Neha

RESEARCH PLAN PROPOSAL
NPA MANAGEMENT
(A COMPARATIVE STUDY OF SBI AND ICICI BANK)
FOR THE DEGREE OF
MASTERS OF COMMERCE
(DEPARTMENT OF ACCOUNTING AND TAXATION)
IN THE FACULTY OF COMMERCE
THE IIS UNIVERSITY,JAIPUR
SUBMITTED TO : SUBMITTED BY:
Dr.Ankita Chaturvedi Neha Maheshwari Head
,Senior Assistant Professor M.COM (IIIrd Semester)
Department of Accounting and Taxation Accounting and Taxation
ICG/2014/17713
2015-2016

INTRODUCTION
• Banking sector plays a pivotal role in the development of an economy. The development role it
undertakes determines the pace of development of the economy. Hence the stability of banking
sector is important for the development of an economy. The primary function of banks is to lend
funds as loans to various sectors such as agriculture, industry, personal and housing and other to
meet the productive use of these funds. In recent times the banks have become very cautious in
extending loans, the reason being mounting Non-Performing Assets. Non-performing assets had
been the single largest cause of irritation of the banking sector of India .
• Non Performing Asset means an asset on which the interest or principal have not been paid by
the borrower for the specified period. NPAs reflect the performance of banks. 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. The NPA growth involves the necessity of
provisions, which reduces the over all profits .

NON PERFORMING ASSETS
The concept of Non Performing Asset (NPA )came into existence with the
recommendations of Narasimaham Committee in the year 1992-1993. Non-Performing
Assets have been substantially reduced since regulations were tightened in 1993, but
improvement has recently slowed down. With passing time Banks implemented many
provisions and curative measures to eliminate NPA which helped them to overcome few
problems regarding NPA but soon they found out that NPAs cannot be eliminated
completely, they can just be reduced with proper implementation and management of
funds.

CLASSIFICATION OF NPAS
Standard
assets
Doubtful
assets
Sub
Standard
assets
Loss
asset

CAUSES OF NPAS
Speculation
Willful defaulters
Diversion
of funds
Internal
reasons
Fraudulent
practices
External
reasons

TRENDS OF NPA
0
1
2
3
4
5
6
7
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
p
e
r
c
e
n
t
a
g
e
%
NET NPAs
Public Sector
Private Sector

Study
Reference
1
Study
Description
Country Data Source
&
Techniques
Used
Findings
Narula S., Singala
M.(2014),”Empirical
Study on Non
Performing Assets Of
Bank”
International Journal
of Advance Research
in Computer Science
&Management
Studies; Volume
2,Issue 1, ISSN No.
2321-7782,PP.194-
198
The article focuses
on Non Performing
Assets of PNB and
its impact on
profitability and sees
its relation between
Total Advances, Net
Profits ,Gross & Net
NPAs.
India Secondary data
based, ratio analysis
used as tool.
Because of
mismanagement in
bank there is a
positive relation
between total
advances, Net profits
and NPA of bank
which is not good.
This positive
relationship between
is due to wrong
choice of client by
bank.

Study
Reference
2
Study
Description
Country Data Source
&
Techniques
Used
Findings
Panery H.J.(2014)
“A Comparative
Study of Non
Performing Assets In
Selected
Nationalized Banks
In India”
Indian Journal of
Applied Research;
Volume 4, Issue
12,ISSN No.
2249-555X,PP.295-
298
This article discusses
the position of NPAs
in Indian
Nationalized Banks .
NPAs of selected
banks have been
compared (Central
Bank of India ,Dena
Bank, SBI). Data for
the period of last five
years i.e. year 2009-
10; to year 2013-14
of the sample banks
have been taken .
India Secondary data is
used. Various Ratios
have been calculated
for the analysis.
ANOVA table is
prepared.
In present time it is
very necessary to
control
growing NPAs in
Nationalized Banks
in India. RBI have to
take some steps to
control the NPAs in
Banking.

Study
Reference
3
Study
Description
Country Data Source
&
Techniques
Used
Findings
Pasha M.A.&
Srivenkataramana
T.(2014),
“Non Performing
Assets of Commercial
Banks – A Critical
Evaluation ” DHARANA
- International Journal
from MP
Birla Institute of
Management;
Volume 8,ISSN No.
0974-0082,
PP.03-09
This paper discusses
Gross & Net NPAs of
commercial banks
classified into Public,
Private & Foreign for
the period (2008-
2013).Management of
NPAs have been
discussed as well.
India Secondary data has
been collected.
NPAs of Public banks
are more in
comparison to Private
&Foreign Banks. A
sound control system
on assets can help in
NPA management.

Study
Reference
4
Study
Description
Country Data Source
&
Techniques
Used
Findings
Samir , Kamra D.
(2013)
“A Comparative
Analysis of Non
Performing Assets of
Selected Commercial
Banks in India”
of Management ;
Volume 3,
No.1,
ISSN No. 2277-5470,
PP. 68-80
This paper analyses
the trends of NPAs
with respect to
Advances & Total
Assets of SBI, CBI &
PNB. It details
about the sector-wise
Classification of
NPAs, internal and
external factors for
their occurrence, the
effects of NPAs on
banks.
India Secondary Data is
collected. Net NPA
as a percent of total
assets and total
advances have been
calculated.
Correlation technique
has been used.
The incidence of
non-performing
assets (NPAs) is
affecting the
performance of credit
institutions both
financially and
psychologically The
study suggests multi-
pronged and
diversified strategy
for speedy recovery
of NPAs in
Commercial Banks in
India.

Study
Reference
5
Study
Description
Country Data Source
&
Techniques
Used
Findings
Srinivas KT (2013),
“A Study On Non
Performing Assets of
Commercial Banks in
India “
International Monthly
Journal Of Research
in
Management &
Technology;
Volume 2 , ISSN No.
2320-0073
The paper states the
reasons for
advances becoming
NPA in the Indian
Commercial banks
Sector. It elucidates
various steps for
reducing NPAs.
India Secondary data:
secondary RBI
bulletins, research
papers etc. is used.
By adopting certain
measures banks can
avoid sanctioning
loans to unworthy
customers. They
should get both the
formal and informal
reports about the
goodwill of the
customer. If a person
is already proven as
a defaulter then there
is no question of
sanctioning loan to
him.

Study
Reference
6
Study
Description
Country Data Source
&
Techniques
Used
Findings
Ganesan D. &
Santhanakrishnan R.
(2013),” Non-
Performing Assets: A
Study of State Bank
of India.” Asia Pacific
Journal of Research;
Volume 1, Issue 10,
ISSN: 2320-5504,
PP. 81-88
The magnitude of
NPA is comparatively
higher in public
sector banks than
private sector banks.
NPA are threatening
the stability and
demolishing banks
profitability
India Pre structured
questionnaire, and
Secondary Data is
used.
The NPA ratios in
India have risen
sharply year-by-year.
A high proportion of
Non-performing
Assets steadily
erodes the capital
base of a bank,
impinging on the
ability of bank to
raise fresh capital.

Study
Reference
7
Study
Description
Country Data Source
&
Techniques
Used
Findings
Shalini H.S. (2013). “A
Study on Causes and
Remedies for Non
Performing Assets in
Indian Public Sector
Banks with Special
Reference to Agricultural
Development Branch,
State Bank of Mysore.”
International Journal of
Business and
Management Invention;
Volume 2, Issue 1,
ISSN: 2319-8028,PP.26-
38
Explaining the credit
management which
includes planning,
organizing,
controlling, directing
and co-coordinating
the credit
sanctioning policies
in order to decrease
the non performing
assets.
India Primary &Secondary
Method used.
Chi-Square Method
is applied.
Measure can be
taken to avoid loans
to non-credit worthy
borrowers which
include a careful
check on the
economic viability of
the project.

Study
Reference
8
Study
Description
Country Data Source
&
Techniques
Used
Findings
Selvarajan B. &
Vadivalagan G.
(2013)
“A Study on
Management of
Non Performing
Assets in Priority
Sector Reference To
Indian Banks &
Public Sector Banks
”
Global Journal of
Management &
Business Research ;
Volume 13, Issue
1 , ISSN No. 2249-
4588,PP.101-113
The paper discusses
the challenges
created by NPAs. It
says that major
portion of bad debts
in Indian Banks
arose out of lending
to the priority sector
at the dictates
of politicians and
bureaucrats.
India The data collected is
mainly secondary in
nature.
The
management of
Indian Bank must
pay special attention
towards the NPA
management and
take appropriate
steps to arrest the
creation of new
NPAs, besides
making recoveries in
the existing NPAs.
Timely action is
essential to ensure
future growth of the
Bank.

Study
Reference
9
Study
Description
Country Data Source
&
Techniques
Used
Findings
Singh A. (2013),
“Performance of
Non-Performing
Assets (NPAs) in
Indian Commercial
Banks” International
Journals of
Marketing, financial
Services &
Management
Research; ISSN:
2277-3622, Volume
2, no.9, PP. 86-94
This article majorly
focuses that the NPA
not only affects the
current profit but also
the future profit,
which lead to loss of
long-term beneficial
opportunity.
India RBI Annual Financial
Report, ratio
analysis: trend
percentage used.
The extent of NPAs
has comparatively
higher in public
sectors banks. To
improve the
efficiency and
profitability, the NPAs
have to be
scheduled. Various
steps have been
taken by government
to reduce the NPAs.

Study
Reference
10
Study
Description
Country Data Source
&
Techniques
Used
Findings
Manjule R. R.
(2013),
“Non Performing
Assets – A Challenge
for
Indian Public Sector
Banks”
Researchjournali’s
Journal of Finance;
Volume 1,No. 2,
ISSN No. 2347-8217
The article discusses
the trends in NPA
level based on
recovery in
Commercial Banks.
It further discusses
the preventive
measures
&corrective
measures.
used. data has been
collected from issues
of
Report on Trends
and Progress of
Banking in India
An efficient
management
information system
should be developed.
The bank staff
involved in
sanctioning the
advances should be
trained about the
proper
documentation and
charge of securities
and motivated to
take measures in
preventing advances
turning into NPA.

Study
Reference
11
Study
Description
Country Data Source
&
Techniques
Used
Findings
Chatterjee C.,
Mukherjee J.&
Das R. (2012),
“Management of
Non Performing
Assets- A Current
Scenario “
of Social Science &
Interdisciplinary
Research ;
Volume 1, Issue 11,
ISSN No.
2277-3630,
PP.204-214
The paper focuses
mainly on the causes
and consequences of
NPAs, policy
directives of RBI,
initiatives of Indian
Government,
scenario of NPAs
sector wise and bank
group wise.
India Secondary Data has
been used. The main
source of information
has been through
RBI reports and
bulletins
From the study it is
quite evident that the
NPAs have a
negative influence on
the achievement of
capital adequacy
level, funds
mobilization and
deployment policy,
banking system
credibility,
productivity and
overall economy.

Study
Reference
12
Study
Description
Country Data Source
&
Techniques
Used
Findings
Balasubramanium
C.S. (2012) “Non
Performing Assets
And Profitability
Of Commercial
Banks in India :
Assessment and
Emerging Issues “
National Monthly
Referred Journal Of
Research in
Commerce &
Management;
Volume 1 ,
Issue 7, ISSN No.
2277-1166,
PP.41-52
Study focuses on
trends of NPA since
2000. It discusses
high cost of funds
due to NPA. It
expects that
participating banks in
BASEL III norms are
following healthy
financial and
operational
management
policies.
used.
Gross NPA and Net
NPA as a percent of
total assets and total
advances have been
calculated.
Good credit appraisal
procedures, effective
internal control
systems can help
banks to reduce
NPAs.
Capital positions of
banks have improved
as they were able to
mobilize funds.

Study
Reference
13
Study
Description
Country Data Source
&
Techniques
Used
Findings
Rajput N., Gupta M.
& Chauhan A.K.
(2012), “Profitability
and Credit Culture of
NPAs: An Empirical
Analysis of PSBs.”
of Marketing,
Financial services
and Management
Research; Volume 1,
Issue 9, ISSN: 2277-
3622, PP. 91-109
This paper provides
a pragmatic method
to evaluate effective
indicator with a focus
of non-performing
assets of commercial
banks.
India Secondary data
based (RBI
Publications),
Correlation &
regression used.
It gives an
understanding that
bank’s profitability
can be increased
only if NPA is
decreased.

Study
Reference
14
Study
Description
Country Data Source
&
Techniques
Used
Findings
Rajput N., Arora A.&
Kaur B.(2011),
“Non Performing
Assets in the Indian
Public Sector Banks”
Bank & Bank
Systems ;
Volume 6,
Issue 4, ISSN No.
1816-7403 , PP.
84-89
This study traces the
movement of the
NPAs present in
Indian public sector
banks by analyzing
the financial
performance of the
banks with respect to
key performance
indicators and
management of the
non performing
assets under the
purview of new policy
actions.
India The study is based
on secondary data
collected from RBI
bulletins, journals,
websites etc.
However during the
periods of economic
slowdown,
public sector banks
in India have shown
flexibility,
management of
NPAs through better
quality of advances
and recovery
procedures is
essential for banks to
maintain their
continued existence
and expansion.

Study
Reference
15
Study
Description
Country Data Source
&
Techniques
Used
Findings
Kaur H.& Saddy
N.k.(2011),
“A Comparative Study
of Non Performing
Assets of Public
&Private Sector Banks
“
International Journal of
Research in
Commerce &
Management;
Volume 2, Issue
9,ISSN No. 0976-
2183,PP. 82-89
This paper focuses
on the effect of
NPAs, factors
contributing to it ,
magnitude of NPAs
& their impact on
Indian Banking
Operations . It also
discusses the
management of
credit risk
&measures to
control NPAs
Menace.
used. Percentage
of NPA to
Advances & has
been calculated.
To improve the
efficiency and
profitability, the NPAs
have to be scheduled.
Various steps have
been taken by
government to reduce
the NPAs. This has led
todecline in the level of
NPAs of the Indian
banking sector. The
Indian banks should
take care to ensure that
they give loans to
creditworthy customers
only.

RESEARCH GAP
By reviewing the above literature it was found that a lot of studies have been conducted
on NPA management of Commercial Banks. But as per my best knowledge no
comparative study has been made between SBI and ICICI bank which are at present the
leading banks of India.
Justification and Relevance of the Study
 NPAs reflect the performance of the banks. Higher level of NPA means high probability of
credit defaults and it adversely affect the profitability and the net worth of the bank.
 In present time increasing NPA is the critical issue in Indian banking sector. Because of
which banks face the problem of declining profitability, liquidity problems, reduction in
capital assets and lending limits. It will attract unexpected attention and interference
from the government.
 During last 10 yrs steps have been taken by government and RBI to reduce NPA but their
efforts have not given any remarkable result .

It will be helpful to the following :
 Public and Private Sector Bank
It will help to know the trends of NPAs of Bank in competition. It will help to know their weak point &
strong point.
 Investors
As NPAs affect asset quality, this influences the net profit of banks which in turn affects the prices
of there stock and return to investors.
 Researcher
The research will prove informative for academicians, students and reader interested in knowing
about the NPAs of Public & Private Sector Banks.

OBJECTIVES OF THE STUDY
Following are the main objectives:-
 To identify and analyze the trends of Loans and Advances of SBI and ICICI Bank.
 To describe the cause and factors which are responsible for non recovery of Loan .
 To evaluate the asset quality of banks.
 To suggest improvement in monitoring and reducing the NPA.
 To make suggestions for better management of NPA.

HYPOTHESIS:
The following are the hypothesis of the proposed
study:
Ho1 = There is no significant association between Amount of
NPA and Loan Sanctioned.
Ho2 = There is no significant association between Amount of
NPA and Loan Outstanding .

RESEARCH DESIGN
A research design is the "blue print" of the study. It is the framework that has been
created to seek answers to research questions. . This research is an Exploratory and
Descriptive research study. It consists of enunciating the problem, formulating a
hypothesis, collecting the facts or data, analyzing the facts and reaching certain
conclusions.
Universe
Public and Private Sector Banks in India have been taken as universe.
Scope of the Study
Scope of study is confined to Public and Private sector banks. For the study Public
Sector Bank :SBI and Private Sector Bank : ICICI have been taken . The study will cover
a period of five years from 2010-11 to 2014-15 and will examine the management of
NPAs as well.

Primary Data - Will be collected through Structured Questionnaire which will be filled by
bank officials of SBI and ICICI bank .
Secondary data – Will be collected through Annual Reports , Journals.
Sample Size
Data will be collected through annual reports and by 100 structured questionnaires.
COLLECTION OF DATA
Banks Number of Bank Officials
SBI
ICICI
50
50
Total 100

Sampling Method
In this study Purposive Sampling will be used. In Purposive Sampling units from a pre-specified
group sought out are sampled. The main goal of Purposive Sampling is to focus on particular
Characteristics of a population that are of interest, which will best enable us to answer the research
questions.
Plan of Work and Methodology
Methodology of the research indicates the tools and techniques used for undertaking the research
study. For the purpose of evaluating the NPAs of both the banks techniques of statistics and financial
analysis will be used.

Tools for Data Analysis
Both statistical and financial tools will be applied in order to support the hypothesis
and derive suitable conclusions. The analysis will be supported by various tables and
charts
The following tools will be used:
1. Ratio Analysis
2. Time Series Analysis
3. Statistical Averages
4. Measures of Dispersion
5. Correlation
6. Z Test

LIMITATIONS OF THE STUDY
1. Financial data collected for the present study will be primary and secondary both in
nature. In such a case, the study carries all the limitations inherent with the primary and
secondary data.
2. The data is related to five years only (i.e.2010-2014)
3. The study concerned only on Non-performing assets and related issues .
4. The time available was limited so fundamental analysis has been done only for
two Banks.
Chaperisitation
Chapter 1 : Introduction
Chapter 2: Brief history and development of Banks
Chapter 3: Research Methodology
Chapter 4: Analysis & Interpretation
Chapter 5: Conclusion and Suggestions

References
Articles
 Narula S., Singala M.(2014),”Empirical Study on Non Performing Assets Of Bank” International
Journal of Advance Research in Computer Science &Management Studies; Volume 2,Issue 1, ISSN
No. 2321-7782,PP.194-198
 Panery H.J.(2014)“A Comparative Study of Non Performing Assets In Selected Nationalized Banks
In India”Indian Journal of Applied Research;Volume 4, Issue 12,ISSN No. 2249-555X,PP.295-298
 Pasha M.A.& SrivenkataramanaT.(2014),“Non Performing Assets of Commercial Banks – A Critical
Evaluation ” DHARANA - International Journal from MP Birla Institute of Management;Volume
8,ISSN No. 0974-0082,PP.03-09
 Samir ,Kamra Deepa.(2013),”A Comparative Analysis of Non Performing Assets of Selected
Commercial Banks in India “International Journal of Management; Volume 3, No. 1, ISSN No. -2277-
5470,PP.68-80
 Srinivas K T (2013),”A Study on Non Performing Assets of Commercial Banks in India” International
Monthly Journal of Research in Management and Technology ; Volume II, ISSN No. -2320-0073
 Ganeshan D, Santhanakrishnan R (2013),”Non Performing Assets: A Study of State Bank of India
“Asia Pacific Journal of Research ; Volume I, Issue 10,ISSN No. -2320-5504, PP.81-88
 H.S. Shalini (2013),” A Study on Causes and Remedies for Non Performing Assets in Indian Public
Sector Banks with Special Reference to Agricultural Development Branch , State Bank of Mysore “
International Journal of Business and Management Invention; Volume 2, Issue 1, ISSN No. 2319-
80IX, PP.-26-38

 Selvarajan B &Vadivalagan G(2013) , “A Study on Management of Non Performing Assets in
Priority Sector “Global Journal of Management and Business Research; Volume 13,Issue 1, ISSN
No. -2249-4588,PP.-101-113
 Singh A (2013), “Performance of Non Performing Assets in Indian Commercial Banks “
International Journal of Marketing Financial Services & Management Research ; Volume 2, No.9,
ISSN No. -2277-3622,PP.86- 94
 Manjule R. R. (2013), “Non Performing Assets – A Challenge for Indian Public Sector Banks”
Researchjournali’s Journal of Finance; Volume 1,No. 2, ISSN No. -2347-8217
 Chatterjee C., Mukherjee J.& Das R. (2012), “Management of Non Performing Assets- A Current
Scenario “ International Journal of Social Science & Interdisciplinary Research ; Volume 1, Issue
11, ISSN No. 2277-3630, PP.204-214
 Balasubramanium C.S. (2012) “Non Performing Assets And Profitability Of Commercial Banks in
India : Assessment and Emerging Issues “ National Monthly Referred Journal Of Research in
Commerce & Management; Volume 1 , Issue 7, ISSN No. 2277-1166, PP.41-52
 Rajput N., Gupta M. & Chauhan A.K. (2012), “Profitability and Credit Culture of NPAs: An Empirical
Analysis of PSBs.” International Journal of Marketing, Financial services and Management
Research; Volume 1, Issue 9, ISSN: 2277-3622, PP. 91-109
 Rajput N., Arora A.& Kaur B.(2011), “Non Performing Assets in the Indian Public Sector Banks”
Bank & Bank Systems ; Volume 6, Issue 4, ISSN No. 1816-7403 , PP. 84-89
 Kaur H.& Saddy N.k.(2011), “A Comparative Study of Non Performing Assets of Public &Private
Sector Banks “ International Journal of Research in Commerce & Management; Volume 2, Issue
9,ISSN No. 0976- 2183,PP. 82-89

 Books
Bidani S.N. (2002), “Managing Non-Performing Assets in Banks”, Vision
books pvt. Ltd., India, PP.1-192
Jain V. (2007), “Non-Performing Assets in Commercial Banks.” Regal
Publications; New Delhi, PP. 1-336
 Webliography
www.abhinavjournal.com
www.iijbmi.org
www.ijemr.net
www.indianresearchjournals.com
www.rbi.org.in

Questionnaire
Name Of The Employee –
Name Of The bank-
Service Period –
1. Since how long NPA is being observed in your region .
 0-1
 1-2
 2-5
 Above 5 years
2.For which category NPA is noticed .
 Personal loan
 Housing loan
 Agriculture loan
 All of them
3.How will you rank the following as cause of NPA.
 Lack of monitoring
 Willful defaulters
 Mismanagement of funds by borrower
 Delay in lagal proceedings
4.Who do you think are the main defaulters responsible for NPAs.
 Small borrowers
 Mediaum borrowers
 Large borrowers

5. Do you think sometime there is political pressure on banks to sanction loans to undeserving borrowers for non
viable projects .
 Yes
 No
 Cannot say
6.Do you think wait and watch approach of banks( ie. Allowing the asset from going bad to worse situation) is
responsible upto an extent .
 Yes No
 May be
 Cannot say
7.In your opinion what is the trend of NPA in your bank.
 Highly decreasing
 Slowly decreasing
 Constant
 Slowly increasing
 Highly increasing
8.Measures for recovery of NPAs adopted by bank .
 Legal
 Legal & Illegal
 Cannot say

9. How will you rank following steps for recovery of NPA.
 Caution and care during loan processing
 Strengthening of recovery cell
 Monitoring of performing asset
 Out of court settlement
 Vigorous follow up at branch level
10.To what extent NPA has been converting into good asset .
 <20%
 20%-30%
 30%-40%
 >40%
 Cannot say
11. Has profitability increased after adopting reduction technique .
 Yes
 No
 Cannot say
12. Who do you think will play major role in lowering NPAs through legal
mechanisms.
 RBI
 Government
 Banks

Neha

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