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 4.1.2 4.1.3 4.2.1 4.2.2 4.2.3 4.2.4 4.3.1 4.3.2 4.3.3 4.3.4 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10
ANOVA for Public and Private sector banks Coefficient for Public and Private sector banks Model summary for Public and Private sector banks Descriptive statistics for public sector banks ANOVA for Public sector banks Coefficient for public sector banks Model summary for Public sector banks Descriptive statistics for Private sector banks ANOVA for Private sector banks Coefficient for Private sector banks Model summary for Private sector banks Public sector bank (2013) Private sector bank(2013) Public sector bank (2012) Private sector bank(2012) Public sector bank (2011) Private sector bank(2011) Public sector bank (2010) Private sector bank(2010) Public sector bank (2009) Private sector bank(2009)
37 37 38 39 39 40 40 41 41 41 42 51 52 54 55 57 58 60 61 63 64
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 3
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. 4
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. 5
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. 7
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. 9
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 11
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 nonagricultural 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 17
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 18
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.
High credit growth
Banks with proper credit appraisal recovery process and management control
Low levels of NPA s
Banks with proper appraisal and loose management control
High levels of NPAs
Inability to grow
Inherent strength to grow further
May stagnate unless restructured
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 22
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 26
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)
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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_NonPerforming_Assets_on_Selected_Public_and_Private_Sector_Banks http://www.abhinavjournal.com/images/Management_&_Technology/Dec13/10.pdf http://www.slideshare.net/domariyaganj/nonperformingassetsofbanks
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Chapter 3 Research Methodology
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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”.
30
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.
31
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 IV
DV
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.
32
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
33
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 design
Exploratory
Descriptive
Causal
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. 34
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.
35
Chapter 4 Data Analysis
36
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 Regression Residual Total Note:*P < 0.05
Sum squares 1296.541 22030.075 23326.616
Df 1 388 389
Mean square 1296.541 56.779
F 22.835
Sig 0.000a
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
Model
1(constant) NPA
un standardize coefficient B 5.249 -0.276
Un standardize Coefficient Std. error 0.774 0.058
t
Sig.
6.781 0.000 -4.779 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 Return on equity of banks.
37
Table 4.1.3 Model Summary For NPA Model
R
1 0.236a Note:*P < 0.05
R Adjusted Std.Error Change Statistics Square R of the R F Df Df2 Square Estimate Square Change 1 Change 0.056 0.053 7.53515 0.056 22.835 1 388
Sig. F change 0.000
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.
38
4.2 Public sector bank H0: There is no significant relationship between Non- performing assets and return on equity of Public sector bank. H1: There is a significant relationship between Non- performing assets and return on equity of Public sector bank
Table 4.2.1 Descriptive Statistics
Variable
Mean
Std.
N
Deviation NPA
1.1514
0.73002
140
ROE
15.4703 5.29179
140
There is no any analysis from the descriptive statistics so further study is require.
Table no 4.2.2 ANOVA Result For NPA Model
Sum squares
Df
Mean square
F
Sig
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.
39
Table no 4.2.3 Coefficient For NPA Model
un
Un standardize
standardize
Coefficient
T
Sig.
coefficient B
Std. error
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
Model R
R
Adjusted Std.Error
Change Statistics
Square
R
of the
R
F
Square
Estimate
Square
Change 1
Df
Df2
Sig. F change
Change 1
0.381a
0.145
0.149
0.67741
0.145
23.431
1
138
0.000
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.
40
4.3 Private sector bank H0: There is no significant relationship between Non- performing assets and return on equity of private sector bank. H1: There is a significant relationship between Non- performing assets and return on equity of private sector bank. Table 4.3.1 Descriptive statistics
Variable
Mean
NPA ROE
2.5234 9.5527
Std. Deviation 9.62836 6.34682
N 250 250
Table 4.3.2 ANOVA Result For NPA Model Sum squares Regression 1417.475 Residual 21666.137 Total 23083.612 Note:*P < 0.05
Df 1 248 249
Mean square 1417.475 87.363
F 16.225
Sig 0.000
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
1(constant) NPA Note:*P < 0.05
un standardize coefficient B 6.115 -376
Un standardize Coefficient Std. error 1.070 0.093
T
Sig.
5.716 0.000 -4.028 0.000
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.
41
Table 4.3.4 Model Summary For NPA
Model R
R
Adjusted Std.Error
Change Statistics
Square
R
of the
R
F
Square
Estimate
Square
Change
Df1
Df2
Sig. F change
Change 1
248a
0.061
0.058
9.34684
0.061
16.225
1
248
0.000
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.
42
Chapter 5 Findings And Suggestions
43
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 postdisbursement 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.
44
Chapter 6 Conclusion
45
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.
46
Chapter 7 Bibliography
47
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<20/2/2014, 2:57> <4/03/2014, 3:27>
Performing_Assets_on_Selected_Public_and_Private_Sector_Banks > <15/4/2014, 4:00>
<20/4/2014, 10:38> <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
48
Chapter 8 Annexure
49
Table 8.1:Public sector bank No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Name Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maha Canara Bank Central Bank Corporation Bank Dena Bank E X I M Bank IOB IDBI Bank Indian Bank NABARD Oriental Bank Pun. & Sind Bank Punjab Natl.Bank SBT St Bk of Bikaner St Bk of Hyderab St Bk of India St Bk of Mysore St Bk of Patiala Syndicate Bank UCO Bank Union Bank (I) United Bank (I) Vijaya Bank
NPA EPS RS. book value 2013 2013 2013 ROE 2013 3.19 22.68 209.92 10.80411585 2.45 22.19 150.85 14.7099768 1.28 102.47 756.64 13.54276803 2.06 41.4 381.07 10.8641457 0.52 10.21 70.88 14.40462754 2.18 62.62 515.68 12.14318957 2.9 7.61 113.23 6.720833701 1.19 90.9 625.58 14.53051568 1.39 22.35 140.24 15.9369652 0 2.43 24.52 9.910277325 2.5 5.81 133.2 4.361861862 1.58 13.58 146.11 9.294367258 2.26 34.68 242.89 14.27806826 0.01 4.52 101.38 4.458473072 2.27 43.95 414.69 10.59827823 2.16 12.14 145.56 8.340203353 2.35 129.73 884.04 14.67467535 1.46 119.76 873 13.71821306 2.27 101.71 680.59 14.94438649 1.61 6,025.16 36779.13 16.38200795 2.1 200.71 1445.6 13.88420033 2.69 87.04 804.44 10.81994928 1.62 223.33 1812.36 12.32260699 0.76 32.16 158.91 20.23787049 3.17 7.56 97.19 7.778578043 1.61 34.61 262.9 13.16470141 2.87 7.98 119.08 6.701377225 1.3 8.98 82.66 10.86377934
50
Table 8.2: Privet sector bank
No 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64
Name AB Bank Abu Dhabi Comm. Akola Janat. Com Amer. Exp. Bank Antwerp Diamond Axis Bank Bank of Bah &Kuw Barclays Bank BNP Paribas Catholic Bank Citibank N. A. City Union Bank Cosmos Cp Bank Credit Agricole DBS Bank DCB Bank Deutsche Bank Dhanlaxmi Bank Federal Bank Greater Bombay HDFC Bank Hongkong & Shang ICICI Bank IndusInd Bank ING Vysya Bank J & K Bank J P Morgan Chase Kapol Co-op Bank Karnataka Bank Karur Vysya Bank Kokan Merchanti Kotak Mah. Bank Lak. Vilas Bank Mahanagar Co-op Maratha Sahakari Mogaveera Co-op
NPA% EPS book value 2013 Rs.2013 2013 ROE 2013 8.98 2.16 20.3 10.64039409 0 0.84 15.09 5.566600398 0 26.76 425.96 6.282280026 1.87 0 7.38 0 0 0.89 14.36 6.197771588 0.36 107.59 707.51 15.2068522 3.16 0.86 14.23 6.043569923 1.74 0 9.24 0 0 1.75 20.59 8.499271491 1.12 7.54 150.56 5.007970244 1.47 7.26 45.28 16.0335689 0.63 6.62 34.58 19.14401388 4.67 30.82 500.38 6.159318918 0 1.58 17.98 8.787541713 2.37 1.98 20.07 9.865470852 0.75 4.08 37.83 10.7850912 0.13 2.52 19.29 13.06376361 3.36 0.31 85.81 0.361263256 0.98 47.47 371.77 12.76864728 2.55 9.15 97.51 9.383652959 0.2 27.33 152.2 17.95663601 0.33 4.3 32.1 13.39563863 0.77 69.63 578.18 12.0429624 0.31 19.78 141.66 13.96301002 0.03 38.69 292.1 13.24546388 0.14 209.1 1003.24 20.8424704 0 2.16 18.51 11.66936791 4.47 1.83 36.42 5.024711697 1.51 17.8 151.69 11.73445843 0.37 48.97 287.85 17.01233281 2.83 6.52 177.16 3.680289004 0.64 18.13 126.53 14.32861772 2.43 8.88 96.02 9.248073318 0.72 3.71 72.2 5.138504155 14.18 4.1 236.48 1.73376184 4.74 15.88 399.42 3.975764859 51
65 66 67 68 69 70 71 72 73 74 75 76 77 78
Mumbai Dist.Bank Oversea-Ch. Bank Pun. & Mah. Bank Ratnakar Bank Royal Bank Sh.Arihant Co-op Shamrao Vithal South Ind.Bank South Ind.Co-op St Bk of Mauriti Stand.Chart.Bank Stand.Chart.PLC T N Merc. Bank Yes Bank
4.77 100 0.16 0.11 0.29 0 0.74 0.78 51.7 2.18 1.63 1.63 0.66 0.01
297.04 0 11.33 3.55 13.17 7.61 25.21 3.64 0 0.29 10.86 10.86 15,603.21 35.3
9218.44 9.78 107.22 63.48 167.55 122.5 195.33 21.41 20.44 11.37 66.56 66.56 72216.79 161.94
3.222237168 0 10.56705838 5.592312539 7.860340197 6.212244898 12.90636359 17.00140121 0 2.55057168 16.31610577 16.31610577 21.60606972 21.79819686
52
Table 8.3: Public sector bank No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Name Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maha Canara Bank Central Bank Corporation Bank Dena Bank E X I M Bank IOB IDBI Bank Indian Bank NABARD Oriental Bank Pun. & Sind Bank Punjab Natl.Bank SBT St Bk of Bikaner St Bk of Hyderab St Bk of India St Bk of Mysore St Bk of Patiala Syndicate Bank UCO Bank Union Bank (I) United Bank (I) Vijaya Bank
Book value NPA 2012 EPS 2012 2012 0.98 36.36 192.92 0.91 23.14 133.66 0.54 118.72 666.3 1.47 45.49 343.35 0.84 5.85 63.77 1.46 72.3 465.57 3.09 4.89 221.41 0.87 98.34 558.69 1.01 22.46 122.59 0 2.94 26.98 1.35 12.45 135.34 1.61 15.42 137.46 1.33 38.35 214.94 0.02 5.45 124.73 2.21 37.85 379.94 1.19 18.01 141.73 1.52 140.43 777.34 1.54 99.17 773.23 1.92 90.79 594.98 1.3 6,178.84 31314.07 1.82 170.05 1251.06 1.93 77.26 729.21 1.35 267.33 1622.04 0.96 21.2 133.5 1.96 15.84 94.72 1.7 30.94 235.91 1.72 14.69 114.65 1.72 8.65 76.17
ROE 2012 18.84719 17.31258 17.8178 13.24887 9.173593 15.52935 2.208572 17.60189 18.32123 10.89696 9.199054 11.21781 17.84219 4.369438 9.962099 12.70726 18.06545 12.82542 15.25934 19.73183 13.59247 10.59503 16.4811 15.88015 16.72297 13.11517 12.81291 11.35618
53
Table 8.4:Privet sector bank No 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67
Name AB Bank Abu Dhabi Comm. Akola Janat. Com Amer. Exp. Bank Antwerp Diamond Axis Bank Bank of Bah &Kuw Barclays Bank BNP Paribas Catholic Bank Citibank N. A. City Union Bank Cosmos Cp Bank Credit Agricole DBS Bank DCB Bank Deutsche Bank Dhanlaxmi Bank Federal Bank Greater Bombay HDFC Bank Hongkong & Shang ICICI Bank IndusInd Bank ING Vysya Bank J & K Bank J P Morgan Chase Kapol Co-op Bank Karnataka Bank Karur Vysya Bank Kokan Merchanti Kotak Mah. Bank Lak. Vilas Bank Mahanagar Co-op Maratha Sahakari Mogaveera Co-op Mumbai Dist.Bank Oversea-Ch. Bank Pun. & Mah. Bank
2012 EPS 2012 Book value 2012 0 2.21 18.14 0 0.75 14.25 0 22.33 419.56 1.19 0.06 7.99 1.96 0.86 13.47 0.27 100.03 552 2.49 1.02 13.37 1.45 0 9.34 0.07 0.76 18.84 1.1 8 167.68 0.9 5.13 41.75 0.44 6.7 30.45 4.79 39.03 625.52 0 2.77 17.76 0.6 2.3 18.09 0.57 2.29 33.39 0.09 2.27 17.62 0.66 0 85.54 0.53 43.95 333.29 0.84 10.73 91.77 0.18 21.32 127.52 0.62 4.42 31.7 0.73 54.17 523.98 0.27 16.8 96.46 0.18 29.67 258.11 0.15 160.22 844.13 0 1.6 16.35 1.25 5.18 34.86 2.11 12.5 137.99 0.33 44.54 252.68 4.24 2.66 168.71 0.61 14.55 107.28 1.74 10.41 90.14 0.05 3.6 75.36 13.55 4.2 208.86 3.82 23.84 694.66 0.98 290.48 10944.17 100 0 9.81 0.47 9.13 113.87
12.18302 5.263158 5.322242 0.750939 6.384558 18.12138 7.62902 0 4.03397 4.770992 12.28743 22.00328 6.239609 15.59685 12.71421 6.858341 12.88309 0 13.18671 11.69227 16.71895 13.94322 10.33818 17.41655 11.4951 18.98049 9.785933 14.85944 9.058627 17.62704 1.57667 13.56264 11.5487 4.77707 2.010916 3.431895 2.654199 0 8.017915 54
68 69 70 71 72 73 74 75 76 77 78
Ratnakar Bank Royal Bank Sh.Arihant Co-op Shamrao Vithal South Ind.Bank South Ind.Co-op St Bk of Mauriti Stand.Chart.Bank Stand.Chart.PLC T N Merc. Bank Yes Bank
0.2 3.01 0.74 28.39 0 6.18 0 22.81 0.28 3.45 4.33 3.44 0 0 0.7 25.68 0.7 25.68 0.45 10,951.07 0.05 27.03
53.13 174.07 129.84 176.2 17.84 80.33 12.48 193.52 193.52 58387.14 132.49
5.665349 16.30953 4.759704 12.94552 19.33857 4.282335 0 13.26995 13.26995 18.75596 20.40154
55
Table 8.5:Public sector bank No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Name Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maha Canara Bank Central Bank Corporation Bank Dena Bank E X I M Bank IOB IDBI Bank Indian Bank NABARD Oriental Bank Pun. & Sind Bank Punjab Natl.Bank SBT St Bk of Bikaner St Bk of Hyderab St Bk of India St Bk of Mysore St Bk of Patiala Syndicate Bank UCO Bank Union Bank (I) United Bank (I) Vijaya Bank
NPA 2011 0.79 0.38 0.35 0.91 1.32 1.1 0.65 0.46 1.22 0.2 1.19 1.06 0.53 0.02 0.98 0.56 0.85 0.98 0.83 0.87 1.63 1.38 1.21 0.97 1.84 1.19 1.42 1.52
Book value EPS 2011 2011 2011 28.21 160.5 17.576324 21.75 116.02 18.7467678 105.3 535.72 19.6557903 44.36 291.86 15.199068 5.81 61.02 9.52146837 89.07 405 21.9925926 27.13 231.2 11.7344291 92.16 481.86 19.1258872 17.98 103.76 17.3284503 2.92 27.08 10.7828656 16.52 131.96 12.5189451 16.2 128.69 12.5883907 37.62 184.44 20.396877 6.4 180.4 3.54767184 49.82 349.97 14.2355059 22.55 127.74 17.6530452 136.37 632.49 21.5608152 142.6 692.71 20.5858151 106.76 570.16 18.7245685 5,543.47 25615.23 21.6413048 126.27 1023.4 12.3382842 105.35 662.28 15.9071692 218.53 1389.4 15.728372 17.68 116.12 15.2256287 13.68 82 16.6829268 38.3 211.31 18.1250296 12.88 103.46 12.4492558 8.67 70.31 12.3311051
56
Table 8.6:Privet sector bank
No 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Name AB Bank Abu Dhabi Comm. Akola Janat. Com Amer. Exp. Bank Antwerp Diamond Axis Bank Bank of Bah &Kuw Barclays Bank BNP Paribas Catholic Bank Citibank N. A. City Union Bank Cosmos Cp Bank Credit Agricole DBS Bank DCB Bank Deutsche Bank Dhanlaxmi Bank Federal Bank Greater Bombay HDFC Bank Hongkong & Shang ICICI Bank IndusInd Bank ING Vysya Bank J & K Bank J P Morgan Chase Kapol Co-op Bank Karnataka Bank Karur Vysya Bank Kokan Merchanti Kotak Mah. Bank Lak. Vilas Bank Mahanagar Co-op Maratha Sahakari Mogaveera Co-op Mumbai Dist.Bank
2011 EPS 2011 0 1.44 2.89 1.3 1.55 17.36 1.5 0.42 3.04 0 0.29 80.21 0.52 2.45 1.46 0.19 0 1.76 1.74 3.72 1.21 3.81 0.52 5.17 1.54 91.76 0 0.42 0.331 1.34 0.96 1.07 0.23 1.74 0.3 2.98 0.6 32.94 1.02 7.77 0.19 81.72 0.91 3.4 1.11 42.97 0.28 12.07 0.39 25.85 0.2 122.55 0 1.98 0 0.67 1.62 10.4 0.07 41.77 0 6.89 0.72 11.04 0.9 9.95 1.12 3.72 8.11 4.84 5.94 15.37 1.52 262.48
Book value 2011 ROE 2011 15.93 9.03954802 21.99 5.91177808 552.33 3.14304854 7.64 5.4973822 12.61 0 462.77 17.3325842 18.16 13.4911894 9.69 1.96078431 18.07 9.73990039 161.26 2.30683368 39 9.76923077 24.85 20.804829 1302.48 7.0450218 12.12 3.46534653 18.89 7.09370037 28.1 3.80782918 15.35 11.3355049 99.21 3.00372946 298.34 11.0410941 100.09 7.76301329 545.46 14.9818502 28.89 11.7687781 478.29 8.98408915 81.92 14.7338867 208.13 12.420122 717.4 17.0825202 16.03 12.3518403 40.3 1.66253102 129.07 8.05764314 223.78 18.6656538 167.54 4.11245076 92.23 11.9700748 83.23 11.954824 88.42 4.20719294 246.22 1.96572171 1304.25 1.17845505 1106.81 23.7150008 57
66 67 68 69 70 71 72 73 74 75 76 77 78
Oversea-Ch. Bank Pun. & Mah. Bank Ratnakar Bank Royal Bank Sh.Arihant Co-op Shamrao Vithal South Ind.Bank South Ind.Co-op St Bk of Mauriti Stand.Chart.Bank Stand.Chart.PLC T N Merc. Bank Yes Bank
0 0 0.36 1.65 1.13 0 0.29 0 0 0.27 0.27 0.27 0.03
0.11 10.58 0.54 10.73 6.08 18.22 2.51 5.6 0.61 30.47 30.47 8,796.07 20.5
10.23 139.9 50.42 145.68 142.56 159.09 14.99 81.3 17.08 175.23 175.23 48786.07 109.29
1.07526882 7.56254467 1.07100357 7.36545854 4.26487093 11.4526369 16.7444963 6.88806888 3.57142857 17.388575 17.388575 18.0298803 18.7574343
58
Table 8.7:Public sector bank
No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Name Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maha Canara Bank Central Bank Corporation Bank Dena Bank E X I M Bank IOB IDBI Bank Indian Bank NABARD Oriental Bank Pun. & Sind Bank Punjab Natl.Bank SBT St Bk of Bikaner St Bk of Hyderab St Bk of India St Bk of Mysore St Bk of Patiala Syndicate Bank UCO Bank Union Bank (I) United Bank (I) Vijaya Bank
Book NPA value 2010 EPS 2010 2010 0.66 26.07 131.73 0.17 20.73 90.93 0.34 81.18 413.27 1.31 33.88 243.41 1.64 9.87 55.84 1.06 71.99 305.83 0.69 24.27 107.96 0.31 78.78 402.6 1.21 17.49 83.43 0.2 3.02 24.54 2.52 12.38 116.54 1.02 13.79 113.48 0.23 34 152.66 0.02 7.79 181.25 0.87 43.74 292.19 0.36 26.98 105.4 0.53 126.17 514.78 0.91 134.13 568.12 0.78 88.58 483.48 0.55 3,883.28 20551.81 1.72 140.65 1038.77 1.02 122.16 575.94 1.04 183.78 1271.28 1.07 15.08 100.06 1.17 18.03 65.74 0.81 40.14 174.37 1.84 9.29 91.69 1.4 10.47 61.44
ROE 2010 19.79048053 22.79775652 19.64333245 13.91890226 17.67550143 23.53922114 22.48054835 19.56780924 20.96368213 12.30643847 10.62296207 12.15192104 22.27171492 4.297931034 14.96971149 25.59772296 24.5094992 23.60944871 18.32133697 18.89507542 13.54005218 21.21054276 14.45629602 15.07095743 27.42622452 23.02001491 10.13196641 17.04101563
59
Table 8.8 Private sector bank
No 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Name AB Bank Abu Dhabi Comm. Akola Janat. Com Amer. Exp. Bank Antwerp Diamond Axis Bank Bank of Bah &Kuw Barclays Bank BNP Paribas Catholic Bank Citibank N. A. City Union Bank Cosmos Cp Bank Credit Agricole DBS Bank DCB Bank Deutsche Bank Dhanlaxmi Bank Federal Bank Greater Bombay HDFC Bank Hongkong & Shang ICICI Bank IndusInd Bank ING Vysya Bank J & K Bank J P Morgan Chase Kapol Co-op Bank Karnataka Bank Karur Vysya Bank Kokan Merchanti Kotak Mah. Bank Lak. Vilas Bank Mahanagar Co-op Maratha Sahakari Mogaveera Co-op Mumbai Dist.Bank
2010 EPS 2010 7.68 1.28 0.19 1.2 4.85 5.43 0 0 14.32 0 0.4 60.06 1.95 0.41 5.15 0 0 1.69 1.58 0.87 2.14 2.3 0.58 3.7 1.78 60.24 6.18 0.7 1 2.84 3.11 0 0.79 1.23 0.84 3.55 0.48 26.33 1.69 11.8 0.31 62.43 2.31 1.8 2.12 34.63 0.5 8.23 1.2 19.76 0.28 101.93 2.88 0.06 0 2.07 1.31 11.79 0.23 59.69 0 9.08 1.73 16.18 4.11 3.05 4.53 2.08 8.91 4.91 0 0.38 0 261.68
Book value 2010 14.49 20.69 567.12 5.95 13.91 395.99 17.16 9.5 16.32 184.72 35.19 20.66 1383.69 12.7 17.55 27.02 13.62 68.63 273.9 135.53 470.13 25.5 462.99 52.68 185.04 620.84 15 50.92 136.78 257.57 168.08 128.83 75.79 101.87 336.72 1264.72 11132.2
ROE 2010 8.833678399 5.799903335 0.957469319 0 0 15.16704967 2.389277389 0 10.35539216 0.47098311 6.535947712 17.9090029 4.353576307 5.511811024 16.18233618 0 9.030837004 5.172665015 9.612997444 8.706559433 13.27930572 7.058823529 7.479643189 15.62262718 10.67877216 16.41807873 0.4 4.065200314 8.61968124 23.17428272 5.402189434 12.55918652 4.024277609 2.041818003 1.458184842 0.030046176 2.35065845 60
66 67 68 69 70 71 72 73 74 75 76 77 78
Oversea-Ch. Bank Pun. & Mah. Bank Ratnakar Bank Royal Bank Sh.Arihant Co-op Shamrao Vithal South Ind.Bank South Ind.Co-op St Bk of Mauriti Stand.Chart.Bank Stand.Chart.PLC T N Merc. Bank Yes Bank
0 0 0.97 1.95 0.24 0 2.39 0 4.32 1.4 1.4 0.24 0.06
0 17.59 1.73 0 11.06 14.91 20.02 5.7 0.95 34.47 34.47 6,463.57 23.81
10.12 148.85 33.59 134.95 154.09 161.85 129.78 79.21 16.46 153.5 153.5 41006.07 90.96
0 11.8172657 5.150342364 0 7.177623467 9.21223355 15.42610572 7.196061103 5.771567436 22.45602606 22.45602606 15.76247126 26.17634125
61
Table 8.9 :Public sector bank
No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Name Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maha Canara Bank Central Bank Corporation Bank Dena Bank E X I M Bank IOB IDBI Bank Indian Bank NABARD Oriental Bank Pun. & Sind Bank Punjab Natl.Bank SBT St Bk of Bikaner St Bk of Hyderab St Bk of India St Bk of Mysore St Bk of Patiala Syndicate Bank UCO Bank Union Bank (I) United Bank (I) Vijaya Bank
NPA EPS 2009 2009 0.72 16.78 0.18 12.7 0.31 59.44 0.44 57.16 0.79 8.46 1.09 49.19 1.24 11.83 0.29 60.12 1.09 14.53 0.23 3.41 1.33 23.57 0.92 11.42 0.18 27.11 0.03 6.95 0.65 34.3 0.32 23.56 0.17 94.63 0.58 119.36 0.85 78.65 0.38 3,488.35 1.79 139.76 0.5 91.89 0.6 187.83 0.77 17.08 1.18 9.97 0.34 33.33 1.48 1.21 0.82 5.88
Book value 2009 111.45 75.2 352.36 224.08 47.97 244.87 86.26 341.36 67.95 28.46 109.06 102.69 127.52 172.37 257.54 77.41 416.74 449.98 409.29 18599.01 912.73 464.2 1140.56 88.03 50.88 139.66 15.39 53.47
ROE 2009 15.056079 16.8882979 16.8691111 25.5087469 17.6360225 20.0882101 13.714352 17.6119053 21.3833701 11.9817287 21.6119567 11.1208492 21.2594103 4.03202413 13.3183195 30.4353443 22.7072035 26.5256234 19.2162037 18.7555682 15.3123048 19.7953468 16.4682261 19.4024764 19.5951258 23.865101 7.86224821 10.9968206
62
Table 8.10:Privet sector bank
No 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63
Name AB Bank Abu Dhabi Comm. Akola Janat. Com Amer. Exp. Bank Antwerp Diamond Axis Bank Bank of Bah &Kuw Barclays Bank BNP Paribas Catholic Bank Citibank N. A. City Union Bank Cosmos Cp Bank Credit Agricole DBS Bank DCB Bank Deutsche Bank Dhanlaxmi Bank Federal Bank Greater Bombay HDFC Bank Hongkong & Shang ICICI Bank IndusInd Bank ING Vysya Bank J & K Bank J P Morgan Chase Kapol Co-op Bank Karnataka Bank Karur Vysya Bank Kokan Merchanti Kotak Mah. Bank Lak. Vilas Bank Mahanagar Co-op Maratha Sahakari
Book EPS value 2009 2009 2009 ROE 2009 6.67 1.03 13.22 7.79122542 0 2.59 19.49 13.2888661 0 45.64 577.48 7.90330401 0.77 3.5 30.02 11.6588941 0 0.58 11.01 5.26793824 0.4 48.85 284.53 17.1686641 1.51 3.29 12.32 26.7045455 4.59 0.06 10.62 0.56497175 0.86 1.59 14.03 11.3328582 2.39 19.7 184.05 10.7036131 2.63 8.35 42.95 19.4412107 1.08 3.69 20.65 17.8692494 2.08 104.11 1270.23 8.19615345 0 2.22 13 17.0769231 0.55 2.72 14.71 18.4908226 3.88 0 30.89 0 0.88 1.18 13.11 9.00076278 0.88 8.79 66.2 13.2779456 0.2 28.41 252.57 11.2483668 2.01 13.51 164.43 8.21626224 0.63 51.08 344.31 14.835468 1.42 2.87 23.7 12.1097046 2.09 32.4 444.92 7.28220804 1.14 3.96 40.23 9.84340045 1.2 18.06 154.94 11.656125 1.38 81.65 540.99 15.0927004 1.27 2.9 16.41 17.6721511 0 2.7 58.98 4.57782299 0.98 20.92 128.89 16.2308946 0.25 41.68 250.26 16.6546791 0.78 6.81 160.16 4.251998 2.39 7.93 110.33 7.18752832 1.24 9.89 93.01 10.6332652 4.38 4.79 111.45 4.29789143 13.03 4.49 312.64 1.4361566 63
64 65 66 67 68 69 70 71 72 73 74 75 76 77 78
Mogaveera Co-op Mumbai Dist.Bank Oversea-Ch. Bank Pun. & Mah. Bank Ratnakar Bank Royal Bank Sh.Arihant Co-op Shamrao Vithal South Ind.Bank South Ind.Co-op St Bk of Mauriti Stand.Chart.Bank Stand.Chart.PLC T N Merc. Bank Yes Bank
13.25 6.85 0 1.33 0.68 2.2 1.9 2.21 1.13 0 0 1.37 1.37 0.34 0.36
0 1276.81 0 73.26 11741.39 0.62394657 0.63 10.16 6.2007874 21.08 160.04 13.1717071 2.74 32.59 8.40748696 1.15 141.15 0.8147361 8.46 161 5.25465839 11.51 172.3 6.68020894 16.72 113.76 14.697609 4.92 74.77 6.58017922 0.66 15.15 4.35643564 28.22 133.82 21.0880287 28.22 133.82 21.0880287 5,261.07 35304.29 14.90207 10.23 54.69 18.7054306
64
