A Study of Non Performing Assets in Indian Public Sector Banks

 

Davinder Kaur

Assistant Professor, Punjabi University Constituent College, Ghudda (Bathinda)

 

ABSTRACT:

 

 

INTRODUCTION:

Non-performing assets are the assets on which repayments or interest payments are not being made on time. A loan is an asset for bank as interest on it is a source of income.  Banks usually treat assets as non-performing if they are not serviced for some time. This time period is usually 90 days.  A high level of NPAs is a sign of problems.  Profitability and earning of banks are affected due to NPAs.  With effect from 31^stmarch 2004, NPA is a loan or advance where:

·        Interest and/or instalment of principle amount remains due for a period of more than 91 days in respect of a term loan.

·        The account remain ‘out of order’ for more than 90 days in respect of cash credit or overdraft.

·        The bills remained overdue for more than 90 days in case of bills purchased or discounted.

·        Interest and/or instalment remain overdue for two harvest seasons in case of agriculture loans.

 

 

 

 

 

LITERATURE REVIEW:

Many published articles are available in the area of Non-performing assets of Indian banking sector. Some of which are A comparative study of NPA of old private sector banks and foreign banks by Kumar (2013), A study of management of Non-performing assets in priority sector by Selvarajan and Vidivalagan (2013), Recovery of NPA in Indian public sector banks by singh (2013) and A study of non-performing assets and its recovery in India by Vivek Rajbhadur Singh (2016). None of the past studies shows the movement of Non-performing assets in Indian banking sector.

 

OBJECTIVES OF STUDY:

Objectives of present study are:

1.    To study the movement of Non-performing assets in Indian public sector banks.

2.    To suggest solutions to overcome this problem

 

METHODOLOGY:

For the purpose of this study, secondary data has been collected from data warehouse of Reserve bank of India.  The sample size of 10 public sector commercial banks have been selected for the study and time period of 5 years i.e. from 2013 to 2017 have been taken.

 

Movement of NPA in Indian commercial banks from the year 2013 to 2017                                       Amount in millions

BANK NAME	Gross NPAs					Net NPAs
	PREVI-OUS YEAR	ADDITION DURING THE YEAR	REDUCTION DURING THE YEAR	WRITTEN OFF DURING THE YEAR	END OF THE YEAR	PREVIOUS YEAR	END OF THE YEAR
2017
State Bank and its Associates	1219686	1115775	278967	278388	1778106	688944	969322
Oriental Bank of Commerce	147018	122223	17565	23083	228593	99322	141178
Punjab and Sind Bank	42291	29001	3409	4906	62976	29495	43751
Punjab National Bank	558183	224146	136573	92051	553705	354226	327021
Central Bank of India	227210	104870	35610	23960	272510	132420	142180
Canara Bank	316378	116521	35431	55448	342020	208329	216490
Syndicate Bank	138322	21380	30901	12707	176093	90149	104110
UCO Bank	209077	99252	63580	19339	225410	114436	107034
Union Bank of India	241709	132439	24388	12637	337123	140259	188321
Indian Bank	88270	33307	10671	12254	98651	54194	56066
2016
State Bank and its Associates	735085	907772	220033	203138	1219686	372777	688944
Oriental Bank of Commerce	76662	103714	16683	16677	147017	48162	99322
Punjab and Sind Bank	30822	19599	4777	3354	42291	22660	29495
Punjab National Bank	256949	422518	56435	64848	558183	153965	354226
Central Bank of India	118730	151450	30180	12790	227210	68070	132420
Canara Bank	130400	247241	27392	33870	316378	87401	208329
Syndicate Bank	64424	122005	33811	14297	138322	38437	90149
UCO Bank	102651	149424	27264	15732	209077	63306	114436
Union Bank of India	130309	129529	10213	7916	241709	69190	140259
Indian Bank	56704	57038	16208	9264	88270	31470	54194
2015
State Bank And Its Associates	798165	452507	269871	245716	735085	418151	372777
Oriental Bank of Commerce	56179	45143	15410	9249	76662	39044	48162
Punjab and Sind Bank	25535	12424	4505	2633	30822	19186	22660
Punjab National Bank	188801	166596	39251	59197	256949	99170	153965
Central Bank of India	115000	65790	48200	13860	118730	66490	68070
Canara Bank	75702	108695	39276	14722	130400	59655	87401
Syndicate Bank	46111	55000	26142	10545	64424	27206	38437
UCO Bank	66214	75513	25065	14011	102651	35564	63306
Union Bank of India	95637	56663	12684	9307	130309	53403	69190
Indian Bank	45622	33389	16809	5497	56704	27637	31470
2014
State Bank and its Associates	627785	592558	293353	128825	798165	281000	418151
Oriental Bank of Commerce	41840	40721	25932	-	56179	29027	39044
Punjab and Sind bank	15369	16196	6030	-	25535	11104	19186
Punjab National Bank	134658	108100	53957	-	188801	72365	99170
Central Bank of India	84560	75690	45250	-	115000	49880	66500
Canara Bank	62602	84436	71336	-	75702	52781	59655
Syndicate Bank	29785	36951	20625	-	46111	11248	27206
UCO Bank	71301	39616	44703	-	66214	40693	35564
Union Bank of In$dia	63138	54789	13165	9126	95637	33534	53403
Indian Bank	35655	28323	18356	-	45622	23843	27637
2013
State Bank and its Associates	482144	425368	219147	60580	627785	202366	281007
Oriental bank of Commerce	35805	32133	26098	-	41840	24590	29027
Punjab and Sind Bank	7634	10936	3201	-	15369	5476	11104
Punjab National Bank	87196	86470	39009	-	134658	44542	72365
Central Bank of India	72730	51250	39420	-	84560	46000	49880
Canara Bank	40318	58193	35909	-	62602	33863	52781
Syndicate Bank	31827	21420	23462	-	29785	11854	11248
UCO Bank	40862	51616	21177	-	71301	22639	40693
Union Bank of India	54499	39738	19809	11288	63138	30250	33534
Indian Bank	18508	28925	11778	-	35655	11968	23843

Source: RBI Data Warehouse

 

 

 

 

 

FINDINGS:

·      Both gross and Net NPA of SBI and its associates increased in 2014 as compared to 2013.  It fall in the year 2015 but again increased in 2016 and 2017.

·      As far as the NPA of OBC is concerned, it is continuously increasing from the year 2013 to 2017.

·      Both gross and net NPA of Punjab and sind bank is increasing from 2013 to 2017.

·      Gross and Net NPA of PNB is increasing from 2013 to 2016 but a slight fall in the year 2017.

·      Both Gross and Net NPA of central bank of India is increasing from 2013 to 2017.

·      NPA of canara bank is also increasing but the rate of increase is huge in the year 2016 as compared to earlier years.

·      NPA of UCO bank is decreasing in the year 2014 as compared to 2013 but again it started increasing till 2017.

·      NPA of all the other banks viz syndicate bank, union bank of india and Indian bank is continuously increasing.

 

 

 

SUGGESTIONS:

·      Banks should improve and strengthen the loan recovery methods.

·      All public sector banks should concentrate on credit appraisal and post loan monitoring.

·      There must be regular follow up with customers to ensure that there is no diversion of funds.

·      Frequent discussions with staff at the branch and taking their suggestions for recovery of dues.

·      Publishing the names of defaulters in news papers and websites.

·      Use of lokadalats and debt recovery tribunals for recovery of dues.

·      If default is beyond the control of borrower such as natural calamity, the banker should restructure the loan

 

CONCLUSION:

The increasing amount of NPA in Indian public sector banks is a serious problem and it is an obstacle in the profitability of banks.  No doubt the government is doing a lot of efforts to curb this problem, but still a lot to be done. It is not at all possible to have zero NPAs.  The banks management should speed up the recovery process because as the time of due debt will be increasing the chances of recovery would be minimising. So the efforts should be done to solve the problem of NPA otherwise it will keep effecting the profitability of banks which is not good for our economy.

 

REFERENCE:

1.     www.google.com

2.     www.rbi.org

 

 

 

 

 

Received on 03.06.2018       Modified on 29.06.2018

Accepted on 12.07.2018      © A&V Publication all right reserved