provisions have been made

(e.g. Gratuity, Provident Fund, Income Tax, Interest accrued on deposits/ borrowings,

etc.), Inspecting Officers should specify the same to arrive at the unprovided for

expenditure and treat them as actual expenditure for the purpose of arriving at the net

worth.

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1.8.3 Credit growth and NPA life cycle

NPAs are largely a fallout of banks activities with regard to advance, both at the management

and implementation levels .The credit appraisal system, monitoring of end -usage of funds

and recovery procedures.

It also depends on the overall economic environment, the business cycle and the legal

environment for recovery of defaulted loan since the overall environment is more or less

same for all banks, Non performing loans of individual banks are mainly a result of

management controls and systems put in place by them

A bank with an efficient credit appraisal and loan recovery system will grow stronger over

the years. Such banks have good management controls and also inherent strengths in terms

High credit growth

Banks with proper credit appraisal recovery

process and management control Banks with proper appraisal and loose

management control

Low levels of NPA s High levels of NPAs

Inability to grow

May stagnate unless restructured Inherent strength to grow further

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of a highly motivated staff, good checks and balance, which are further enhance by a

regulatory and supervisory system.

As the growth in advances is largely determine by the economic and business environment,

such banks will be able to push their credit portfolio aggressively, especially when

economy is booming. Also, as such banks have a diversified credit portfolio, it would act as

a cushion during economic downturns. This will results in lower NPAs, allowing them to

grow stronger and even adopt a more aggressive growth strategy and their by, withstand

marginally higher incidences of default.

However, a bank without inherent strength will not be able to push their credit portfolio

the way the want to. They are characterized by poor management control, inadequate credit

appraisal and even low levels of motivation among the staff. When such banks push their

advances portfolio, chances of their assets quality deteriorating are higher. since assets

quality will be visible only after credit disbursal, which it self depends on the regulatory

definition of NPAs, any deteriorating will be reflected after a time lag. Thus, bank without

inherent strength will have higher NPA levels, especially when the economy has seen

above average credit growth.

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Reference

IBA Bulletin (March 2013)

RBI Bulletin (March 2013)

Genestenberg, financial management: by C.paramasivan T.subramanin, page no 150

.S. Mill, Fianancial management:theory and practice by Eugene F. Brigham, page no 206.

Geoffrey at al. (1969). Management of Money and Finance. Grower Press, New York.

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Chapter 2

Review of Literature

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Review of Literature:-

A large number of researchers have been studied to the issue of non performing asset (NPA) in

banking industry .A review of the relevant literature has been described as under: Non

Performing Assets engender negative impact on banking stability and growth. Issue of NPA and

its impact on erosion of profit and quality of asset was not seriously considered in Indian banking

prior to 1991. There are many reasons cited for the alarming level of NPA in Indian banking

sector. Asset quality was not prime concern in Indian banking sector till 1991, but was mainly

focused on performance objectives such as opening wide networks/branches, development of

rural areas, priority sector lending, higher employment generation, etc. The accounting treatment

also failed to project the problem of NPA, as interest on loan accounts were accounted on accrual

basis (Siraj K.K. and P. Sudarsanan Pillai, 2012).

A Committee on Banking Sector Reforms known as Narasimham Committee was set up by RBI

to study the problems faced by Indian banking sector and to suggest measures revitalize the

sector. The committee identified NPA as a major threat and recommended prudential measures

for income recognition, asset classification and provisioning requirements. These measures

embarked on transformation of the Indian banking sector into a viable, competitive and vibrant

sector. The committee recommended measures to improve “operational flexibility” and

“functional autonomy” so as to enhance “efficiency, productivity and profitability” (Chaudhary

& Singh, 2012).

The main cause of mounting NPAs in public sector banks is malfunctioning of the banks.

Narasimham Committee identified the NPAs as one of the possible effects of malfunctioning of

public sector banks (Ramu, N., 2009).It has been examined that the reason behind the falling

revenues from traditional sources is 78% of the total NPAs accounted in public sector banks

(Bhavani Prasad, G. and Veena, V.D., 2011).

An evaluation of the Indian experience in Financial Sector Reforms Published in the RBI

Bulletin gives stress to the view that the sustained improvement of the economic activity and

growth is greatly enhanced by the existence of a financial system developed in terms of both

27

operational and allocation efficiency in mobilizing savings and in channelizing them among

competing demands (G.Rangarajan, 1997).It has been observed that the current banking Scenario

and the need for the policy change, opines that a major concern addressed by the banking sector

reform is the improvement of the financial health of banks. The Introduction of prudential norms

is better financial discipline by ensuring that the banks are alert to the risk profile of their loan

portfolios (S.P.Talwar (1998).

The Reserve Bank of India has also conducted a study to ascertain the contributing factors for the

high level of NPAs in the banks covering 800 top NPA accounts in 33 banks (RBI Bulletin, July

1999). The study has found that the proportion of problem loans in case of Indian banking sector

always been very high. The problem loans of these banks, in fact, formed 17.91 percent of their

gross advances as on March 31, 1989. This proportion did not include the amounts locked up in

sick industrial units. Hence, the proportion of problem loans indeed was higher.

However, the NPAs of Indian Banks declined to 17.44 percent as on March 31, 1997 after

introduction of prudential norms. In case of many of the banks, the decline in ratio of NPAs was

mainly due to proportionately much higher rise in advances and a lower level of NPAs accretion

after 1992.

The study also revealed that the major factors contributing to loans becoming NPAs include

diversion of funds for expansion, diversification, modernization, undertaking new projects and

for helping associate concerns. This is coupled with recessionary trend and failure to tap funds in

the capital and debt markets, business failure (product, marketing, etc.),inefficient management,

strained labour relations, inappropriate technology/technical problems, product obsolescence,

recession input/power shortage, price escalation, accidents, natural calamities, Government

policies like changes in excise duties, pollution control orders, etc.

The RBI report concluded that reduction of NPAs in banking sector should be treated as a

national priority issue to make theIndian banking system stronger, resilient and geared to meet

the challenges of globalization (Parul Khanna, 2012)

28

Reference

"Kesavan's Lamentations". Crossword Bookstores. Retrieved July 2, 2013.

Terule &Solano, International Journal of Managerial Finance, Vol. 3, No. 2, pp. 164-177

http://www.academia.edu/4700608/A_Study_of_Non-

Performing_Assets_on_Selected_Public_and_Private_Sector_Banks

http://www.abhinavjournal.com/images/Management_&_Technology/Dec13/10.pdf

http://www.slideshare.net/domariyaganj/nonperformingassetsofbanks

http://www.crossword.in/books/kesavans-lamentations-rs195-mukundan-m/p-books-8129110105.html

http://en.wikipedia.org/wiki/Crossword_Bookstores

http://www.academia.edu/4700608/A_Study_of_Non-Performing_Assets_on_Selected_Public_and_Private_Sector_Banks



http://www.slideshare.net/domariyaganj/nonperformingassetsofbanks

29

Chapter 3

Research Methodology

30

3.1 Introduction

The design of any research project requires considerable attention to the research methods and

the proposed data analysis. Within this section, we have attempted to provide some information

about how to produce a research design for a study. We offer a basic overview of the research

methods portion of a research proposal and then some data analysis templates for different types

of designs. Our goal is not to answer every question, but provide a head start.

3.2 Problem statement

The first and for most step happens to be that of selecting and properly defined the

research problem.

Research problems refers to some difficulty which a researcher experience in the context

of either a theoretical or practical situation and wants to obtain a solution for the same.

The research problem is one which requires a research of to find out the best solution for

the given problem that is to find out by which goals of action the objective can be attained

optimally in the context of a given environment.

As part of the research study we have selected Public sector and private sector bank of

India. The title of the problem is “ NPA Impact On Profitability Of Public Sector And

Private Sector Bank”.

31

3.3 Objective Of The Study

Objectives are goals or aims ,which the management wishes the organization to achieve .There

are end points or pole star towards which all business activities like organizing, staffing, directing

and controlling are directed .Only after defined these and points can the manager determine the of

organization ,the kind of personnel and their qualification ,the kind of motivation, supervision and

direction and kind of control techniques, which he must employ to reach these points.

Primary Objective

Understand the concept of non performing assets of public sector and private sector banks.

Study the impact of non performing assets on profitability of public sector and private

sector banks.

Offer suggestions based on findings of the study in public sector and private sector bank.

Secondary Objective

To know is there any statistically significant relationship between independent variables

and choice of bank to transact with.

32

3.4 Scope Of the Study

The present study of the non performing assets is confined an restricted to the boundary of public

sector and private sector bank of India.

3.5 Research Model

Here,

IV= Independent variable

DV= Dependent variable

Regression analysis was carried out to test the impact of non performing assets on profitability of

bank. Here, Non performing assets is independent variable and profitability is the dependent

variable. So, study utilized one DV-one IV liner model.

IV DV

33

3.6 Hypotheses Of The Study

H0: There is no significant relationship between Non performing assets and return on equity

H1: There is a significant relationship between Non performing assets and return on equity

34

3.7 Research Design

Research designs is a frame work or blue print for conducting research procedure is necessary for

obtaining information to solve the problem.

Research designed to assist the decision maker in determining, evaluating and selecting

the best course of action to take in a given situation.

Descriptive studies are usually the best methods for collecting information that will

demonstrate relationships and describe the world as it exists. These types of studies are

often done before an experiment to know what specific things to manipulate and include

in an experiment. Descriptive studies are designed primarily to describe what is going or

what exist.

In our study we have conducted the descriptive research to study what is the investor‟s

opinion regarding the attrition rate of investment in the stock market.

Research design

Exploratory Descriptive Causal

35

3.8 Source of Data

Secondary data were used for the study. In this research we covered public and private sectors

bank which have the non performing assets. for the analysis of impact of non performing assets

on profitability and for this there must be needed of book value and return on equity. with the help

of book value we calculate the return on equity. this all the data collected from the capital line.

3.9 Tools Used for Analysis

In research study there is regression analysis used with the model of one DV and one IV. There is

One dependent variable and One Independent variable. Independent variable is NPA and

Dependent variable is Profitability in our research Study.

3.10 Sample Size

In this research study we have to taken public sector banks and privet sector banks for the study

we have selected 74 banks for the study.

36

Chapter 4

Data Analysis

37

4.1 Private and Public Sector Banks

H0: There is no significant relationship between Non- performing assets and return on equity of

bank.

H1: There is a significant relationship between Non- performing assets and return on equity of

bank.

Table 4.1.1 ANOVA Result For NPA

Model Sum squares Df Mean square F Sig

Regression 1296.541 1 1296.541 22.835 0.000a

Residual 22030.075 388 56.779

Total 23326.616 389

Note:*P < 0.05

This model is fit because the significant level is less than 0.05. There is impact of Non

Performing Assets on Return on equity of banks.

Table 4.1.2 Coefficient For NPA

Note:*P < 0.05

In above table of coefficient there is significant is 0.000. So Null hypotheses is not

excepted so there is impact of Non Performing Assets on Return on equity of banks.

Model un

standardize

coefficient

B

Un standardize

Coefficient

Std. error

t Sig.

1(constant) 5.249 0.774 6.781 0.000

NPA -0.276 0.058 -4.779 0.000

38

Table 4.1.3 Model Summary For NPA

Note:*P < 0.05

This Model is fit because significant level is less than 0.000 so there is impact of Non

performing Assets on Return on equity of banks.

Model R R

Square

Adjusted

R

Square

Std.Error

of the

Estimate

Change Statistics

R

Square

Change

F

Change

Df

1

Df2 Sig. F

change

1 0.236a 0.056 0.053 7.53515 0.056 22.835 1 388 0.000

39

4.2 Public sector bank


Public sector bank.


Public sector bank

Table 4.2.1 Descriptive Statistics

There is no any analysis from the descriptive statistics so further study is require.

Table no 4.2.2 ANOVA Result For NPA


Regression 10.752 1 10.752 23.431 0.000

Residual 63.326 138 0.459

Total 74.078 139

Note:*P < 0.05

This model is fit because the significant level is less than 0.000. There is impact of Non

Performing Assets on Return on equity of public and private sector banks.

Variable Mean Std.

Deviation

N

NPA 1.1514 0.73002 140

ROE 15.4703 5.29179 140

40

Table no 4.2.3 Coefficient For NPA

Model un

standardize

coefficient

B

Un standardize

Coefficient

Std. error

T Sig.

1(constant) 1.965 0.177 11.070 0.000

NPA -0.053 0.011 -4.841 0.000

Note:*P < 0.05

In above table of coefficient there is significant is 0.000. So Null hypotheses is not

excepted so there is impact of Non Performing Assets on profitability of public and

private sector banks.

Table 4.2.4 Model Summary

Note:*P < 0.05

This Model is fit because significant level is less than 0.000 so there is impact of Non

performing Assets on profitability of public and private sector banks.

Model R R

Square

Adjusted

R

Square

Std.Error

of the

Estimate

Change Statistics

R

Square

Change

F

Change

Df

1

Df2 Sig. F

change

1 0.381a 0.145 0.149 0.67741 0.145 23.431 1 138 0.000

41

4.3 Private sector bank


private sector bank.


private sector bank.

Table 4.3.1 Descriptive statistics

Table 4.3.2 ANOVA Result For NPA


Regression 1417.475 1 1417.475 16.225 0.000

Residual 21666.137 248 87.363

Total 23083.612 249

Note:*P < 0.05

This model is fit because the significant level is less than 0.05. There is impact of

Non Performing Assets on Return on equity of banks.

Table 4.3.3 Coefficient For NPA

Model un standardize

coefficient

B

Un standardize

Coefficient

Std. error

T Sig.

1(constant) 6.115 1.070 5.716 0.000

NPA -376 0.093 -4.028 0.000

Note:*P < 0.05

In above table of coefficient there is significant is 0.000. So Null hypotheses is

not excepted so there is impact of Non Performing Assets on profitability of

public and private sector banks.

Variable Mean Std.

Deviation

N

NPA 2.5234 9.62836 250

ROE 9.5527 6.34682 250

42

Table 4.3.4 Model Summary For NPA

Note:*P < 0.05

This Model is fit because significant level is less than 0.05 so there is impact of Non performing

Assets on profitability of public and private sector banks.

Model R R

Square

Adjusted

R

Square

Std.Error

of the

Estimate

Change Statistics

R

Square

Change

F

Change

Df1 Df2 Sig. F

change

1 248a 0.061 0.058 9.34684 0.061 16.225 1 248 0.000

43

Chapter 5

Findings And Suggestions

44

5.1 Findings

Because of mismanagement in bank there is a positive relation between Total Advances,

Net Profits and NPA of bank which is not good.

Positive relation between NPA & profits are due to wrong choice of clients by Banks.

There is an adverse effect on the Liquidity of Bank.

Bank is unable to give loans to the new customers due to lack of funds which arises due

to NPA

5.2 Suggestion

Advances provided by banks need to be done pre-sanctioning evaluation and post-

disbursement control so that NPA can decrease.

Good management needed on the side of banks to decrease the level of NPA.

Proper selection of borrowers & follow ups required to get timely payment.

45

Chapter 6

Conclusion

46

NPAs reflect the overall performance of the banks.

The NPAs have always been a big worry for the banks in india. The Indian banking

sector faced a serious problem of NPAs. .

A high level of NPAs suggests high probability of a large number of credit defaults that

affect the profitability and liquidity of banks.

The extent of NPAs has comparatively higher in public sectors banks. To improve the

efficiency and profitability, the NPAs have to be scheduled.

Various steps have been taken by government to reduce the NPAs. It is highly impossible

to have zero percentage NPAs. But at least Indian banks should take care to ensure that

they give loans to creditworthy customers.

47

Chapter 7

Bibliography

48

<http://www.abhinavjournal.com/images/Commerce_&_Management/Jul12/5.pdf > < 20/2/2014,

2:34 >

<http://ijarcsms.com/docs/paper/volume2/issue1/V2I1-0032.pdf > <20/2/2014, 2:57>

<http://www.capitaline.com/user/framepage.asp?id=1 > <4/03/2014, 3:27>

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Performing_Assets_on_Selected_Public_and_Private_Sector_Banks > <15/4/2014, 4:00>

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Private Sector Banks > <28/4/2014, 11:45>

Reference

Terule &Solano, International Journal of Managerial Finance, Vol. 3, No. 2, pp. 164-177

S. Mill, Fianancial management:theory and practice by Eugene F. Brigham, page no 206

Deloof, M., and Jegers, M. (1996), “Trade credit, product quality, and intra group trade: Some

European evidence”, Financial Management, Vol. 25, pp. 945-968. DOI:10.2307/3665806

Genestenberg, financial management :by C.paramasivan T.subramanin, page no 150

http://www.abhinavjournal.com/images/Commerce_&_Management/Jul12/5.pdf

http://ijarcsms.com/docs/paper/volume2/issue1/V2I1-0032.pdf

http://www.capitaline.com/user/framepage.asp?id=1




http://www.academia.edu/4700608/A

http://dx.doi.org/10.2307/3665806

49

Chapter 8

Annexure

50

Table 8.1:Public sector bank

No Name

NPA

2013

EPS RS.

2013

book value

2013 ROE 2013

1 Allahabad Bank 3.19 22.68 209.92 10.80411585

2 Andhra Bank 2.45 22.19 150.85 14.7099768

3 Bank of Baroda 1.28 102.47 756.64 13.54276803

4 Bank of India 2.06 41.4 381.07 10.8641457

5 Bank of Maha 0.52 10.21 70.88 14.40462754

6 Canara Bank 2.18 62.62 515.68 12.14318957

7 Central Bank 2.9 7.61 113.23 6.720833701

8 Corporation Bank 1.19 90.9 625.58 14.53051568

9 Dena Bank 1.39 22.35 140.24 15.9369652

10 E X I M Bank 0 2.43 24.52 9.910277325

11 I O B 2.5 5.81 133.2 4.361861862

12 IDBI Bank 1.58 13.58 146.11 9.294367258

13 Indian Bank 2.26 34.68 242.89 14.27806826

14 N A B A R D 0.01 4.52 101.38 4.458473072

15 Oriental Bank 2.27 43.95 414.69 10.59827823

16 Pun. & Sind Bank 2.16 12.14 145.56 8.340203353

17 Punjab Natl.Bank 2.35 129.73 884.04 14.67467535

18 S B T 1.46 119.76 873 13.71821306

19 St Bk of Bikaner 2.27 101.71 680.59 14.94438649

20 St Bk of Hyderab 1.61 6,025.16 36779.13 16.38200795

21 St Bk of India 2.1 200.71 1445.6 13.88420033

22 St Bk of Mysore 2.69 87.04 804.44 10.81994928

23 St Bk of Patiala 1.62 223.33 1812.36 12.32260699

24 Syndicate Bank 0.76 32.16 158.91 20.23787049

25 UCO Bank 3.17 7.56 97.19 7.778578043

26 Union Bank (I) 1.61 34.61 262.9 13.16470141

27 United Bank (I) 2.87 7.98 119.08 6.701377225

28 Vijaya Bank 1.3 8.98 82.66 10.86377934

51

Table 8.2: Privet sector bank

No Name

NPA%

2013

EPS

Rs.2013

book value

2013 ROE 2013

29 AB Bank 8.98 2.16 20.3 10.64039409

30 Abu Dhabi Comm. 0 0.84 15.09 5.566600398

31 Akola Janat. Com 0 26.76 425.96 6.282280026

32 Amer. Exp. Bank 1.87 0 7.38 0

33 Antwerp Diamond 0 0.89 14.36 6.197771588

34 Axis Bank 0.36 107.59 707.51 15.2068522

35 Bank of Bah &Kuw 3.16 0.86 14.23 6.043569923

36 Barclays Bank 1.74 0 9.24 0

37 BNP Paribas 0 1.75 20.59 8.499271491

38 Catholic Bank 1.12 7.54 150.56 5.007970244

39 Citibank N. A. 1.47 7.26 45.28 16.0335689

40 City Union Bank 0.63 6.62 34.58 19.14401388

41 Cosmos Cp Bank 4.67 30.82 500.38 6.159318918

42 Credit Agricole 0 1.58 17.98 8.787541713

43 DBS Bank 2.37 1.98 20.07 9.865470852

44 DCB Bank 0.75 4.08 37.83 10.7850912

45 Deutsche Bank 0.13 2.52 19.29 13.06376361

46 Dhanlaxmi Bank 3.36 0.31 85.81 0.361263256

47 Federal Bank 0.98 47.47 371.77 12.76864728

48 Greater Bombay 2.55 9.15 97.51 9.383652959

49 HDFC Bank 0.2 27.33 152.2 17.95663601

50 Hongkong & Shang 0.33 4.3 32.1 13.39563863

51 ICICI Bank 0.77 69.63 578.18 12.0429624

52 IndusInd Bank 0.31 19.78 141.66 13.96301002

53 ING Vysya Bank 0.03 38.69 292.1 13.24546388

54 J & K Bank 0.14 209.1 1003.24 20.8424704

55 J P Morgan Chase 0 2.16 18.51 11.66936791

56 Kapol Co-op Bank 4.47 1.83 36.42 5.024711697

57 Karnataka Bank 1.51 17.8 151.69 11.73445843

58 Karur Vysya Bank 0.37 48.97 287.85 17.01233281

59 Kokan Merchanti 2.83 6.52 177.16 3.680289004

60 Kotak Mah. Bank 0.64 18.13 126.53 14.32861772

61 Lak. Vilas Bank 2.43 8.88 96.02 9.248073318

62 Mahanagar Co-op 0.72 3.71 72.2 5.138504155

63 Maratha Sahakari 14.18 4.1 236.48 1.73376184

64 Mogaveera Co-op 4.74 15.88 399.42 3.975764859

52

65 Mumbai Dist.Bank 4.77 297.04 9218.44 3.222237168

66 Oversea-Ch. Bank 100 0 9.78 0

67 Pun. & Mah. Bank 0.16 11.33 107.22 10.56705838

68 Ratnakar Bank 0.11 3.55 63.48 5.592312539

69 Royal Bank 0.29 13.17 167.55 7.860340197

70 Sh.Arihant Co-op 0 7.61 122.5 6.212244898

71 Shamrao Vithal 0.74 25.21 195.33 12.90636359

72 South Ind.Bank 0.78 3.64 21.41 17.00140121

73 South Ind.Co-op 51.7 0 20.44 0

74 St Bk of Mauriti 2.18 0.29 11.37 2.55057168

75 Stand.Chart.Bank 1.63 10.86 66.56 16.31610577

76 Stand.Chart.PLC 1.63 10.86 66.56 16.31610577

77 T N Merc. Bank 0.66 15,603.21 72216.79 21.60606972

78 Yes Bank 0.01 35.3 161.94 21.79819686

53

Table 8.3: Public sector bank

No Name NPA 2012 EPS 2012

Book value

2012 ROE 2012

1 Allahabad Bank 0.98 36.36 192.92 18.84719

2 Andhra Bank 0.91 23.14 133.66 17.31258

3 Bank of Baroda 0.54 118.72 666.3 17.8178

4 Bank of India 1.47 45.49 343.35 13.24887

5 Bank of Maha 0.84 5.85 63.77 9.173593

6 Canara Bank 1.46 72.3 465.57 15.52935

7 Central Bank 3.09 4.89 221.41 2.208572


9 Dena Bank 1.01 22.46 122.59 18.32123

10 E X I M Bank 0 2.94 26.98 10.89696

11 I O B 1.35 12.45 135.34 9.199054

12 IDBI Bank 1.61 15.42 137.46 11.21781

13 Indian Bank 1.33 38.35 214.94 17.84219

14 N A B A R D 0.02 5.45 124.73 4.369438

15 Oriental Bank 2.21 37.85 379.94 9.962099

16 Pun. & Sind Bank 1.19 18.01 141.73 12.70726

17 Punjab Natl.Bank 1.52 140.43 777.34 18.06545

18 S B T 1.54 99.17 773.23 12.82542

19 St Bk of Bikaner 1.92 90.79 594.98 15.25934

20 St Bk of Hyderab 1.3 6,178.84 31314.07 19.73183

21 St Bk of India 1.82 170.05 1251.06 13.59247

22 St Bk of Mysore 1.93 77.26 729.21 10.59503

23 St Bk of Patiala 1.35 267.33 1622.04 16.4811

24 Syndicate Bank 0.96 21.2 133.5 15.88015

25 UCO Bank 1.96 15.84 94.72 16.72297

26 Union Bank (I) 1.7 30.94 235.91 13.11517

27 United Bank (I) 1.72 14.69 114.65 12.81291

28 Vijaya Bank 1.72 8.65 76.17 11.35618

54

Table 8.4:Privet sector bank

No Name 2012 EPS 2012 Book value 2012

29 AB Bank 0 2.21 18.14 12.18302

30 Abu Dhabi Comm. 0 0.75 14.25 5.263158

31 Akola Janat. Com 0 22.33 419.56 5.322242

32 Amer. Exp. Bank 1.19 0.06 7.99 0.750939

33 Antwerp Diamond 1.96 0.86 13.47 6.384558

34 Axis Bank 0.27 100.03 552 18.12138

35 Bank of Bah &Kuw 2.49 1.02 13.37 7.62902


37 BNP Paribas 0.07 0.76 18.84 4.03397

38 Catholic Bank 1.1 8 167.68 4.770992

39 Citibank N. A. 0.9 5.13 41.75 12.28743

40 City Union Bank 0.44 6.7 30.45 22.00328

41 Cosmos Cp Bank 4.79 39.03 625.52 6.239609

42 Credit Agricole 0 2.77 17.76 15.59685

43 DBS Bank 0.6 2.3 18.09 12.71421

44 DCB Bank 0.57 2.29 33.39 6.858341

45 Deutsche Bank 0.09 2.27 17.62 12.88309

46 Dhanlaxmi Bank 0.66 0 85.54 0

47 Federal Bank 0.53 43.95 333.29 13.18671

48 Greater Bombay 0.84 10.73 91.77 11.69227

49 HDFC Bank 0.18 21.32 127.52 16.71895

50 Hongkong & Shang 0.62 4.42 31.7 13.94322

51 ICICI Bank 0.73 54.17 523.98 10.33818

52 IndusInd Bank 0.27 16.8 96.46 17.41655

53 ING Vysya Bank 0.18 29.67 258.11 11.4951

54 J & K Bank 0.15 160.22 844.13 18.98049

55 J P Morgan Chase 0 1.6 16.35 9.785933

56 Kapol Co-op Bank 1.25 5.18 34.86 14.85944

57 Karnataka Bank 2.11 12.5 137.99 9.058627

58 Karur Vysya Bank 0.33 44.54 252.68 17.62704

59 Kokan Merchanti 4.24 2.66 168.71 1.57667

60 Kotak Mah. Bank 0.61 14.55 107.28 13.56264

61 Lak. Vilas Bank 1.74 10.41 90.14 11.5487

62 Mahanagar Co-op 0.05 3.6 75.36 4.77707


64 Mogaveera Co-op 3.82 23.84 694.66 3.431895

65 Mumbai Dist.Bank 0.98 290.48 10944.17 2.654199


67 Pun. & Mah. Bank 0.47 9.13 113.87 8.017915

55

68 Ratnakar Bank 0.2 3.01 53.13 5.665349

69 Royal Bank 0.74 28.39 174.07 16.30953

70 Sh.Arihant Co-op 0 6.18 129.84 4.759704

71 Shamrao Vithal 0 22.81 176.2 12.94552

72 South Ind.Bank 0.28 3.45 17.84 19.33857

73 South Ind.Co-op 4.33 3.44 80.33 4.282335

74 St Bk of Mauriti 0 0 12.48 0

75 Stand.Chart.Bank 0.7 25.68 193.52 13.26995

76 Stand.Chart.PLC 0.7 25.68 193.52 13.26995

77 T N Merc. Bank 0.45 10,951.07 58387.14 18.75596

78 Yes Bank 0.05 27.03 132.49 20.40154

56


No Name

NPA

2011 EPS 2011

Book value

2011 2011

1 Allahabad Bank 0.79 28.21 160.5 17.576324

2 Andhra Bank 0.38 21.75 116.02 18.7467678

3 Bank of Baroda 0.35 105.3 535.72 19.6557903

4 Bank of India 0.91 44.36 291.86 15.199068

5 Bank of Maha 1.32 5.81 61.02 9.52146837

6 Canara Bank 1.1 89.07 405 21.9925926

7 Central Bank 0.65 27.13 231.2 11.7344291


9 Dena Bank 1.22 17.98 103.76 17.3284503

10 E X I M Bank 0.2 2.92 27.08 10.7828656

11 I O B 1.19 16.52 131.96 12.5189451

12 IDBI Bank 1.06 16.2 128.69 12.5883907

13 Indian Bank 0.53 37.62 184.44 20.396877

14 N A B A R D 0.02 6.4 180.4 3.54767184

15 Oriental Bank 0.98 49.82 349.97 14.2355059

16 Pun. & Sind Bank 0.56 22.55 127.74 17.6530452

17 Punjab Natl.Bank 0.85 136.37 632.49 21.5608152

18 S B T 0.98 142.6 692.71 20.5858151

19 St Bk of Bikaner 0.83 106.76 570.16 18.7245685

20 St Bk of Hyderab 0.87 5,543.47 25615.23 21.6413048

21 St Bk of India 1.63 126.27 1023.4 12.3382842

22 St Bk of Mysore 1.38 105.35 662.28 15.9071692

23 St Bk of Patiala 1.21 218.53 1389.4 15.728372

24 Syndicate Bank 0.97 17.68 116.12 15.2256287

25 UCO Bank 1.84 13.68 82 16.6829268

26 Union Bank (I) 1.19 38.3 211.31 18.1250296

27 United Bank (I) 1.42 12.88 103.46 12.4492558

28 Vijaya Bank 1.52 8.67 70.31 12.3311051

57


No Name 2011 EPS 2011

Book value

2011 ROE 2011

29 AB Bank 0 1.44 15.93 9.03954802

30 Abu Dhabi Comm. 2.89 1.3 21.99 5.91177808

31 Akola Janat. Com 1.55 17.36 552.33 3.14304854

32 Amer. Exp. Bank 1.5 0.42 7.64 5.4973822

33 Antwerp Diamond 3.04 0 12.61 0

34 Axis Bank 0.29 80.21 462.77 17.3325842

35 Bank of Bah &Kuw 0.52 2.45 18.16 13.4911894

36 Barclays Bank 1.46 0.19 9.69 1.96078431

37 BNP Paribas 0 1.76 18.07 9.73990039

38 Catholic Bank 1.74 3.72 161.26 2.30683368

39 Citibank N. A. 1.21 3.81 39 9.76923077

40 City Union Bank 0.52 5.17 24.85 20.804829

41 Cosmos Cp Bank 1.54 91.76 1302.48 7.0450218

42 Credit Agricole 0 0.42 12.12 3.46534653

43 DBS Bank 0.331 1.34 18.89 7.09370037

44 DCB Bank 0.96 1.07 28.1 3.80782918

45 Deutsche Bank 0.23 1.74 15.35 11.3355049

46 Dhanlaxmi Bank 0.3 2.98 99.21 3.00372946

47 Federal Bank 0.6 32.94 298.34 11.0410941

48 Greater Bombay 1.02 7.77 100.09 7.76301329

49 HDFC Bank 0.19 81.72 545.46 14.9818502

50 Hongkong & Shang 0.91 3.4 28.89 11.7687781

51 ICICI Bank 1.11 42.97 478.29 8.98408915

52 IndusInd Bank 0.28 12.07 81.92 14.7338867

53 ING Vysya Bank 0.39 25.85 208.13 12.420122

54 J & K Bank 0.2 122.55 717.4 17.0825202

55 J P Morgan Chase 0 1.98 16.03 12.3518403

56 Kapol Co-op Bank 0 0.67 40.3 1.66253102

57 Karnataka Bank 1.62 10.4 129.07 8.05764314

58 Karur Vysya Bank 0.07 41.77 223.78 18.6656538

59 Kokan Merchanti 0 6.89 167.54 4.11245076

60 Kotak Mah. Bank 0.72 11.04 92.23 11.9700748

61 Lak. Vilas Bank 0.9 9.95 83.23 11.954824

62 Mahanagar Co-op 1.12 3.72 88.42 4.20719294


64 Mogaveera Co-op 5.94 15.37 1304.25 1.17845505

65 Mumbai Dist.Bank 1.52 262.48 1106.81 23.7150008

58

66 Oversea-Ch. Bank 0 0.11 10.23 1.07526882

67 Pun. & Mah. Bank 0 10.58 139.9 7.56254467

68 Ratnakar Bank 0.36 0.54 50.42 1.07100357

69 Royal Bank 1.65 10.73 145.68 7.36545854

70 Sh.Arihant Co-op 1.13 6.08 142.56 4.26487093

71 Shamrao Vithal 0 18.22 159.09 11.4526369

72 South Ind.Bank 0.29 2.51 14.99 16.7444963

73 South Ind.Co-op 0 5.6 81.3 6.88806888

74 St Bk of Mauriti 0 0.61 17.08 3.57142857

75 Stand.Chart.Bank 0.27 30.47 175.23 17.388575

76 Stand.Chart.PLC 0.27 30.47 175.23 17.388575

77 T N Merc. Bank 0.27 8,796.07 48786.07 18.0298803

78 Yes Bank 0.03 20.5 109.29 18.7574343

59


No Name

NPA

2010 EPS 2010

Book

value

2010 ROE 2010

1 Allahabad Bank 0.66 26.07 131.73 19.79048053

2 Andhra Bank 0.17 20.73 90.93 22.79775652

3 Bank of Baroda 0.34 81.18 413.27 19.64333245

4 Bank of India 1.31 33.88 243.41 13.91890226

5 Bank of Maha 1.64 9.87 55.84 17.67550143

6 Canara Bank 1.06 71.99 305.83 23.53922114

7 Central Bank 0.69 24.27 107.96 22.48054835


9 Dena Bank 1.21 17.49 83.43 20.96368213

10 E X I M Bank 0.2 3.02 24.54 12.30643847

11 I O B 2.52 12.38 116.54 10.62296207

12 IDBI Bank 1.02 13.79 113.48 12.15192104

13 Indian Bank 0.23 34 152.66 22.27171492

14 N A B A R D 0.02 7.79 181.25 4.297931034

15 Oriental Bank 0.87 43.74 292.19 14.96971149

16 Pun. & Sind Bank 0.36 26.98 105.4 25.59772296

17 Punjab Natl.Bank 0.53 126.17 514.78 24.5094992

18 S B T 0.91 134.13 568.12 23.60944871

19 St Bk of Bikaner 0.78 88.58 483.48 18.32133697

20 St Bk of Hyderab 0.55 3,883.28 20551.81 18.89507542

21 St Bk of India 1.72 140.65 1038.77 13.54005218

22 St Bk of Mysore 1.02 122.16 575.94 21.21054276

23 St Bk of Patiala 1.04 183.78 1271.28 14.45629602

24 Syndicate Bank 1.07 15.08 100.06 15.07095743

25 UCO Bank 1.17 18.03 65.74 27.42622452

26 Union Bank (I) 0.81 40.14 174.37 23.02001491

27 United Bank (I) 1.84 9.29 91.69 10.13196641

28 Vijaya Bank 1.4 10.47 61.44 17.04101563

60

Table 8.8 Private sector bank

No Name 2010 EPS 2010

Book

value

2010 ROE 2010

29 AB Bank 7.68 1.28 14.49 8.833678399

30 Abu Dhabi Comm. 0.19 1.2 20.69 5.799903335

31 Akola Janat. Com 4.85 5.43 567.12 0.957469319

32 Amer. Exp. Bank 0 0 5.95 0

33 Antwerp Diamond 14.32 0 13.91 0

34 Axis Bank 0.4 60.06 395.99 15.16704967

35 Bank of Bah &Kuw 1.95 0.41 17.16 2.389277389


37 BNP Paribas 0 1.69 16.32 10.35539216

38 Catholic Bank 1.58 0.87 184.72 0.47098311

39 Citibank N. A. 2.14 2.3 35.19 6.535947712

40 City Union Bank 0.58 3.7 20.66 17.9090029

41 Cosmos Cp Bank 1.78 60.24 1383.69 4.353576307

42 Credit Agricole 6.18 0.7 12.7 5.511811024

43 DBS Bank 1 2.84 17.55 16.18233618

44 DCB Bank 3.11 0 27.02 0

45 Deutsche Bank 0.79 1.23 13.62 9.030837004

46 Dhanlaxmi Bank 0.84 3.55 68.63 5.172665015

47 Federal Bank 0.48 26.33 273.9 9.612997444

48 Greater Bombay 1.69 11.8 135.53 8.706559433

49 HDFC Bank 0.31 62.43 470.13 13.27930572

50 Hongkong & Shang 2.31 1.8 25.5 7.058823529

51 ICICI Bank 2.12 34.63 462.99 7.479643189

52 IndusInd Bank 0.5 8.23 52.68 15.62262718

53 ING Vysya Bank 1.2 19.76 185.04 10.67877216

54 J & K Bank 0.28 101.93 620.84 16.41807873

55 J P Morgan Chase 2.88 0.06 15 0.4

56 Kapol Co-op Bank 0 2.07 50.92 4.065200314

57 Karnataka Bank 1.31 11.79 136.78 8.61968124

58 Karur Vysya Bank 0.23 59.69 257.57 23.17428272

59 Kokan Merchanti 0 9.08 168.08 5.402189434

60 Kotak Mah. Bank 1.73 16.18 128.83 12.55918652

61 Lak. Vilas Bank 4.11 3.05 75.79 4.024277609

62 Mahanagar Co-op 4.53 2.08 101.87 2.041818003


64 Mogaveera Co-op 0 0.38 1264.72 0.030046176

65 Mumbai Dist.Bank 0 261.68 11132.2 2.35065845

61


67 Pun. & Mah. Bank 0 17.59 148.85 11.8172657

68 Ratnakar Bank 0.97 1.73 33.59 5.150342364

69 Royal Bank 1.95 0 134.95 0

70 Sh.Arihant Co-op 0.24 11.06 154.09 7.177623467

71 Shamrao Vithal 0 14.91 161.85 9.21223355

72 South Ind.Bank 2.39 20.02 129.78 15.42610572

73 South Ind.Co-op 0 5.7 79.21 7.196061103

74 St Bk of Mauriti 4.32 0.95 16.46 5.771567436

75 Stand.Chart.Bank 1.4 34.47 153.5 22.45602606

76 Stand.Chart.PLC 1.4 34.47 153.5 22.45602606

77 T N Merc. Bank 0.24 6,463.57 41006.07 15.76247126

78 Yes Bank 0.06 23.81 90.96 26.17634125

62

Table 8.9 :Public sector bank

No Name

NPA

2009

EPS

2009

Book

value

2009 ROE 2009

1 Allahabad Bank 0.72 16.78 111.45 15.056079

2 Andhra Bank 0.18 12.7 75.2 16.8882979

3 Bank of Baroda 0.31 59.44 352.36 16.8691111

4 Bank of India 0.44 57.16 224.08 25.5087469

5 Bank of Maha 0.79 8.46 47.97 17.6360225

6 Canara Bank 1.09 49.19 244.87 20.0882101

7 Central Bank 1.24 11.83 86.26 13.714352


9 Dena Bank 1.09 14.53 67.95 21.3833701

10 E X I M Bank 0.23 3.41 28.46 11.9817287

11 I O B 1.33 23.57 109.06 21.6119567

12 IDBI Bank 0.92 11.42 102.69 11.1208492

13 Indian Bank 0.18 27.11 127.52 21.2594103

14 N A B A R D 0.03 6.95 172.37 4.03202413

15 Oriental Bank 0.65 34.3 257.54 13.3183195

16 Pun. & Sind Bank 0.32 23.56 77.41 30.4353443

17 Punjab Natl.Bank 0.17 94.63 416.74 22.7072035

18 S B T 0.58 119.36 449.98 26.5256234

19 St Bk of Bikaner 0.85 78.65 409.29 19.2162037

20 St Bk of Hyderab 0.38 3,488.35 18599.01 18.7555682

21 St Bk of India 1.79 139.76 912.73 15.3123048

22 St Bk of Mysore 0.5 91.89 464.2 19.7953468

23 St Bk of Patiala 0.6 187.83 1140.56 16.4682261

24 Syndicate Bank 0.77 17.08 88.03 19.4024764

25 UCO Bank 1.18 9.97 50.88 19.5951258

26 Union Bank (I) 0.34 33.33 139.66 23.865101

27 United Bank (I) 1.48 1.21 15.39 7.86224821

28 Vijaya Bank 0.82 5.88 53.47 10.9968206

63


No Name 2009

EPS

2009

Book

value

2009 ROE 2009

29 AB Bank 6.67 1.03 13.22 7.79122542

30 Abu Dhabi Comm. 0 2.59 19.49 13.2888661

31 Akola Janat. Com 0 45.64 577.48 7.90330401

32 Amer. Exp. Bank 0.77 3.5 30.02 11.6588941

33 Antwerp Diamond 0 0.58 11.01 5.26793824

34 Axis Bank 0.4 48.85 284.53 17.1686641

35 Bank of Bah &Kuw 1.51 3.29 12.32 26.7045455

36 Barclays Bank 4.59 0.06 10.62 0.56497175

37 BNP Paribas 0.86 1.59 14.03 11.3328582

38 Catholic Bank 2.39 19.7 184.05 10.7036131

39 Citibank N. A. 2.63 8.35 42.95 19.4412107

40 City Union Bank 1.08 3.69 20.65 17.8692494

41 Cosmos Cp Bank 2.08 104.11 1270.23 8.19615345

42 Credit Agricole 0 2.22 13 17.0769231

43 DBS Bank 0.55 2.72 14.71 18.4908226

44 DCB Bank 3.88 0 30.89 0

45 Deutsche Bank 0.88 1.18 13.11 9.00076278

46 Dhanlaxmi Bank 0.88 8.79 66.2 13.2779456

47 Federal Bank 0.2 28.41 252.57 11.2483668

48 Greater Bombay 2.01 13.51 164.43 8.21626224

49 HDFC Bank 0.63 51.08 344.31 14.835468

50 Hongkong & Shang 1.42 2.87 23.7 12.1097046

51 ICICI Bank 2.09 32.4 444.92 7.28220804

52 IndusInd Bank 1.14 3.96 40.23 9.84340045

53 ING Vysya Bank 1.2 18.06 154.94 11.656125

54 J & K Bank 1.38 81.65 540.99 15.0927004

55 J P Morgan Chase 1.27 2.9 16.41 17.6721511

56 Kapol Co-op Bank 0 2.7 58.98 4.57782299

57 Karnataka Bank 0.98 20.92 128.89 16.2308946

58 Karur Vysya Bank 0.25 41.68 250.26 16.6546791

59 Kokan Merchanti 0.78 6.81 160.16 4.251998

60 Kotak Mah. Bank 2.39 7.93 110.33 7.18752832

61 Lak. Vilas Bank 1.24 9.89 93.01 10.6332652

62 Mahanagar Co-op 4.38 4.79 111.45 4.29789143


64

64 Mogaveera Co-op 13.25 0 1276.81 0

65 Mumbai Dist.Bank 6.85 73.26 11741.39 0.62394657

66 Oversea-Ch. Bank 0 0.63 10.16 6.2007874

67 Pun. & Mah. Bank 1.33 21.08 160.04 13.1717071

68 Ratnakar Bank 0.68 2.74 32.59 8.40748696

69 Royal Bank 2.2 1.15 141.15 0.8147361

70 Sh.Arihant Co-op 1.9 8.46 161 5.25465839

71 Shamrao Vithal 2.21 11.51 172.3 6.68020894

72 South Ind.Bank 1.13 16.72 113.76 14.697609

73 South Ind.Co-op 0 4.92 74.77 6.58017922

74 St Bk of Mauriti 0 0.66 15.15 4.35643564

75 Stand.Chart.Bank 1.37 28.22 133.82 21.0880287

76 Stand.Chart.PLC 1.37 28.22 133.82 21.0880287

77 T N Merc. Bank 0.34 5,261.07 35304.29 14.90207

78 Yes Bank 0.36 10.23 54.69 18.7054306

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