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A Study on Management of Non-Perfor ming Assets in Indian Over seas Bank, Click to edit Master subtitle style Por ur
Presented By, MANIKANDAN.L 2010201039

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IOB-INTRODUCTION

Founded on : February 10, 1937 Founded By : Mr.M.Ct.M. Chidambaram Chettiar Headquarters : Chennai, India Key Person : Mr.M.Narendra, Chairman & MD IOB was nationalized in 1969 IOB has 2555 domestic and 6 overseas branches IOB was the first Bank to venture into consumer credit

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IOB, PORUR BRANCH

Branch was established to support W.S. Industries as an extension counter. Established as a full commercial bank from January 2005 Specialty : Started as an ALL WOMEN branch Employees : 20

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NEED FOR THE STUDY

To study the kind of role NPAs play in the operations of the bank To evaluate and analyze the credit worthiness of the borrower to prevent NPA To know the variables that are available to control and prevent NPA To study the financial performance of the bank with respect to NPA and measures adopted to prevent assets from becoming NPA

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PROBLEM STATEMENT

As an investor (depositors) or creditors point of view NPA of any co-operative, nationalized or private bank is an important thing in study of the financial position of a bank. If NPA is greater than the PA, then it would create a problem or can cause failure of a bank in near future. Main focus is on NPA of the bank because from last ten years, number of banks are becoming failures due to high NPA ratios So it is very important for success of any bank to maintain PA and having less or zero NPA

RESEARCH OBJECTIVE
PRIMARY OBJECTIVES:

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To study the magnitude and trend of NPA in IOB, Porur branch To study the impacts of NPA on the operating profits of the bank through statistical and comparative ratio analyses. To perform a comparative analysis with other public and private sector banks with respect to NPA

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RESEARCH OBJECTIVE (Contd.)

SECONDARY OBJECTIVES:

To study the existing debt recovery and NPA management methods To study the strength and weakness in recovery aspect, and provision created for NPAs To study the credit worthiness of JK healthcare, the major borrower and defaulter To offer necessary measures for effective management and prevention of NPAs in the

RESEARCH METHODOLOGY
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Research Design : Empirical and Analytical Sources of Data: Primary data : Personal interviews with bank officials and observations Secondary Data : IOBs Annual Reports IOBs Quarterly Bulletins IOBs Website Details of major defaulter from the bank Research articles, other banks websites and

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WORK DONE TILL NOW

Studying the meaning, classification and importance of NPA Review Collection of NPA details from the of details of JK healthcare

Literature Data

bank
Collection Identifying

the comparative ratios for financial analysis the hypotheses for the

Formulating

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HYPOTHESES
There

is no significant association between gross NPAs and gross advances NPAs and net advances are not significantly associated doubtful and loss assets on an average do not differ significantly is no significant reduction in the portion of gross NPAs to gross advances.

Net

Sub-standard, There

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LITERATURE REVIEW
The

challenge of NPAs to public sector banks of NPA on banks profitability ratios

Impacts

Accounting Factors Banks Debt

related to NPA lending policy

recovery management methods

NPA : NON-PERFORMING ASSET

Meaning: An asset, including a leased asset, becomes nonperforming when it ceases to generate income for the bank. A NPA is a loan or an advance where Interest and/ or installment of principal remain overdue for a period of more than 90 days in respect of a term loan.

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CLASSIFICATION OF ASSETS
Loan Asset

Performing Asset (PA)

Non Performing Assets (NPA) Doubtful Loss

Substandar Standard d Assets RBI has specified norms on providing provisions for various classes of NPL as follows: Substandard Assets: 20% Doubtful Assets: 100% of unsecured portion, 2050% on secured portion

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Cont.

Standard Assets : These are loans which do not have any problem are less risk. Substandard : A substandard asset would be one, which has remained NPA for a period less than or equal to 12 months Doubtful : An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months. Loss : A loss asset is one where loss has been identified by the bank or internal or external auditors or the RBI inspection but the amount has not been written off wholly.

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RATIO ANALYSIS
1.GROSS NPA RATIO: Gross NPA ratio Gross NPA Gross advances 2.NET NPA RATIO Gross NPA-Provision Net NPA Ratio =----------------------------------* 100 Gross Advances-Provisions = -------------------------------- *100

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Contd..

3. PROVISION RATIO Total Provision

Provision Ratio=------------------------*100 Gross NPAs 4. PROBLEM ASSET RATIO TotalAssets Problem Asset Ratio = ----------------------*100 GrossNPAs

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Contd..
5. CAPITAL ADEQUACY RATIO Capital * 100 Capital Adequacy Ratio =--------------------------Risk Weighted Assets 6. SUB-STANDARD ASSETS RATIO total substandard assets*100 Substandard Assets =-----------------------------------Ratio Gross NPAs

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Contd..
7.DOUBTFUL ASSET RATIO: total doubtful assets*100 Doubtful Asset Ratio=----------------------------Gross NPAs 8.LOSS ASSET RATIO: Total Loss Assets*100 Loss Asset Ratio=-------------------------------Gross NP A

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NPA over years at IOB,Porur

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OVERVIEW OF WORK TO BE DONE

Data collection of NPA of various banks Performing statistical analysis on the collected data to test the hypotheses Performing ratio and trend analysis on collected data Interpretation of analyzed data and representation of findings Studying existing methods to prevent NPA Offering necessary measures for management and prevention of NPAs from findings and research

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