Dissertation Report on

Comparative Analysis of Non-Performing Assets of Public

Sector Banks, Private Sector Banks & Foreign Banks

UNDER THE GUIDANCE OF:

SUBMITTED BY

DR. MATLOOB ULLAH KHAN

Rameez Tassaduq

MBA (4TH SEMESTER) (DEPARTMENT OF

FMIT)
JAMIA HAMDARD UNIVERSITY, NEW DELHI

What is NPA

A non-performing asset (NPA) was defined as a credit facility in

respect of which the interest and/ or instalment of principal has
remained past due for a specified period of time.

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.Accordingly, with effect from March 31, 2004, a nonperforming asset

TYPES OF NPA:
1.

Gross NPA

2.

Net NPA

Gross NPA:
Gross NPAs are the sum total of all loan assets that are classified as NPAs as
per RBI guidelines as on Balance Sheet date. Gross NPA reflects the quality of
the loans made by banks. It consists of all the nonstandard assets like as substandard, doubtful, and loss assets. It can be calculated with the help of
following ratio:

Net NPA:

Net NPAs are those type of NPAs in which the bank has deducted the provision regarding NPAs. Net
NPA shows the actual burdenof banks. Since in India, bank balance sheets contain a huge amount of
NPAs and the process of recovery and write off of loans is very time consuming, the provisions the
banks have to make against the NPAs according to the central bank guidelines, are quite significant.
That is why the difference between gross and net NPA is quite high.

It can be calculated by following:

Net NPAs = Gross NPAs Provisions

Gross Advances - Provisions

Problem statement/Objective of
the research

To study of the concept of Non Performing Asset in Indian perspective.

To study NPA standard of RBI

To study the Reasons for & Impact of NPAs

To evaluate the efficiency in managing Non Performing Asset of different types of

banks (Public, Private & Foreign banks) using NPA ratios & comparing NPA with profits.

To check the proportion of NPA of different types of banks in different categories.

RESEARCH METHODOLOGY

Research Design

The research design that will be use is Descriptive Research.

Involves gathering data that describe events and then organizes, tabulates,
depicts, and describes the data.

Uses description as a tool to organize data into patterns that emerge during
analysis.

Often uses visual aids such as graphs and charts to aid the reader.

Using of hypothesis testing.

Test of Correlation:

H0: There is no significant correlation between profits & NPAs of Public Sector Banks for last 9
years

H1: There is correlation between profits & NPAs of Public Sector Banks for last 9 years

H0: There is no significant correlation between profits & NPAs of Private Sector Banks for last 9
years

H1: There is correlation between profits & NPAs of Private Sector Banks for last 9 years

H0: There is no significant correlation between profits & NPAs of Foreign Banks for last 9 years

H1: There is correlation between profits & NPAs of Foreign Banks for last 9 years

Data Collection Sources

Secondary Data

Secondary data refers to the data which has already been generated
and is available for use. The data about NPAs & its composition,
classification of loan assets, profits (net & gross) & advances of
different banks is taken from Reserve Bank of India website and
indiastat.com.

Scope of the study

To understand the concept of NPA in Indian Banking industry.

To understand the causes & effects of NPA

To analyze the past trends of NPA of Public, Private & Foreign banks in
different sector.