1

A
REPORT ON

NPA MANAGEMENT
AT
THE JAMMU AND KASHMIR BANK LTD

BY

SHAHID AMIN
ROLL No. 39

IN PARTIAL FULFILLMENT OF MBA(BA)

BHARTI VIDYAPEETH UNIVERSITY

INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP

DEVELOPMENT
PUNE 2009

1
 2

PREFACE

This research project is a part of the Business

Administration Course being taken up at Deptt. of
Management Studies, Bharati Vidyapeeth University.

I was provided opportunity to undergo training at The

Jammu & Kashmir Bank Ltd. at its zonal office sopore Dist
Baramulla my field of interest was to study the:

NPA Management
OF
THE J&K BANK LTD.

This project has been of great help in providing me an

insight in to the real life working of an organization; it gave
me a chance to apply, all I had learnt to practical situations,
enhancing my understanding and image of the business world.

This experience in decision making and practical application of

knowledge has
Contributed greatly to my growth both as a person and trainee.

2
 3

STUDENT DECLERATION

I declare that project entitled “NPA Management at THE

J&K BANK LTD.”

A critical and comprehensive Study of NPA Management

of The Jammu and Kashmir bank is my own work. I also
undertake that the work is purely academic and no part has been
copied or taken from anywhere.

SHAHID AMIN
M.B.A (BA)
BHARATI VIDHYAPEETH UNIVERSITY

3
 4

ACKNOWLEDGMENT

It gives me immense pleasure to present the report of my

project titled “NPA Management AT THE J&K BANK LTD.

This work would not have been possible without the

assistance and guidance of a no. of people . I Would like to
take this opportunity to thank each and every one of them.

At first I would like to thank the management of the

Jammu & Kashmir Bank Ltd. for providing me an opportunity
to work as summer trainee with their Zonal Office sopore Disst
Baramulla.

I also express my sincere gratitude to my guide Mr. Riyaz

Ahmad Wani Sr. Executive Manager Zonal Office sopore and
Farooq Ahamad advance manager TP Baramulla for taking
keen interest in my training/project work and giving me
valuable guidance at every stage.

4
 5

SHAHID AMIN
MBA (BA-39)

Certificate
5
 6

This is to certify that Mr. SAHAHID AMIN is a

bonafide student of MBA (BA) 4Th trimester program
in this institute for the year 2008-2010.

As a part of the university curriculum, the student

has completed the project titled “NPA MANAGEMENT
OF J&K BANK”.

The project report is prepared by the student under

the guidance of our course coordinator.
(Programme coordinator)
Director

Date:
Place:

6
 7

EXECUTIVE
SUMMARY

7
 8

EXECUTIVE SUMMARY
OBJECTIVE OF THE RESEARCH:

1. To know various types of Loan products and there Management Of

J&K Bank Ltd.
2. To Know the Non Performing Assets Of the bank
3. To know the methods of provisions regarding NPA.
4. To know the methods employed by the bank to recover Non
Performing Assets.
5. To know about the management of NPA.
6. To get acquainted of banking activities.

SOURCE OF INFORMATION:

PRIMARY SOURCE:
• Through structured questions.
• Face to face interview.

SECONDARY SOURCE:

• Records maintained by the bank.

• Websites.
8
 9

RESEARCH METHODOLOGY:

The study pertains to behavior aspects such as their perception,

attitude and expectations towards the Loan products and provided by Jammu
& Kashmir bank Ltd. An exploratory research design was adopted to
conduct the study.

DATA USED:

Both primary and secondary data was used .Bank broaches, diaries, books,
other written material and bank’s website were used to collect secondary
data.

9
 10

RECOMMENDATIONS:

1. Marketing side of the bank needs improvement.

2. Much improvement is needed in HRD Department. The employees
should be trained about new business trends and their motivation level
should be improved.
3. The bank should come out with new and innovative methods to
recovered NPA and should motivate customers to pay there dues in
time.
4. There should be no delay in customer service.
5. The bank should provide easy and quick financial facilities to small
scale industries, retailers.

10
 11

TABLE OF CONTENTS

S.NO. Chapters Page

1. Introduction to the Bank

1O-15
2. Bank at Glance
16-18
3. Organizational Hierarchy& Board of Directors
19-22
4. Types of Loans And Advances
23-30
5. NPA Management
Introduction 31-43
Assets classification
Provisioning Norms
Recovery
Conclusion
6. Conclusion
44-45
7. Bibliography and References
46

11
 12

CHAPTER ONE

INTRODUCTION
TO

THE JAMMU &

KASHMIR
12
 13

BANK LTD.

COMPANY PROFLE
Founded 1938
Headquarters Jammu & Kashmir, India
No. of Locations > 500 branches/offices
Financial, Commercial
Industry
banks
Employees 6833

Moneylenders have been part of Indian society since ancient times.

Modern banking in India began some 200 years ago. First Bank in India was
established under the name and style of bank of Calcutta in 1806(a
presidency Bank).In 1840 Bombay presidency Bank and in 1843 Madras
presidency Bank came into exisentance. In 1921, these three presidency
Banks were merged as imperial Bank of India. In 1955, imperial Bank was
renamed as State Bank of India.

13
 14

Aimed this scenario, entire banking in the State of Jammu and

Kashmir was performed by traditional moneylenders and that too at
exorbitant interest rates. At the same time some banks like Punjab National
Bank, Grindalay’s Bank and imperial Bank of India functioned in the State
to a limited extent. The role of these banks was reduced to the people of the
State owing to the statutory limitations.
Under this Scenario banks could not ameliorate the financial social
position of the people of the State.

To overcome this crisis, the then Maharaja of the State, His Highness
Maharaja Hari Singh, conceived the idea to establish a bank to help people
of the State to come out of the economic backwardness. The scheme of
forming the bank was formulated by an eminent banker sir Sorabji
N.Pochkanwala, the then Managing Director of Central Bank of India. The
outcome of the efforts of Sir Sorabji resulted in the establishedment of the
Jammu & Kashmir Bank Limited on October 1, 1938.And the Bank formally
commenced its business on July 4, and 1939.The bank opened its first
branch at Residency Road, Srinagar. Encouraged by the support of public, it
opened it’s another branch at Jammu. By 1946, the number of branches of
the bank went up to 12.

Precisely, banking in the State of Jammu & Kashmir actually began in

1939, when Jammu & Kashmir Bank started its operation. Since then, with
the continuous changes taking place in the financial services scenario, the
banking in Jammu & Kashmir went under tremendous. Besides exhibiting its

Commercial character, the bank has been meeting the social obligation of the
people of the State too.

The Jammu & Kashmir Bank is the first of its nature and composition
as a State owned bank in the country. The State government besides
contributing half of the issued capital also appointed the bank as bankers for
general banking and treasury business of the State government. In its
formative years, the bank had to coup up several serious problems,
particularly around the time of independence, when two of its branches at
Muzaffarabad and Mirpur fell to the other side in 1947.However, the State
14
 15

government came with assistance of Rs 6.00 lacto meet the claims.

Following the extension of Central laws to the State of Jammu & Kashmir,
the Bank was defined as a government companies Act 1956.

The real growth of its operations and business started after 1969, the
area of nationalization of major banks, when the union government
announced control on banking. It began to emerge from its regional shell,
opening branches beyond the State boundaries and emerged as a leading
bank. In 1971, the bank was included in the second schedule of the RBI Act
1934.It had its first full time chairman following social control measures in
banks in the country. Five years later (in 1976) it was declared an ‘A’ Class
bank. By the end of 1980, its branches numbered 212 with aggregate
deposits of Rs. 191.67 corer and advance of Rs. 61.67crores.
The bank became pioneer in the finance of road transport, horticulture
and hostels to promote tourism and extended finance to the artisans to
promote traditional handicrafts. In fact the bank was the first commercial
Indian bank to introduce schemes for financing fruit crops on standing trees
in the State of Jammu & Kashmir, a policy that was subsequently emulated
by other banks elsewhere in the country.

The bank expanded its area of operation and widened its credit base
by financing schemes like integrated Rural Development Programmers
(IRDP), SEEDY, PMRY, NRY and other self-employed programmers
sponsored by the State and Central Governments. In 1976, Bank became the
first and the only bank, which was permitted by the Reserve Bank of India to
sponsor two regional banks, namely, Kamraz Rural Bank and Jammu Rural
bank. The bank has also been entrusted with lead bank responsibility in eight
of the fourteen districts and governorship of the State Level Bankers
committee in J&K State.

The bank has played a key role in the economic development of the
State in particular and the country in general. In the last ten turbulent years,
it was the only commercial bank to sustain economic and business activity as
most of the nationalized banks in the State downed their shutters. During this
difficult period, it was the J&K Bank alone that supported various aimed at
alleviating poverty and generating self-employment opportunities.
With a substantial increase in its capital base, the bank participating more
extensively in financing of infrastructure projects. A number of leading
corporate and blue chip companies as well as prominent public sector
undertakings of the Indian
15
 16

Governments have become part of its clientele. The financial of the

bank are very strong. The banks debt instruments have been highly rated by
CRISIL (Credit Rating Information Service of India Limited), which has
reaffirmed its P1+rating of the banks certificate of deposits, including strong
degree of safety with regards to timely payments. The bank is governed by
the companies act and banking regulation act of India .It is regulated by the
Reserve Bank of India and Security and Exchange Board Of India (SEBI).At
the end of May 2006, the bank had 517 branches spread from Kashmir to
Kanyakumari with 98%of its business computerized. The bank has been
playing a vital role in the development of the economy of the state and
bolstering industry, trade, commerce and agriculture in the state. The bank
has put a commendable performance in all aspects of banking .The
performance of J&K Bank, its growth, profitability, diversification of
product portfolio, modernization of its operations and its achievements in
other areas have made it one of top most banks of the country.

Sri Sohan Lal Kothari was the first manager of the bank and the then
chief Minister major general Roy Bahadur Dewan Bishan Das was appointed
as the foundation stone of the Residency road Srinagar branch building.
Since 1977 the bank has been responsible for payment of civil pension and
receipt of various states taxes. Findings overall performances of the bank
good, the RBI issued a license to the J&K Bank to deal in all types of
foreign exchange presence in 1980.

The bank installs first ATM in valley connected globally to all master
card networks ATMs.All the branches of the bank are connected through V-
SAT on 10-08-2001 the bank took over the Srinagar branch of standard
chattered Grindlays bank. The bank inaugurated its new corporate
headquarter building at M.A road Srinagar-on 2 september 2001.

J&K Bank is today one of the feasted grooving bank of India with a
network of 517 branches offices spread across the country offering world
class banking products and service to its customers. Today the bank has the
status of value driven organization and is always working towards building
trust with shareholders, employees, customers, borrower’s etc.for which it
has adopted strategy directed to developing a sound foundation of
relationship and trust aimed at achieving excellence which of course comes
from the womb of good corporate governance.

16
 17

The J&K Bank has recorded an outstanding achievement in the key

areas of operations. The total deposits as on 31-03-2008 were Rs. 28593.263
crores against Rs.25194.2947 crores for the fiscal year 2007-2008.

Thus deposits have shown a growth of 13.49%.The reserves and

surplus of the bank grove’ by 13.8% from Rs 2232.335 cr. of the previous
year to Rs 1960.241 cr. on

ending March 2007. Other borrowing of the bank increased from Rs.
620.189 Cr. To 751.78 Cr. Other liabilities for the fiscal year 2007-2008
ending 31 March stood at Rs 1102.015cr against Rs. 832.31 cr. for the
previous year.

The Bank has made the total investment of Rs. 857.766 cr. on 31 March
2008 the advances have increased from Rs.1707.799 cr. as on 31 March
2007 to Rs. 1888.26118 cr. as on 31 March 2008 showing a growth of 10.5%
over the previous year.

The fixed assets of the bank amount for Rs.19.2 cr. and other assets are
worth Rs 48.6 cr. The J&K Bank has the total cash and balance with RBI
Rs.321.996677 cr. and balance with banks and money at C&S notice is Rs.
121.727.cr as on 31-08-2008.

In the state of Jammu and Kashmir, the J&K Bank has been the major
contributor in providing credit to poor artisans, retailers, small business,
agriculture and other allied activities, small scale industries and technically
qualified entrepreneurs. In these sectors with Rs 137.89 cr. in agriculture
sector, Rs 145.38 cr. in industries sector and Rs 241.09 cr.in service sector.

J&K Bank having a strong network of 410 branches across the state has
made total advances of Rs 5941.02 cr in J&K State as on ending March 2006
as against its total deposits of Rs 12236.98 cr.Thus achieving a current
deposit ratio of 48.55%.

Maintaining a progressive outlook, the J&K Bank is keeping pace with the
changing technology. The bank continues to leverage information
technology as strategic tool for its business operators.

17
 18

The IT strategy emphasizes enhanced level of customer service through

24x7 hours availability, multi channel banking and cost efficient through
optimal use of electronic channels, wider market reach and opportunities for
cross selling.

Currently more than 90.5% of the banks business is computerized. The J&K
Bank is the first bank to launch ATM cum debit card in Kashmir. The bank
launched ATM cum Debit card “J&K Bank global access card” in
collaboration with the master card international. The bank has grown the
number of ATMs to 182 at the end of March 2006.

The bank has launched the three variant types of credit cards with different
limits with an interest free credit facility for 20 to 50 days at accept at
125000 mercantile establishments across the globe. The customers have the
access to their money for all the 365 days of a year and 24 hours per day.
The credit and debit cards of the bank are accept of cash with draws at 7000
ATMs in India and 1 million ATMs across the globe. To maximize value

to its customers, the innovation in products and improving the quality and
speed of the services in the Hall Mark of banks business strategy. The bank
has launched several unique financial and deposit products like education
loans, car loans, consumer loans,

Flexi deposit recurring plus and Mehandi deposits schemes to meet the
needs of customers. The bank has recently won the prestigious Asian
banking awards 2004 for

Customer convenience programmmes. The awards is given each to

recognize and honor the bank in Asia pacific region for outstanding
innovating and world-class products services, projects and programmers.

J&K Bank has embarked on brand strategy exercise and engaged removed
consultants to work on business development possibility and engaged over
all processes that could be improved in the future to enhance the overall
profitability of the bank.

18
 19

This would increase branding of the banks products in order to

increase the value for its customers. And now with the right kind of
leadership efforts of dedicated employees and State of art technology, the
J&K Bank is on the path of growth and success building trust profit, peace
and property.

CHAPER TWO

19
 20

BANK AT A
GLANCE

20
 21

BANK AT A GLANCE
PROFILE:-

• Incorporated in 1938 as a limited liability company.

• Governed by companies Act and Banking regulation Act of India.
• Regulated by the Reserve bank of India and SEBI.
• Listed on National Stock Exchange (NSE) and Bombay Stock
exchange (BSE).
• 53 per cent owned by the Govt. of J&K.
• Rated “P1+”by standard and poor-CRISIL connecting highest degree
of safety.
• Four decades of uninterrupted profitability and dividends.

SHAREHOLDING PATTERN (AS ON OCTOBER 24, 2008):

Unique characteristics: one of a kind

• Private sector Bank despite Government holding 53% of equity.

• Sole bankers and lender of last resort to the Govt.of J&K.

21
 22

• Plan and non plan funds, taxes and non-taxes revenues, routed through
the bank.
• Salaries of Govt officials disbursed by the bank.

• Only Private sector designed as agent of RBI for banking business.

• Collect taxes pertaining to Central Board of Direct Taxes in J&K.

INFRASTRUCTURE. GLOBAL STANDARDS

• The fastest growing Bank with 510 branches across the country.
• Over 98 per cent of the business computerized.
• Banking, Tele-banking and SWIFT facilities available.
• Internet Banking, SMS and Mobile Bank provided.
• ATMs connected globally to all Master card Networked ATMs.
• Mobile ATM Service available-first of its kind in Northern India.
• J&K bank Global Access Debit card cirrus and Maestro enabled.
Own Credit card.
• Live on RTGS System of RBI.

FINANCIAL SERVICES PORTFOLIO: ONE STOP FOR ALL

FINANCIAL
NEEDS.

• Insurance joint venture with MetLife international.

• Distributor of :
• Life Insurance products of MetLife (India) Pvt. Ltd.
• Non-life insurance products of Bajaj Allianz General Insurance
Co.Ltd
• Providing depository Services.
• Offering Stocks Barking Service.
• Collection Agent for utility Services provided by State and private
sector.

22
 23

NEW BUSINESS INITIATIVES: SHAPING OURSELVES TO

SERVE
BETTER.

To meet the growing needs of the economy, in tune with the

competitive banking innovative financial products.

• Monetizing the Bank’s branch network.

• Third party products distribution.
• Investment Banking.
• Offshore Banking.

CHAPTER THREE

23
 24

ORGANISATIONA
L HIERARCHY
&
BOARD OF
DIRECTORS

24
 25

BRIEF PROFILE OF DIRECTORS:

HASEEB AHAMD DRABOO (CHAIRMAN & CHIEF EXECUTIVE)

Haseeb Ahmad Draboo, Chairman and Chief Executive of the bank is

a professional economist who has been on the board of directors of the bank
since 11th July 2003.
Possessing a diverse skill set and wide ranging experience, he started
his professional career with a perspective planning division of the planning
commission. Later, he worked as consultant to the economic advisory of the
Prime Minister. His final stint with policy making was with the 10th finance
commission.
At present, he continues to work as the economic advisor the
Government of Jammu and Kashmir, a position he has held January 2003. he
is credited with having conceptualized wide-ranging economic and physical
reforms of the Govt. he has been inducted by the planning commission to its
working group on resources for the 11th five year plan.

MS VERMA:

M.S. Verma serves on the Board of a number of a number of public

and private sector companies and is associated with several educational and
research institutions in a advisory capacity. He is Vice-President of the
governing body of the National Council of Applied Economic Research and
member of the Board of Governors of the Institution of Economic growth,
University of Delhi.

G.P. GUPTA:

G.P. Gupta a post graduate in commerce, having combined stints in

both academic and public sector, is also the Ex-Chairman and Managing
Director, IDBI, and has served on several distinguished positions such as
Chairman, UTI, Chairman, SIDBI, Chairman, National Stock Exchange of
India Ltd., Member Life Insurance corporation of India , Director, Export-
Import Bank of India, Director, Infrastructure Development Finance
Company Ltd., Director, Indian Airlines Ltd., Director, Discount & Finance
House of India Ltd., Director, Securities Trading Corporation Of India Ltd.,
Council Member, Indian Institute of Bankers and President,
Entrepreneurship Development Institute of India Ahmadabad.

25
 26

B.B. VYAS (IAS):

Bharat Bushan Vyas belongs to the 1986 batch of Indian Administrative

Services. During his probation he was awarded Gold Medal by Lal Bhadur
Shastri National Academy of Administration, Mussoorie for best all round
performance.
Mr. Vyas has held several distinguished positions both in State and
Centeral Governments. In the Government of J&K, Mr. Vyas worked as
District Megistrate/ Deputy Commissioner of Poonch, Udhampur districts.
He is presently holding the position of Commissioner/ Secretary to
Government Finance Department.

EXECUTIVE DIRECTORS:

ABDUL RAUF FAZILI

MUSHTAQ AHMAD

B.L. DOGRA

UMAR KHURSHEED TRAMBOO

SECRETARY TO BOARD:

PARVEZ AHMAD

EXECUTIVE DIRECTORS:

A.R. FAZILI……………………………………..(Business Operations)

26
 27

MUSHTAQ AHMAD……………………………(Corporate Functions)

PRESIDENTS:

ABDUL MAJID MIR……………………………(Chief Financial Officer)

ALOK KUMAR MEHTA……………………….(Chief Peoples Officer)

MANZOOR AHAMD SHAH…………………...(Chief Strategist/Chief

Tech. Officer)

NISAR AHAMD KOUL………………………...(Chief Credit Officer)

AJIT SINGH……………………………………..(Chief Regulatory Officer)

RAJ KUMAR……………………………………(Chief Treasury

Consultant)

VICE PRESIDENTS:

GHULAM MOHAMMAD RESHI………………(Assist Monitoring and

Information)

GHULAM AHMAD REGOO…………………... (Finance and Risk

Management)

GHULAM AHMAD BEIGH…………………….(Strategy and Business

Development)

MOHAMMAD BASHIR-UL-ISLAM…………...(Treasury Operations)

SUMAN DURASWAL…………………………..(Retail Credit)

PARVEZ AHMAD………………………………(Company Secretary)

27
 28

MUKHTAR AHMAD KAWOOSA……………..(Insurance)

CHAPTER FOUR

28
 29

FINANCIAL
PRODUCTS

FINANCIAL PRODUCTS:
LOAN PRODUCTS:

29
 30

PERSONAL LOAN:

With the changing times, the luxuries of yesteryears have become

basic necessities of today ensuring that you don’t miss out living a quality
for yourselves and your family. Our whole suite of personal finance
products helps you in owning all basic necessities of life and proudly so
be it having your own sweet home, renovating and refurbishing it with
items like: TV, refrigerator, washing machine etc. or bring a proud owner
of a stylish car, we have a loan product for every such need.

CONSUMPTION LOAN:

Eligibility:
• Permanent employees of central/state Govt., public sector
undertakings, autonomous bodies, institutions, having at least 3
years of active remaining services.
Amount of Loan:
• Maximum Rs.7.00 Lakh or 30 times gross monthly salary
• Gross deductions including installments of the proposed loan
not exceed 60% of the gross income.
Margin: Nil

Repayment period: The loan along with interest would be repayable

in 84 monthly installments beginning one month after the
disbursement of the loan.

HOME LOAN:

Eligibility:
• Professionals and self-employed like Doctors, engineers,
chartered accounts, advocated with minimum standing of 3
years.
• Employees of Govt./ semi-governments departments, public
sector undertakings with minimum 3 years service.
Purpose:

30
 31

• Purchase with construction of house/flat

renovation/additions/alterations of existing house, purchase of
land
Margin:
• For construction/purchase of house: 15%
• For renovation: 25%

Repayment period: Upto 20 years including 9 months moratorium by

equal monthly installments.

Rate of interest:

Repayment Floating ROI Fixed ROI

Period Upto Above Upto Above
2 Lakh 2 Lakh 2 Lakh 2 Lakh
5 years 11.5% 13.25% 12% 14.25%
5 to 10 years 11.75% 14% 13% 15%
10 to15 years 12.75% 14.25% 13% 15%
Above 15 years 13% 14.75% 13% 15%

CAR LOAN:

Eligibility:
• Employees of Govt./semi-Government departments,
autonomous bodies, public sector undertakings, individual,
firms, limited companies having a minimum 5 years active
service.

Security: Hypothecation of vehicle, third party guarantee of one

person,

Quantum of Finance: Maximum 10 Lakh.

Margin: 20% of the cost of the vehicle.

31
 32

Repayment: 7 years in equal monthly installments

Rate of Interest:
12 % upto 4 Lakh
13.50 % above 4 Lakh

• EDUCATION LOAN:
For bright students with a good academic background and
pursuing graduation/post graduation courses in Science/Arts/Commerce,
Medicine, Surgery, Hotel

Management, Design, Architecture, Biochemistry, Veterinary

Science, ICWA, CA, CFA, Computer Certificate Courses/leading to
Diploma/Degree, MCA, MBA, MS etc.

Eligibility: Should have secured admission to professional/technical

courses in domestic/foreign universities/institutions through entrance
test/selection process.

Margin:

Upto 5 Lakh: Nil

Above 5 Lakh

i) Studies in India: 5%
ii) Studies Abroad: 15
32
 33

Repayment:
Moratorium: Course period + one year or Six months after
getting Job
Whichever is earlier? The loan is to be repaid in 5 to 7 years after
moratorium period.

Rate of Interest:

2.5 to 5 Lakh 11.5%

5 to 10 Lakh 12.5%
10 to 20 Lakh 14.5%

J&K BANK DASTKAR FINANCE:

J&K Bank in its endeavor to promote trade, industry and to

preserve the traditional arts and crafts of the state devised a scheme aimed at
the financial needs of the artisan community aptly called ‘JK Bank
Dastkaar Finance’. The scheme provides easy and soft credit to craftsmen
engaged in the trade and helps them to set up their own ventures, weeding
out the middlemen responsible for their exploitation. Keeping in view the
specific production cycle associated with this trade the loan comprises of a
term loan and working capital components.
The disbursement is phased in quarterly installments and
aligned to the status of WIP (work in Progress). This ensures proper end use,
quality control and timely completion of work. The weavers/ artisans are
allowed a reasonable time for the

Repayment of the bank finance. To make the credit hassle free, no Collateral
/third party guarantee is required. The product has been designed on the
bank’s philosophy of confidence based lending as opposed to collateral
based lending. There is no requirement of any collateral security under this
product. The legal documentation has been kept at
bare minimum with only two documents to be executed for disbursement of
the loan. In order to increase the reach of this product the database of the
weavers/ artisans available with various trade associations is being utilized
besides identification of people by concerned branches of the bank.

33
 34

JK BANK ZAFRAN FINANCE SCHEME:

Kashmiri Saffron – the most expensive spice in the world – has a

unique aroma and flavour. It is considered world’s best because of it’s
scientifically proven superior quality, hence commanding a price much
higher than the saffron from any other part of the world. Saffron is
extensively used for culinary and colouring purposes. Besides, because of its
medicinal qualities, it is an important ingredient for both traditional
(Ayurvedic and Unani) and allopathic medicines. Its demand in the markets,
both domestic and international, is growing. Saffron is a niche-economy,
involving hundreds of Kashmiri families. Still, the recent decline in saffron
production is going to affect this segment of state economy. In 2003-04,
around 6.98 metric tonne of saffron was exported while as the exports
declined to 5.19 metric tons in 2004-05.

With a view of preserving this prized spice, J&K Bank tailored a

specific product named JK Bank Zafran Finance. Its purpose is to provide
adequate, timely and need-based finance to saffron growers. The scheme is
for all saffron growers, especially the smaller and marginal ones including
even the contract farmers engaging in or intending to start its cultivation.
The quantum of finance is proportionate to the land holding of a grower. The
product also provides an additional finance for post harvest and packaging.
A Product that covers the entire plantation and production costs including
plant material, agricultural machinery, labour etc. this scheme is provided to
Saffron growers.
The disbursement is done in two phases; 60% in the first year and 40% in
the second, when the growers are in need of funds. The repayment of the
advance is scheduled within the four year growing cycle of saffron. Re-
financing facility can be availed for fresh plantation of the crop. The
documentation has been simplified and kept minimum to make it hassle-free.

With a view of preserving this prized spice, J&K Bank tailored a

specific product named JK Bank Saffron Finance. Its purpose is to provide
adequate, timely and need-based finance to saffron growers. The scheme is
for all saffron growers, especially the smaller and marginal ones including
even the contract farmers engaging in or intending to start its cultivation.
The quantum of finance is proportionate to the land holding of a grower. The
product also provides an additional finance for post harvest and packaging.

34
 35

Other such products like Khatamband Craftsmen Finance for Khatamband

Craftsmen and Ghiri Finance for taking complete care of the expenses
involved in procurement processing sale and export of walnut kernels.

AGRICULTURE AND ALLIED FINANCE:

Agriculture is the mainstay of our economy but unfortunately being financed

mainly from outside of the banking sector.
Our rural finance strategy envisages extending the frontier of formal
finance ton incorporate agriculture along with other rural economies on
principles of sustainability, efficiency and significant outrage.

Rate of Interest:

Upto .50 Lakh: 12.5%

.50 to 2.00 Lakh 13.5%
2.00 to 5.00 Lakh 14.0%
5.00 to 20.00 Lakh 14.5%

J K BANK ALL - PURPOSE AGRI-TERM LOAN:

The product aptly named as All-Purpose Agri-Term Loan has been

designed in a way that lays special emphasis on small and marginal farmers
and provide sufficient and, more importantly, timely finances to the farmers
engaged in all types of agricultural and allied activities. The product aims to
cater to the needs of small farmers within very little land holdings in the
rural and semi-urban areas of the state.
The product is given to the people engaged in any kind agriculture and
allied activities. Horticulture, Sericulture, Animal Husbandry, Plantation and
Fisheries can be financed through this product.
The objective has been to provide easy finance to needy farmers
through regular channels of finance and to wean them away from the
exploitative circle created by the non-banking intermediaries. For that
purpose, the product has been devised in such a way that hitherto un-banked
customers get an easy access to banking services through simple and
affordable documentation process. A maximum credit of Rs 1.00 Lakh,
35
 36

depending upon the Agri-activity to be financed is provided but multiple

activities can also be considered for finance. The product is offered at
affordable interest rates.

Rate of Interest:

Upto .50 Lakh: 13.0%

Above .50 Lakh 14.0%

APPLE ADVANCE SCHEME:

Apple, the king of Kashmir fruit, lies at the heart of horticultural

economy of J&K state. Every year hundreds of truckloads of apple reach the
markets of Delhi, Punjab, Jaipur, Bangalore, Chennai and Ahmadabad. The
potential yearly returns on the fruit, as per some of the findings, stand at
somewhere between Rs. 2000 to 2500 crores. Almost 2.5 million people of
the state are directly or indirectly associated with the apple business.
J&K Bank’s specially designed product named as Apple Advance has
struck at the root of this exploitative system that thrived on scant or untimely
fund availability and at times even lack of finance through formal channels.
Last year, after a detailed study of the apple economy, a need-based, time
specific product was introduced. The product incorporated all the critical
inputs necessary to make our financial intervention effective and grower-
friendly. Apple Advance was introduced to meet the comprehensive
requirements of the apple growers with distinctive features like reduced
margins, higher scale of finance that includes production and post harvest
maintenance, auto renewal of limits and most importantly very easy and
hassle free documentation. With an effective product monitoring mechanism
in place, the scale of finance was increased from Rs 1.50 Lakh per acre from
Rs 40,000 per acre. Regular revision of scales of finance is carried out to
match the rising production and marketing costs.

The objectives that guided the customization of the product included

the easy access, simplified documentation, `avoiding redundancies,
shortened process time and flexible fund limit. Even for the growers who
have just leased orchards can avail finance under the scheme. With
hypothecation of fruit crop and Third Party Guarantee of 2 persons as
36
 37

security and no emphasis on collaterals, the borrower is also allowed

withdrawals up to 50% of the previous year’s limit till the bank renews the
sanction for the next year. The process has been made extremely easy and
hassle free to ensure that comprehensive requirements of Apple growers to
take care of Production & Marketing Costs are fulfilled adequately and in
time. Simplified legal documentation has been made to expedite the loan
processing.

Rate of Interest:

Upto .50 Lakh: 12.5%

.50 to 2.00 Lakh 13.5%
2.00 to 5.00 Lakh 14.0%
5.00 to 20.00 Lakh 14.5%

BUSINESS LOAN:

Right from financing the contractors, providing credit to transporters,

funding the working capital of shopkeepers, providing financial solution
to business men to corporate, SME and infrastructure finance, our regular
loan products cater to all kinds of business of industrial activities in the
state and rest of country.

Rate of Interest:

Upto .50 Lakh: 13.0%

.50 to 2.00 Lakh 14.0%
2.00 to 5.00 Lakh 14.5%
5.00 to 20.00 Lakh 15.0%

MICRO-FINANCE:

37
 38

J&K Bank is working on empowering people and demonstrating that

people with lesser means can be reached profitably. For us, at J&K Bank,
empowerment is the process of enhancing the capacity of individuals or
groups make choices and to transform those choices into desired actions and
outcomes.
One of the many of such products is our craft development loan which
caters to the needs of our highly talented and skilled artisans engaged in
Wood Craving, Paper Mache, Namdasazi, Copper Smithy, Willow Wicker
and Kangri making etc.
Likewise all our other such products have been designed keeping in
view the seasonal and craft specific requirements.

CHAPTER FIVE

38
 39

NPA
MANAGEMENT

39
 40

Introduction
Banks derive their major source of income by way of interest on advances
and investments .Interest is charged to the asset and then recovered from the
party /borrower concerned. Thus income is booked initially on accrual basis.
However, if the bank is not able to get/recover interest from the counterparty
within reasonable time, then the income should not be accounted for or
recognized, till it is actually received. Thus, accounting for interest is
changed to a mercantile one. The interest in this situation becomes a non
performing one.

We are going to see the classification of assets into four main categories and
their sub-groups. We shall then proceed to discuss the provisioning norms
based on the classifications as well as provisioning have been made fairly
objective over a period of time.

ASSET CLASSIFICATION

In august 1991, a high level committee, headed by Mr M.Narsimham was

appointed to examine various aspects of our financial system. One of the
important recommendation of Narsimham committee was that balance sheet
of the banks should be transparent and comply with international accounting
standards .The committee recommended that banks should adopt uniform
accounting practices in regard to income recognition and bad debts
provisioning. In particular, income recognition of non- performing assets
should not be an accrual basis but on record of recovery. The committee also
suggested that provisioning should depend upon a proper classification of
assets, which in turn should be based on objective criteria.
Following these, the Reserve bank of India issued guidelines/instructions
to banks in April, 1992 for classifications of assets. Initially an advance was
treated as non-performing one, if the interest/installments remain unpaid for
90 days.
Narsimham committee also recommended that the assets should be
classified into four broad categories and provisioning should be done based
on the classification of assets. The four categories are as follows –(a)
standard assets (b) sub-standard assets, (c) Doubtful assets, and (d) loss
assets.

40
 41

An asset becomes non-performing when it ceases to generate income for

the bank. From 31 march, 2004 an advance (other than agriculture advance)
is classified as NPA, where
(a) Interest or installments remain overdue for more than 90 days in respect
of a term loan
(b) The account remains out of order in respect of an overdraft/cash credit
for more than 90 days.
(c) A bill remains overdue for more than 90 days in case of bill
purchased/discounted.
(d) Any amount to be received remains overdue for more than 90 days

In case of agriculture advance, I) A loan granted to a short duration crop will

be treated as NPA, if the installment or interest there on remains overdue for
two crop seasons and ii) a loan granted for long duration crops will be
treated as NPA, if the installment or interest remain unpaid one crop season.
(Long duration crop would be the ones for which the crop season is longer
than one year.)
Ones the account becomes NPA, it goes through a process of ageing where
asset classification shall progressively deteriorate. The first stage of NPA is
sub-standard asset. The account continues to be sub-standard for a period of
twelve months, as per the present norms
The asset would be classified as Doubtful one, if it remains substandard for
12 months. Under doubtful category, there are three sub-categories viz.
Doubtful-I, Doubtful-II, doubtful-III. For a period of 12 months it remains in
Doubtful-I, for the next 24 months,
It remains in Doubtful-II and then migrates to Doubtful-III category.
A loss asset is one where loss has been identified, but the amount has not
been fully written off. Such asset is considered as uncollectible,
unrealizable.

The position of classification is summarized below:

Standard Asset : not NPA.
Sub-standard Asset : Twelve months period after becoming NPA
Doubtful Asset : Substandard for 12months or more.
Loss Asset : Asset becomes uncollectible/ unrealizable.

PROVISIONING NORMS
41
 42

A non per-forming asset causes two fold impact on the profitability of the
bank. On one hand, the bank ceases to interest on these assets and
thus is deprived of its legitimate income from the assets. On the other hand,
the bank is required to make provisions for this asset, depending on the
classification /category of the asset and
Value of security, if any. This makes a further dent in the profitability of the
bank. The Reserve Bank of India introduced the system of the asset
classifications and provisioning
In with international practices for the first time in 1993. The norms
underwent several changes during the last 12 years. We peruse the current
norms, which are applicable as on 31 march, 2005. Depending on the age of
a NPA, the classifications of the asset changes. With passage of time,
probability of recovery diminishes and hence requirement for provisioning
goes up. Some consideration / weight age is given to value of the security as
well as, while deciding the provision.
To begin with sub-standard assets are divided into two sub
classes viz. Secured and Unsecured ones. Unsecured asset are those, where
the realizable value of security is not more than 10% of the outstanding dues.
For sub-standard secured assets _ denotes by code 21 – provision is to be
made at 10% of the outstanding dues. In the case of sub-standard unsecured
assets – denoted by code 22 – provision requirement would be 20% of the
outstanding dues.

As we have seen, doubtful category consists of three sub- categories

doubtful-I, doubtful-II and doubtful-III, based on the age in the doubtful
category. Doubtful-I category – denoted by code 31- represents first 12
months in doubtful category. The provision category for this sub–category is
20% of realizable value of security (RVS) plus 100% Of the short of
security. We shall take one example to clarify the position . Suppose, there is
an asset of Rs 120 in the Doubtful –I category and the realizable value of
security (RVS) is Rs 90. Then the provision requirement would be (20% of
Rs 90 + (120-90) i.e. Rs (18+30). Thus, provision requirement for this asset
of Rs 120 in Doubtful-I category will be Rs 48.
Doubtful-II category- denoted by code 32- represents the period of
further 24 months in the doubtful category. This means, a NPA during 24
months to 48 months belongs to D-II category. Provisioning required in this
category is 30% of the realizable value of security (RVS) plus 100% 0f the

42
 43

shortfall in security. In the case of above mentioned example, if the asset

was to belong to D-II category, the provisioning requirements would be as
follows -30% of Rs 90 + (120-90) i.e. Rs (27+30). Thus provision
requirement for the asset of Rs 120 in D-II category, with RVS of Rs 90,
would be Rs 57.
Accounts which are NPA for over 48 months (i.e. doubtful category for
over 36 months) are classified under Doubtful-III- denoted by code 33-
category. Accounts in D-III category require 100% provisioning. In the
above mentioned example, a provisioning of entire Rs120/- will be required
in D-III category.
Loss assets – denoted by code 41- are uncollectible asset which does not
have any security at all moves from sub-standard category to loss category.
Provisioning requirement for Doubtful-III asset and loss asset is the same
viz.100%.

CAUSES OF AN ASSET TURNING NPA

(A)Internal (within control of bank).

Improper selection of beneficiary.

Defective appraisal.
Lack of proper supervision.
Stress on quantity rather than quality.
High volume of transaction.
Untrained staff.
Contigency approach.
Financing non-viable projects.
Unscientific repayment schedule.

(B) Reasons beyond control of bank but with in control of borrower.

Misutilisation.

43
 44

Diversion of income generated.

Delay in completion of project.
Disposal of asset.
Willful default.
Inadequate knowledge.
Misguidance by others.

(c) Reasons beyond control of bank as well as borrower.

Insufficent incremental income.
Natural calamities
Death/phy social disability.
Change in Govt policy.
Lack of Govt support.
Lack of cooridination among agencies.
Abject poverty/illiteracy.
Social compulsion.
Competition.
Product obsolescence.
Technology obsolescence.

Illustrative Symptoms Of Business Failure(from

bankers view point)

* Non-Submission/delayed submission of stock/Receivable statement and

Quarterly/annual operating data.
* Unsatisfactory operation/ cash drawings/return of bills.
* Dishonor of bills, delay in retirement/return of bills.
* Reduction in credit summations- due to opening of account with another
bank.
* Delay in payment to creditors/ invoking of guarantees by beneficiaries.
* Constant use of c/c limit to the hilt.
* Slow turn over /pling up of inventory.
* Request for reduction of margin/stoppage of overvaluation of stock.
* under-utilization of capacity/stoppage of production/closure of factory.
* Continuous cash losses resulting in erosion of Tangible Net Worth.
* Chronic default in payment of interest installments /statutory liabilities.
* Failure to funds (for promoting allied concerns).
* High rejection/scraps.
*Large number of law suits against the company.

44
 45

*Delay in implementation of the project.

*Any major change in management pattern/ share holding.

Ramifications Of NPAs

Reduced profitability: Provisioning to be made to cover default / credit risk

adversely affect.
Dividend to be paid to the investors.
Salary and other benefits to be given to the employees.
Investments to be made in technology, infrastructure etc.

Capital Adequacy Problem: only 1.25% of risk weight age Assets out of
the entire provisioning made by a bank is included in tier II capital leading to
. Reduced lending.
. Reduced Profitability.
. Overall reduced growth.
Capital Account Convertibility: Tavapore committee recommended that
CAC should not be introduced unless the NPAs of banks come down to less
5%.
Asset Liability Management: sub standard Assets are taken in 3 to5 years
time bucket and Doubtful/loss assets in more than 5years time bucket
creating mismatch in the earlier (e.g. 29d- 3 m, 3 m- 6 m-1 year-3 year)
Both for liquidity and an interest rate risks management

Overall Image and Rating of the bank:

. Increased risk perception about the bank relating to investment, lending,
Refinance etc. Leading to increased cost of borrowing and
reduced profitability.
. Attracting penal action by RBI including refusal of license to open
branches in India.
. Difficulty in obtaining license to do business overseas.
. CAMELSC Rating by Reserve Bank of India.
Capital Adequacy
Asset Quality
Management
Earnings
Liquidity
Systems
Control & Compliance
45
 46

Illustrative strategies For Reducing NPAs

1 Replacement /Rescheduling of Loans
2 Rehabilitation of Potentially viable units
3 Acquisition of sick units
4 Compromise and settlement with borrowers
5 Debt restructuring of corporate and SME Accounts
6 Enforcement of securities under SARFAESI ACT, 2002
7 Sale of financial assistance to assets reconstruction securitiesation
companies

8 Sale of NPAs
9 Settlement of claims with DIGC/ECGC
10 Establishment of special loan Recovery Branches and posting competent
staff to these branches
11 Legal Actions
A Recovery through Debt Recovery Tribunals/lok Adalats
B Certified Proceeding under State Recovery Acts
C Filling of suits including summary suits in civil courts
D criminal action against willful Defaulters

12 Write off

MISELLANEOUS
1 Improving credit Appraisal, Monitoring supervision and Follow-up
2 Appointment of agents
3 Efficient credit information systems
4 Greater Accountability on the part of Borrower Particularly Corporate

ILLUSTRATIVE STEPS WHICH MAY BE TAKEN BY THE

CONTROLLING OFFICES OF COMMERCIAL BANKS FOR
REDUCING NPAS

Step 1 Study the problem of NPAs: Branch-wise, amount-wise and age-wise

Step 2 Formulate a loan recovery policy and several strategies for reducing
NPAs
Step 3 Create special recovery cells at HO/ZO/RO/ other controlling offices
46
 47

Step 4 Identify Critical branches for recovery

Step 5 Fix branch-wise and region/zone-wise targets for recovery and draw
time bound action programmers for the branches/ROs/ZOs etc to enable
them to achieve their respective targets
Step 6 Select proper strategy (including combination of strategy) and
techniques for solving the problem of each critical NPA on a case to case
basis and common strategy and technique for other NPAs.
Step7 Monitor implementation of the time bound action plan drawn
Step8 Take corrective steps wherever necessary and change/modify the
original plan, if necessary.

THE SECURITISATION AND RECONSTRUCATION OF

FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY
INYEREST ACT,2002

A) Important Provision of the ACT

Chapter 1: Preliminary Definition
1 “Asset Reconstruction” means acquisition by any securitization
company or reconstruction company of any right or interest of any
bank or financial institution for the purpose of realization of such
financial assistance;

2 “Borrower” means any person who has been granted financial assistance
by any bank or FI or who has given any guarantee or created any mortgage
or pledge as

Security for the financial assistance granted by any bank or FI and

includes a person who becomes borrower of a securitization company
or reconstruction company consequent upon acquisition by it of any
rights or interest of any bank or FI in relation to such financial
assistance
3 “Debt” has the same meaning as in sec 2(g) of RDDBFI Act1993.
4 “Default” means nonpayment of any principal debt or interest there
on or any other amount payable by a borrower in any secured creditor
consequent upon which the account of such borrower is classified as
nonperforming assets. Sec2 (I) (j)
5 “Financial Asset” means debt or receivable and includes
47
 48

(i) A claim to any debt or receivable or part thereof whether

secured or un secured.
(ii) An debt or receivables secured by , mortgage of or charge on ,
immovable property;
(iii) A mortgage charge ,hypothecation or pledge of immovable
property;
(iv) Any right or interest in the security , whether full or part under
lying such debtor receivable
(v) Any beneficial interest In property whether movable or
immovable or in such debt receivables whether such interest is
exiting , future, accruing, conditional or contingent
(vi) Any financial assistance
6 “Hypothecation” means a charge in or upon any movable property ,
existing or future created by a borrower in favor of a secured creditor with
delivery of position of the movable property to such creditor as a security for
financial assistance and includes floating charges and crystallization of such
charge into fixed charge on movable property
7 “Non performing Assets” means an asset or account of a borrower which
has been classified by a bank or financial institution as sub standard
,doubtful or loss assets, in accordance with the directions or guidelines
relating to asset classification issued by the regulatory /administering
authority/body or by Reserve Bank as the case may be.
8 “Obligor” means a person liable to the originator whether under a contract
or other wise to pay a financial asset or to discharge any obligation in respect
of a financial asset, whether existing future, conditional or contingent and
includes a borrower;
9 “originator” means the owner of the financial asset which is acquired by a
securitization company or reconstruction company for the purpose of
securitization or asset reconstruction
10 “Securitization” means acquisition of financial assets by any
securitization company or reconstruction company from qualified
institutional buyers by issue of security receipts representing undivided
interest in such financial assets or otherwise;
11“secured creditor” means any bank or FI or group of banks or FIs and
includes:
(i)Debenture trustee appointed by any bank or financial institution

48
 49

(ii) Securitization company (sc) or reconstruction company (Rc) whether

acting as such or its managing a trust set up for securitization
/reconstruction;
(iii) any other trustee holding securities on behalf of a bank or FI I whose
favor security interest is created for due repayment by any borrower of any
financial assistance.

Chapter II:
1 Registration of securitization/ Reconstruction companies
2 Acquisition of right or interest in financial assets
3 Issue of Security By Security Reconstruction Company
4 Measures for asset reconstruction
5 other functions of security Reconstruction Company
6 Regulation of disputes.
Chapter III: Enforcement of security interest
1 Notwithstanding anything u/s 69A in TPA 1882 without intervention of
any court tribunal the secured creditor may enforce the security interest.
2 The secured creditor may issue a notice in writing to the borrower of NPA
account with details of amount payable by him and the securities intended to
be enforced in case of his failure to pay by the stipulated date and giving him
60days time to adjust his dues in full.
3 If the borrower makes any representation /raises any objection on receipt
of notice the secured creditor shall communicate with in one week the
reasons for its non acceptance
Provided that such reasons communicated /likely to be
communicated shall not confer any right upon the borrower to prefer an
application to the DRT/ court of dist judge
4 If the borrower fails to repay in full within the specified period the creditor
may do one or more of the followings:
(i)Take possession of the secured assets of the borrower including the right
to lease/assign/sell to realize the secured asset
(ii) Take over the management of the business of borrower including the
right to lease/assign/sell to realize the secured asset
5 All costs, charges and expenses incurred with connection of action taken
u/s 13(4) shall be recovered first and the balance shall be paid to the entitled
person from the money received by the secured creditor.
Chapter IV: Central Registry
1 setting up central registry for registration of securitization and
reconstruction of financial assets and creation of security interest S. 20

49
 50

2 Filling of transactions of securitization and reconstruction of financial

assets and creation of security interest S. 23
3 modification of security interest
4 Securitization Company or Reconstruction Company or secured creditor to
report satisfaction of security interest.

5 Chapter: Offences and Penalties

1 Penalties: penalties upto Rs 5000 per day for every company secured
creditor /their every officer in default in filling particulars u/s 23 or sending
particulars u/s 24 or giving intimation u/s 25.
2 Penalties for non-compliance of directives of RBI by any securitization
company/reconstruction company: Finance up to Rs 5lakhs and in case of a
continuing offence with an additional fine, which may extend to Rs 10,000
per day during the period of default-s.no 28

3 Offence: Imprisonment upto 1 year or fine or both for contravening or

attempting to contravening or a betting the contravention of the provisions of
the ACT or of any rules made there under. S.no 29.
ChapterVI: Miscellaneous
1 Provisions of the Act not apply in case of:
(a) Lien on any good/money/ security.
(b) Pledge of movables.
(c) Creation of security in any aircraft/ vessel
(d) Any conditional sale/ hire-purchase/lease/any other contract. Where no
security interest has been created
(e) Any right of unpaid seller.
(F) Any properties not liable to attachment (excluding the properties
specially charged with the debt recoverable under this Act) or sale under the
first provision to S.no 60 (1) of CPC
(g) Repayment of loans not exceeding Rs1lakh.
(h) Agriculture land and
(i) Amount of due<20% of principal & interest.

50
 51

CONCLUSION
In the above we discussed the norms for assets classification and
provisioning. In India, the process of globalization liberalization and
deregulation commenced in the early 90s. In the banking arena, this process
was initiated with the report committee. The Reserve Bank of India adopted
the suggestion of this committee and recommended objective norms for asset
classification, income recognition, and provisioning in line with international
practices. An asset was classified as non-performing one aced on the sole
criterion of non recovery of installment /interest within stipulated time .
Subjective factors such as health of the borrower, potential of recovery,
perception about the activity etc are

Not given consideration. Similarly, asset classification is based on the age of

the asset in NPA category. We discussed four categories of assets viz.
standard, sub-standard,

Doubtful and Loss. The provisioning is again based on the category and sub-
category of the asset and the value of realizable security .Value of security
would play some part in the determination of provision, in Doubtful-I and
Doubtful-II categories .The exercise of asset classification and provisioning
is largely made objective and arithmetical nom

51
 52

52
 53

53
 54

NPA FIGURES FOR FINANCIAL YEAR ENDING 31

MARCH 2008-2009:

Particulars FY 08- FY 07-08 Year Year

09 ended ended
mar mar 2008
2009
Gross NPA 5592.7 4852.3 5592.7 4852.3
(in millions)
Net NPAs 2875.1 2035.5 2875.1 2035.5
(in millions)
Gross NPA 2.64 2.53 2.64 2.53
ratio(%)
Net NPA ratio 1.37 1.08 1.37 1.08
(%)
NPA 48.59 58.05 48.59 58.05
Coverage ratio(%)

Net NPA’s as a percentage of net advances, declinefrom1.13%as on

31march 2007to1.08%as on 31march 2008.
NPA coverage ratio is 58.05% against 61.43% as on march31, 2007.
The gross NPA and net NPA as proportion of gross and net customer assets
for quarter year ending June 2009 were at 2.44% and0.77% respectively.
The NPA coverage ratio which is an indicator of safety and shows the level
of provision a bank has for its bad assets has gone up to 68.79%from59.53%
as year ago. It is now among the highest in industry. As a result of efficient
leveraging of its assets. The bank has been able to bring down its cost to
income ratio to32.77% from 37.66% a year ago. The return on assets has
improved to 1.29 %( annualized) compared to 1.16%a year ago.

54
 55

CHAPTER SIX

CONCLUSION

55
 56

CONCLUSION

It is good to see that the J&K Bank has introduced giving all its major
services to the customers such as ATM debit card, credit card, anywhere
banking and online banking facilities to capture the market share of around
80% in the town which is very high in spite of its tough competitors like
SBI, ICICI, HDFC, State Co-operative bank etc. from this research I came to
conclusion that the bank has succeeded in satisfying its majority of customer
by its financial products and services. The bank is also able to boost up its
financial strength and position in the market, the bank records net profit of
Rs117.05crores an increase of 24%over Rs 94.56 pertains to the
corresponding period the previous year. The asset has also been increased to
15.07% and the bank’s reserve with the RBI as on 31-03-2009 is 73%. The
bank is also able to satisfying the interest of share holders in the bank by
giving 169% dividend i.e. (sixteen rupees and ninety paisa per share).0n 01-
06-2009. But still much is to be done especially for the customer
satisfaction, because what matter most is the customer satisfaction. For any
business establishment, its advertisement is the satisfied customer.

56
 57

BIBLIOGRAPHY AND REFERENCES

During the completion of this project work I have taken
references from various sources which include:

• Annual report of The Jammu and Kashmir Bank Ltd.

• Magazines such as Business Economics, newspapers such as
Greater Kashmir (Corporate Section), bank dairy, bank
magazine, catalogue etc.
• Yearly journals of The Jammu and Kashmir Bank Ltd.
• Websites of the bank.
• www.Rbi.org.in

57
 58

Books
• Financial Management by I. M. Panday
• Marketing Management by Philli Kotler
• Financial Accounting by S.P. Jain
• Risk Management by Indian institute of banking and finance.
(Macmillan)

58