research paper on npa of sbi bank

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A STUDY ON NON-PERFORMING ASSETS OF STATE BANK OF INDIA

" The three letters Strike terror in banking sector and business circle today ". NPA is short form of " Non Performing Asset ". The economic future of the country is wholly dependent on banking sector. The problem of NPA show signs of "persistent bane of hitherto developmental policies". "New stratagem is required to attempt effacing of the NPA menace". The significance of the paper is expected to be an immense use to fulfill consumer needs and facing competition with other banks. This study provides the information related to solve NPA problem. The study uses the annual reports of SBI for the period of year 2007-2008 to 2013-2014. The motive of present study is to assess the non performing assets of SBI and its impact on profitability & to see the relationship between Total Advances, Net Profits, NET & GROSS NPA. The study also includes advances and NPA of SBI groups by Priority & Non Priority sectors. The study has been analyzed by using tables and coefficient of correlation. The major reason of increased NPA is banks focal point on quantitative aspect of achieving targets and less attention being paid towards qualitative aspect of loan and credit disbursement of money & mismanagement of funds. INTRODUCTION NPA is short form of " Non Performing Asset ". We know the built up of NPA has been the major factor in destroying the profitability of the Public sector Banks in India, the Narasimham Committee (II) underscored the need to reduce the average level of NPAs of all banks and recommended prudential norms on income recognition, asset classification & provisioning. The dreaded NPA rule says simply this: when interest or other due to a bank remains unpaid for more than 90 days, the entire bank loan automatically turns a non performing asset [1]. The recovery of loan has always been problem for banks and financial institution [1]. To come out of these first we need to think is it possible to avoid NPA, no cannot be then left is to look after the factor responsible for it and managing those factors [3]. With a view to moving towards international best practices and to ensure greater transparency, it has been decided to adopt the " 90 days' overdue' norm for identification of NPAs, from the year ending March 31, 2004 [3].

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Banking industry plays a significant role in the development of any economy as it caters to the needs for all the sections of the society.The modern economies of the world have developed primarily by making best use of the credit availability in their systems. India is on the march; far reaching socio-economic changes are taking place and Indian banks should come forward to play this role in the process. The role of banks has been important, but it is going to be even more important in the future. In this context giving due importance and consideration for the growth of banking sector is considered to be the need of the hour. Therefore this paper is an attempt to study the importance of both public sector and private sector banks in the development of Indian economy.

The Indian banking sector has been facing serious problems of raising Non-Performing Assets (NPAs). The NPAs growth has a direct impact on profitability of banks. Non-performing assets are one of the major concerns for public sector banks in Pune district. There seems to be no unanimity in the proper policies to be followed in resolving this problem. A high level of NPAs suggests high probability of a large number of credit defaults that affect the profitability and net-worth of banks and also erodes the value of the asset. NPAs affect the liquidity and profitability, in addition to posing threat on quality of asset and survival of banks. The problem of NPAs is not only affecting the banks but also the whole economy. In fact high level of NPAs in Indian banks is nothing but a reflection of the state of health of the industry and trade. It is necessary to trim down NPAs to improve the financial health in the banking system. An attempt is made in this paper to understand NPA, the status and trend of NPAs on public sector banks in Pune district. Keywords: NPA's, public sectors banks, Indian economy and recovery of NPA's etc.

Private Sector Banks (PSBs) in India have performed rather poorly over the past 3-4 years. For the most part this has been on account of Non Performing Asset (NPA) related worries which have so far been brushed under the carpet. The current level of NPAs as disclosed by most private sector banks is far from reality and made possible because of the flexibility enjoyed by PSBs in terms of disclosure requirements .A healthy and a sound banking system are very essential for an economy in order to grow and remain in this competitive environment. RBI and other regulatory bodies have taken several policies in the light of developing the functioning of the banking sector. The best indicator for the health of the banking industry in a country is its level of Non-performing assets (NPAs). It reflects the performance of banks. NPAs in the Indian banking sector have become a major concern for the Indian economy. NPA has a direct impact on the profitability, liquidity and solvency position of the bank. Higher NPA indicates inefficiency of the bank and lower NPA indicate better performance and management of funds. To improve the efficiency and profitability of banks the NPA need to be reduced and controlled. This paper basically deals with the trends of NPA in banking industry, the factors that mainly contribute to NPA raising in the banking industry and also provides some suggestions how to overcome this burden of NPA on banking industry. Keywords: Private sector Banks, Non-Performing Asset and Banking system etc. Introduction A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. The most important business implication of the NPAs is that it leads to credit risk management assuming priority over other aspects of bank's functioning. The bank's whole machinery would thus be preoccupied with recovery procedures rather than concentrating on expanding business. A bank with a high level of NPAs would be forced to incur carrying costs on non-income yielding assets. Other consequences would be reduction in interest income, high level of provisioning (as banks are required to keep aside a portion of their operating profit as provisions, as NPAs increases banks have to increase the amount kept aside as provisions which will reduce their net profits) stress on profitability and capital adequacy, gradual decline in ability to meet steady increase in cost, increased pressure on Net Interest Margin (NIM) thereby reducing competitiveness, steady erosion of capital resources and increased difficulty in augmenting capital resources. Developing of sound and healthy

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