Study on Management of NPA in KBL

8/3/2019 Study on Management of NPA in KBL

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By,

Lokesh .H

Karnataka Bank Ltd.,


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Company Profile Karnataka bank limited a leading A1+ class scheduled commercial bank in India

was incorporated on February 18th 1924 with a registered office at Mangalore. Thebank commenced its business on 23rd may 1924 with an initial paid up capital ofRs.11.580 contributed by 113 share holders. Sri .B.R. Vyasaraya Achar was the firstpresident of the bank. The banks memorandum of association in its objective clause

states that the bank apart from carrying on the general function of banking business,would set apart and appropriate from the annual net profit towards the general,mental, moral and physical advancement of other beneficial purpose of the membersof the Dravidian Brahmin community, such same as may be deemed fit. The firstreal recognition for the Mangalore based bank come in the year 1959 with the bankbeing elevated firm C class to B class. In the stride of progress of expansion, thebank got reinforced by the takeover of 3 banks namely Shringeri Sharada bank ltd

an 1st April 1960, Chitradurga bank ltd on December 30 1966., In year 1971 the bank opened its first branch in the countrys financial capital the

following year the bank was elevated to A class by the Reserve Bank of India.


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Nature of the business carriedIn the words of late shri T.A Pai some people believe that banking

means money lending that a banker is not but a glorified money

lender. But banking is not money lending as money lender does not

take the risk where as the banker does bankis into pooling to gatherthe savings of the community scattered all over and from the very

some pool granting loans to the needy in the society. Thus it acts as a

link between the savers and the needy. Thus the two main products

of the bank are deposits and loans.


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Vision Mission and Quality

Policy Vision Statement:Bank believes in total quality at all levels bank are aiming at a total value package

one shop for all banking needs. Bank value the opportunity of building arelationship, developing an understanding of changing financial needs at adifferent stage of life. Bank customer centric focus has enabled the bank to

change with time offering quality products though can variant items. Bankmotto is to serve the customers with high standard of professionalism with apersonal touch on trust.

Mission Statement: Karnataka Banks mission is to be a technological survey, customer centric

progressive bank with a national presence driven by the higher standard ofcorporate governance and guided by sound ethical values. Towardsachievement of this, the Bank is committed to the best practice s in corporategovernance to protect the interest of share holders, depositors

Quality policy:The quality policy of Karnataka bank limited is of providing quick and better

service and their by achieving customer satisfaction.


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Products/Services Profile LOANS OR SCHEMES PRODUCT

KBL APNA GHAR

KBL VARTHAK LOAN

KBL UDYOG MITHRA KBL CAR FINANCE

VIDYA NIDHI EDUCATIONAL LOAN SCHEME

KBL - KRISHIK SARATHI SCHEME

DEPOSITS PRODUCTS

ABHYUDYA CASH CERFIFICATE

FIXED DEPOSITS

READY MONEY DEPOSITS INSURANCE LINKED SAVINGS BANK DEPOSIT

K-FLEXI DEPOSIT

RESIDENT FOREIGN CURRENCY(DOMESTIC) ACCOUNT

NRI SERVICES

Area of Operation

The Bank at present has 478 Branches, 267 ATM outlets, 9 RegionalOffices, 6 Extension counters, 1 International Division, I Data centre, Icustomer care centre, 5 service branches, 2 currency chests, 2 centralprocessing centers, spread across 20 states and 2 Union Territories.Further, for better ambience and improved customer service, theyshifted 11 branches/offices to new premises, during the year 2010-11.


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All the banks in India are competition for the bank.Some of the major competitions for the bank are :

City Union Bank Ltd.Karur Vysya Bank Ltd.The South Indian Bank Ltd.

The Vysya Bank Ltd.


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Awards/Achievements The Karnataka Bank Ltd. As awarded recently from the

RBI. For maximum usage of the information andtechnology in the banking business.

The Governor of the RBI, Mr. Subba Rao present theAward to the Sri P. JayaramaBhat (Managing

Director), for the efficient usage of the financialsoftwares in the banking business.


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Future Growth ProspectiveGrowth of information technology in banking industry has givencompetitiveness and opened up new opportunities to the banks.Adoption of care banking solution finance in 2,000 envisaging any

time any where banking. And networking of 500 branches, offices upto March 2011 have enabled your bank in offering customer centricvalue added products and services like Multi -BranchBanking (MBB) Flexi - Term Deposit, ATM Card linked Creditfacility bills etc.The bank is planning to enable moneyclick as a payment gate way

for shopping that conversant areas of business like hotel bookingticket booking, purchase of goods etc the bank is also planning tointroduce mobile top up through ATMs and internet banking. Furtherbank is also planning to tie up for online trading in shares.


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MCKENSYS 7-S FRAME WORK MODEL

Structure at branch levelThe Karnataka Bank has totally 478 branches on 31st march 2011. each branch is headed by a branch

manager who has the responsibility of overall administration of his or her branch. Structure of regional office levelThe Karnataka Bank has eight regional offices spread across the country. Each regional office is headed

by an assistant manager. The regional officers are responsible for controlling the branches comingunder them and also for implementation of decision taken at the head office of the bank is dividedinto different deportments with each deportment headed by its respective departmental head whoare responsible for the overall administration of their deportment and also to carry out variousactivities coming under their departments by taking the help of executive officers and staff of theirdeportments. The organization structure of the Karnataka Bank has been shown in the chart belowthe board of directors occupy the two most position followed by the chairman who is next in thehierarchy in the next level of organizational structure there are DGM human relations and industrialrelations general manager, planning and development, GM credit. GM credit treasury GM recovery

legal and GMD, and DGM inspection and audit. Board of Directors:The Board of Directors of the bank consist and of 12 directors including the chairman who is the Chief

Executive Officer. The Constitution of the board confirms with the provisions of section lOB of theBanking Regulation Act, 1947.

All the directors on the board are independent Directors.

Structure:


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System means formal and informal procedures that govern every dayactivities. The decision making systems within the organization canrange from management institutions to structured computer thatgovern the everyday activities of the bank.

The system of the Karnataka Bank includes Computer System

Training System

Control System

Computer system: Karnataka Bank has the first bank to realize the importance of

centralized banking system and was the first to deploy core bankingsystem a part from this the bank has computerized all activities andbranches so to provide quick service to its customer.

System


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Staff:Officers Clerks Sub staff Total

At the end of the

year

2138 2546 1050 5795

Recruited during the

year

137 264 159 551

Table showing the total staff position as

The Karnataka Bank has well trained developed and skilled staffs who workvery hard for the success of the bank. The number of people employed by

the bank stood at 5795 as on 31st march 2011. The business per employee

has improved from Rs 7.27crores as on 31st march 2010 to Rs.7.71crores as

on 31st march 2011. the bank during the 2010-2011 requited 137 new

officers ,264 creaks and 159 sub staff.


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StyleThe MC Kinsey s framework considers style as move thanthe style of top management.

Karnataka Bank Ltd follows a top to down style ofmanagement. It also works in a participative style. Thedictions are taken by the top management concerningmatters related to the organization. The decisions relatingto development matter are taken by the detail heads thebank follows a democratic leadership style which allows theemployee to take part in the decision making process.Employees are free to give any ideas, Suggestions etc, forthe betterment of the organization. This will be taken withactive consultation with the employees.


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Shared values Shared values refer to the guiding concepts, values and

aspirations that unite on organization in same common purpose.They guide employees of any organization towards valued

behaviors. Shared values originally called as super ordinate goals. It is the

guiding concepts and principles of the organization values andaspirations

The Karnataka Bank goes for the following values

1. customer satisfaction2. quick and better service3. loyal to the customers4. honest in work


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SkillSkills refer to the fact that employees have the assets of the organization.

Skills of the employees may be improved by giving necessary training

to them. The bank believes the skillful employees contribute to the

success of the bank. The bank H R D policy a guided by the Chinese

proverb ifyou are planning for one year, grow rice of you are planning

for twenty years plant trees. If u are planning for centuries, develop

men, during the year 2010-11, 1599 officers,942 clerks and 90 sub staff

were given training under various aspects to update improve the

knowledge the officers of the bank are also accepted at banker training

college Mumbai, nation teal institute of bank management Pune institute

of development and research in banking technology, Hyderabad when

ever specialized training was toned necessary.


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Strategy:Strategy means action a company plans in response to or in anticipation of challenges in the

external environment. The Karnataka bank in order to respond to the changes has formed thefollowing action plan with specific reference to product, pricing and people

Action plans on product:

1. Introduction of internet banking.

2. expansion of bank on ATM network

3. introduction of debit cords

4. Retailing in securities.

Action plans on pricing:

Increasing emphasis on fee based, commission based activities collection of utility bills and other

fee based services like mutual fund distribution which the bank to be more competitive.

The bank plan to train employees on marketing of products like schematic loans, insurance,

money transfer etc.

The bank has decided to give incentives to employees for group performance.

The successful implementation of their strategies or action plans helps the bank to gaincompetitive advantage ver the other banks


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SWOT ANALYSIS

Highly educated workforce

The factors that have contributed to the success of the bank are itsworkforce because the bank has highly educated workforce. Young andEnergetic employees within the age group of 25-45 this helps the junioremployees to learn from the experience of the senior employees.

Advanced technology

The bank is professionally managed. The bank is one of the few banks inIndia which gives impotence to technology in order to serve its customersbetter it is one of the few banks which uses financial softwares.

1. The banks strengths lie in management capabilities, focused strategy,speedy decision making.

2. There has been expansion of branches and ATM services by the bankduring the last few years.

3. The banks provides good infrastructural facilities to its staff and help theirto concentrate more on their job.

4. The bank has introduced various schemes like western union moneytransfer.

STRENGTHS


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WEAKNESS

I. The weaknesses of the bank includes that the bank has

majority of the branches in the southern region.

II.Delay in follow up on various accounts.

III. KBL provided loans on lots of conditions:

Lengthy procedure of sanctioning of debts.


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OPPORTUNITIES

The bank is planning to enable money click as

payment gateway for shopping that covers vastareas of business like hotel booking ticket booking,

purchase of goods etc.

The bank is also planning to introduce mobile top-up through ATMs and internet banking besides

continuing value additions like SMS alerts to non-

money click customers utility bill payment and air

ticket booking through ATMs

. Farther bank is also planning to tie up for ensure

trading in shares. The bank is planning to increase

the number of its ATM to 325 by 31-3-2011.


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THREATS

As the bank majority business comes from the south any

effect to the economy here would have an adverse effect to

the performance of the bank.

Stiff competition:

The bank is relatively smaller when compared to other

banks like SBI and ICICI bank and some others. Since its

weights like SBI and corporation bank. The bank isalways under treat of being taken over by other banks.

Providing license for departments such as LIC and India

Post.


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Research Methodology STATEMENT OF THE PROBLEM:


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OBJECTIVES OF THE STUDY: To study the efficiency of Karnataka Bank Limited.

To know how the NPA level affect the financialperformance of Bank.

LIMITATIONS OF THE STUDY

The study is limited to the extent to the data given byKBL..

An in depth study cannot be done because of timeconstraint.

Based on the limited information it is not possible toarrive at proper conclusion


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RESEARCH DESIGN

SOURCES OF DATA COLLECTION:

Primary data:

Primary data was collected from the branch manager through discussions in branch ofKBL( B.H.ROAD)

Secondary data: Company website

Company report

Management report

Journals

Financial statements

It involves finding out best tool, process and procedure for getting financial information

required for the project work A study on financial performance of Karnataka Bank Limited.The type of research used for the collection & analysis of the data is Historical Research

Method.The main source of data for this study is the past records prepared by the bank.

The focus of the study is to determine the non-performing assets of the bank s & to identifythe ways in which the performance especially the non-performing assets of the KBL can be

improved


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ANALYSIS & INTERPRETATION OF DATA

The balance sheet and other relevant data, whichwas published in the 2006-2007,2007-2008,2008-2009,2009-2010 and 2010-2011 annual reports were

collected and studied. An attempt has been made toanalyze the data of KBL keeping in view of thelimitation. Guidance was taken from the officials of thebanks to analyze the financial performance i.e.

profitability, productivity, efficiency and to analyze howthe level of Non-Performing Assets affects theperformance of the bank.


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1. Capital Adequacy Ratio

Interpretation:

The graph shows that the Capital Adequacy Ratio has been fluctuatingover the past 5 years i.e. 11.03%.,12.17%,13.48%, 12.37% and 13.33% foryears 2006-07,2007-08,02008-09,2009-10 and 2010-11 respectively for 5years.

YEAR2006-

2007

2007-

2008

2008-

2009

2009-

2010

2010-

2011

% 11.03 12.17 13.48 12.37 13.33

0

2

4

6

8

10

12

14

16

Capital Adequacy Ratio

Capital AdequacyRatio


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2. Loans & Advances TO Total Asset:

Interpretation:The loans and Advances to Total assets has been 58.88% in 2006-07,

after that decreasing to 56.06% in 2007-08, 51.66% in 2008-09; 23.39% in 2009-10 and increase to 54.47% in 2010-11. This shows that bank is unsuccessful inbringing the level of Loans and advances to Total assets which becomes

nonperforming assets year by year which in turn would affect the profitability ofthe bank.

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Loans &

Advances

9552067 10841.97 11810.04 14435.68 17348.07

Total

Asset

16222.52 19339.8222857.81

27035.16 31693.01

% 58.88 56.06 51.66 53.39 54.47

48

50

52

54

56

58

60

2006-07 2007-08 2008-09 2009-10 2010-11

Loans & Advances To Total Assets

Loans & Advances To TotalAssets

=Loans & Advances/Total Asset*100

h


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3. Return on Net Worth:

Interpretation:

From the above it is clear that the return on Net worth is 14.23%for 2006-07, 17.52% for 2007-08, 17.01% for 2008-09, 9.11% for 2009-10and 8.42% for 2010-11. It can be analysed that the return on net worthincreased to a little extent and then in the 2009 financial year the returnon net worth has come down to a greater extent.

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Profit 177.03 241.74 266.70 167.12 204.61Net Worth 1238.62 1379.60 1567.02 1832.75 2429.09

% 14.29 17.52 17.01 9.11 8.42

=Profit/ Net Worth*100

0

0.5

1

1.5

2006-07 2007-08 2008-09 2009-10 2010-11

Return On Net Worth

Return On Total Assets


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4. Total Debt Ratio:

Interpretation:

The above table shows the Total Debt ratio of the bank which has0.89% in 2006-07 to 0.88% in 2007-08 and again same in 0.88% in 2008-09,then onwards increase to 0.89% and 0.89% in 2009-10 and 2010-11respectively.

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Total debt 14458.18 17158.39 20337.26 24072.29 28422.78

Total Asset 16222.52 19339.82 22857.81 27035.16 31693.01

% 0.89 0.88 0.88 0.89 0.89

=Total debt/ Total Asset*100

0.875

0.88

0.885

0.89

0.895

2006-07 2007-08 2008-09 2009-10 2010-11

Total Debt Ratio

Percantage


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5. Deposits per Employee:

Interpretation:

The Deposits per Employee has been at Rs.3.15 in 2006-07, afterthat increasing to Rs.3.63 in 2007-08, Rs.4.11 in 2008-09; Rs.4.52 in 2009-10and Rs 4.71 in 2010-11.

=Total Deposits/Total Employee

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Total Deposits 14037.44 17016.11 2033.28 23730.64 27336.44

Total Employee 4667 4677 4947 5244 5795

Rs 3.15 3.63 4.11 4.52 4.71

0

1

2

3

4

5

2006-07 2007-08 2008-09 2009-10 2010-11

Deposits Per Employee

Crores(Rs.)


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6. Deposit per Branch:

Interpretation:

The above graph shows that Deposit per Branch was at Rs 34.23and slightly increase to Rs.39.48 and then increasing at a higher rate over 3years i.e. Rs.45.48 in 2008-09, Rs.51.14 in 2009-10 and Rs.57.18 in 2010-11.

.

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Total Deposits 14037.44 17016.11 2033.28 23730.64 27336.44

No of Branch 410 431 447 464 478

Rs 34.23 39.48 45.48 51.14 57.18

=Total Deposits/No of Branch

0

20

40

60

80

2006-07 2007-08 2008-09 2009-10 2010-11

Deposit Per Branch

Crores(Rs.)


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7. Asset Utilization:

Interpretation:

The above graph shows that Assets Utilization was 8.81% in 2006-07, then increases to 9.29% in 2007-08, 9.93% in 2008-09, 8.70% in 2009-10and 8.40% in 2010-11.

.

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Total Income 1430.52 1797.89 2270.55 2354.68 2662.60

Total Asset 16222.52 19339.82 22857.81 27035.16 31693.01

% 8.81 9.29 9.93 8.70 8.40

= Total Income/ Total Asset*100

7.5

8

8.59

9.5

1010.5

2006-07 2007-08 2008-09 2009-10 2010-11

Asset Utilization

Percentage

8 E i P Sh


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8. Earning Per Share:

Interpretation:

From the above it shows thatthe Earning per Share are14.59% for 2006-07, 19.92% for 2007-08, 21.96% for 2008-09,13.50% for 2009-10 and 15.20% for 2010-11.

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Profit 177.03 241.74 266.70 167.12 204.61

No of Equity

Shares121262417 121343548 121444753 123779973 134345980

% 14.59 19.92 21.96 13.50 15.20

= Profits/No of Equity Shares*100

0

5

10

15

20

25

2006-07 2007-08 2008-09 2009-10 2010-11

Earning Per Share

Percentage


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9. Profit per Employee:

Interpretation:

The above graph shows that the Profit per Employee wasRs.3.97 lakhs in 2006-07, then increases to Rs.5.16 lakhs in 2007-08,Rs.5.39 lakhs in 2008-09, Rs.3.10 lakhs in 2009-10 and Rs.3.50 lakhs

in 2010-11.

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Profit(in crores) 177.03 241.74 266.70 167.12 204.61

No of

Employee4456 4677 4947 5244 5795

Rs in LAKHS 3.97 5.16 5.39 3.1 3.5

= Profits/No of Employee*100

0

2

4

6

2006-07 2007-08 2008-09 2009-10 2010-11

Profit per Employee

LAKHS


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10. Operating Profit Ratio:

Interpretation:

From the above it is clear thatthe Operating profit ratio is3.73% for 2006-07, 3.60% for 2007-08, 4.06% for 2008-09, 1.80% for2009-10 and 2.04% for 2010-11. It can be analysed that the operatingprofit ratio had decreased to a little extent and then in the nextfinancial year the profit percentage has come upward to a greater

extent, and come down in 2010 and 2011.

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Operating Profit 356.59 390.60 480.21 260.84 355.29

Net Sales(BUSINESS) 9552.067 10841.97 11810.04 14435.68 17348.07

% 3.73 3.60 4.06 1.80 2.04

=Operating Profit/Net Sales(BUSINESS) *100

0

1

2

3

4

5

2006-07 2007-08 2008-09 2009-10 2010-11

Operating Profit Ratio

Percentage


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11. Business per Employee:

Interpretation:

The graph shows that the Business Per employees has beenfluctuating over the past 5 years i.e. 2.42%., 2.31%, 2.38%, 2.75% and 2.99%for years 2006-07,2007-08,02008-09,2009-10 and 2010-11 respectively for 5years.

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Business 9552.067 10841.97 11810.04 14435.68 17348.07No of

Employee4456 4677 4947 5244 5795

% 2.42 2.31 2.38 2.75 2.99

=Business/No of Employee

0

1

2

3

4

2006-07 2007-08 2008-09 2009-10 2010-11

Crores(Rs.)


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12. Gross Profit Ratio:

Interpretation:

The Gross Profit ratio has been at 14.97% in 2006-07, after thatincreasing to 16.58% in 2007-08, 19.22% in 2008-09; 16.31% in 2009-10 and15.34% in 2010-11.

= Gross Profit/ Sales(Business)*100

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Gross Profit 1430.52 1797.89 2270.55 2354.68 2660.60

Business 9552.067 10841.97 11810.04 14435.68 17348.07

% 14.97 16.58 19.22 16.31 15.34

0

5

10

15

20

25

2006-07 2007-08 2008-09 2009-10 2010-11

Gross Profit Ratio

Gross Profit Ratio


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13. Borrowings To Total Working Fund:

Interpretation:

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Borrowings 420.73 142.19 3.97 691.64 1086.33

Working Fund(TA) 16222.52 19339.82 22857.81 27035.16 31693.01

% 2.60 0.73 0.017 2.55 3.42

= Borrowings/ Total Working Fund(TA OR TL)*100

0

12

3

4

2006-07 2007-08 2008-09 2009-10 2010-11

Borrowings To Total Working Fund

Borrowings To Total Working Fund


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14. Cash & Bank Balance to Total Working Fund:

Interpretation:

The above graph shows that the Cash and bank balance to total workingfund was 5.09% in 2006-07, then increases to 7.66% in 2007-08 and decreasingat a higher rate in the 3 years i.e. 5.97% in 2008-09, 6.44% in 2009-10 and 6.12%in 2010-11.

= Cash & Bank Balance/ Total Working Fund*100

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Cash & BankBalance 826.82 1480.20 1364.98 1743.09 1939.80

Working

Fund(TA)16222.52 19339.82 22857.81 27035.16 31693.01

% 5.09 7.66 5.97 6.44 6.12

0

5

10

2006-07 2007-08 2008-09 2009-10 2010-11

Cash & Bank Balance To Total Working Fund

Cash & Bank Balance To TotalWorking Fund


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15. Interest Earned To Total Income:

Interpretation:

The above graph shows that the Interest Earned to Total Income was87.81% in 2006-07, then decreases to 87.36% in 2007-08, 84.44% in 2008-09,86.78% in 2009-10 and Increase to89.04% in 2010-11.

= Interest Income/ Total Income*100

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Interest

Income 1256.25 1570.81 1917.40 2043.42 2370.85

Total

Income1430.52 1797.89 2270.55 2354.68 2662.61

% 87.81 87.36 84.44 86.78 89.04

82

84

86

88

90

2006-07 2007-08 2008-09 2009-10 2010-11

Interest Earned To Total Income

Interest Earned To Total Income


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16. Interest Expenses To Total Deposit:

Interpretation:

The above graph shows that the Interest Expenses to Total Deposit is 5.95% in2006-07 and slightly increase to 6.47% in 2007-08 and then increasing whencompared to the increase to 7.10% in 2008-09, 7.19% in 2009-10 and again

decrease 6.43% in 2010-11.

=Interest Expenses/Total Deposit*100

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

InterestExpenses

836.39 1101.71 1443.83 1707379 1758.36

Total Deposits 14037.44 17016.11 2033.28 23730.64 27336.44

% 5.95 6.47 7.10 7.19 6.43

0

2

4

6

8

2006-07 2007-08 2008-09 2009-10 2010-11

Interest Expenses To Total Deposit

Interest Expenses To Total Deposit


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17. Cash & Bank Balance to Total Deposit:

Interpretation:

The Cash And Bank Balance to Total Deposit has been 5.89% in 2006-07 then increases to 8.70% in 2007-08, from here afterwards it decreases to6.71%, 7.34% and 7.09%, 2008-09,2009-10, and 2010-11 respectively.

= Cash & Bank Balance/ Total Deposit*100

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Cash & Bank Balance

826.82 1480.20 1364.98 1743.09 1939.80

Total Deposits 14037.44 17016.11 2033.28 23730.64 27336.44

% 5.89 8.70 6.71 7.34 7.09

0

2

4

6

8

10

2006-07 2007-08 2008-09 2009-10 2010-11

Cash & Bank Balance To Total Deposit

Cash & Bank Balance To Total Deposit


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18. Interest Income to Total Loans & Advances:

Interpretation:

The above table shows the Interest Income to Total Loans AndAdvances which has been 13.15% in 2006-07, 14.48% in 2007-08 and againincreases to 16.23% in 2008-09, then onwards decreases to 14.15% and 13.66%

in 2009-10 and 2010-11 respectively.

= Interest Income/ Loans & Advances*100

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

InterestIncome 1256.25

1570.81

1917.40

2043.42

2370.85

Loans &

Advances

9552.067 10841.97 11810.04 14435.68 17348.07

% 13.15 14.48 16.23 14.15 13.66

0

5

10

15

20

2006-07 2007-08 2008-09 2009-10 2010-11

Interest Income To Total Loans & Advances

Interest Income To Total Loans &Advances


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19. Credit Deposit Ratio:

Interpretation:

The Credit Deposit ratio has been at 68.05% in 2006-07, after thatincreasing to 93.71% in 2007-08,and decreasing at a higher rate in the next 3years i.e. 58.08% in 2008-09; 60.83% in 2009-10 and 63.46% in 2010-11.

=Total Loans & Advances/ Total Deposits*100

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Loans &

Advances 9552.067 10841.97 11810.04 14435.68 17348.07

Total

Deposits14037.44 17016.11 2033.28 23730.64 27336.44

% 68.05 93.71 58.08 60.83 63.46

50

55

60

65

70

2006-07 2007-08 2008-09 2009-10 2010-11

Credit Deposit Ratio

Credit Deposit Ratio


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20. Total Assets to Sales:

Interpretation:

The above graph shows that the Total Assets to Sales was 1.69% in2006-07, then increases to 1.78% in 2007-08 andis increasing at a higher rate1.93% in 2008-09, 1.87% in 2009-10 and 1.82% in 2010-11.

= Total Assets/ Sales (BUSINESS)

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Total Asset 16222.52 19339.82

22857.81

27035.16 31693.01

Loans &

Advances

9552.067 10841.97 11810.04 14435.68 17348.07

% 1.69 1.78 1.93 1.87 1.82

1.4

1.6

1.8

2

2006-07 2007-08 2008-09 2009-10 2010-11

Total Assets To Sales

Total Assets To Sales


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21. Return on Total Assets:

Interpretation:

The above graph shows that Return on Total Assets is1.09% for 2006-07, 1.24% for 2007-08, 1.16% in 2008-09, 0.64% in 2009-10 and 0.64% for 2010-11.

=NET PROFITS/ Total Assets*100

YEAR 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Profit 177.03 241.74 266.70 167.12 204.61Total Asset 16222.52 19339.82

22857.8127035.16 31693.01

% 1.09 1.24 1.16 0.64 0.64

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2006-07 2007-08 2008-09 2009-10 2010-11




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Findings:

As the number of branches has increases, the assets of the bank have

also increased. Credit deposit ratio is increasing comparatively.

Capital Adequacy ratio is been well maintained above 9% as per RBIrules.

Return on Net worth of the bank has come down from 14.2 (2006-07) to

8.4 (2010-2011). Total debt ratio has been consistently maintained well at the rate of 0.89.

Deposits per branch have been increasing proportionately.

Asset utilization has come down from 8.8 (2006-07) to 8.40 (2010-2011).

Earnings per share have increased compared to the previous year.

Even thought the total profits are fluctuating, the others incomes areconsistently increasing.

i & d i


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Suggestions & Recommendations

The bank should maintain the other incomes as thereare many technological changes happening likeinternet banking, Anywhere Anytime Anyhow, mobile

banking. The bank should increase its efficiency in using its

assets in order to increase the asset utilization ratio.

The bank must increase its profits in order to increase

the Returns on net worth.


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Conclusion


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Study on Management of NPA in KBL

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