Shivu Project

An Exploratory study on Debt Recovery Management at “The BCCB Ltd”
Dissertation submitted to the

BANGALORE UNIVERSITY
In partial fulfillment of the requirements for the award of the
POST GRADUATE DEGREE
of
MASTER OF COMMERCE
Submitted by
SHIVAKUMAR S.L.
Reg. No. O8ATCM1028
Under the guidance of

Dr. H. PRAKASH,
M.Com, M.B.A., Ph.D.
Co-ordinator – M.B.A
Govt. R.C.College of Commerce & Management
Govt. R.C. College of Commerce & Management 1

Palace Road, Bangalore – 560 001.

2009-10
CO-ORDINATOR’S CERTIFICATE
This is to certify that the dissertation entitled

“AN EXPLORATORY STUDY ON DEBT
RECOVERY MANAGEMENT OF CO-OPERATIVE
BANKS WITH SPECIAL RFERENCE TO THE
BANGALORE CITY CO-OPERATIVE BANK LTD.”
is the bonafide research work carried out by Mr.
SHIVAKUMAR S.L. bearing Reg. No.
08ATCM1028 under the guidance and supervision
of Dr.H.PRAKASH, Co-ordinator of M.B.A., Govt.
R.C. College of Commerce and Management.

Place: Bangalore Dr. M.ASHFAQ

AHMED
Date: Co-ordinator–
M.Com
GUIDE’S CERTIFICATE
This is to certify that the dissertation entitled

“AN EXPLORATORY STUDY ON DEBT
RECOVERY MANAGEMENT OF CO-OPERATIVE
BANKS WITH SPECIAL RFERENCE TO THE
is the bonafide research work carried out by Mr.
SHIVAKUMAR S.L. bearing Reg. No.
08ATCM1028 under my guidance.

Place: Bangalore
Dr.H.PRAKASH
Date: Co-
ordinator of M.B.A
STUDENT’S DECLARATION
I hereby declare that the dissertation entitled

“AN EXPLORATORY STUDY ON DEBT RECOVERY
MANAGEMENT OF CO-OPERATIVE BANKS WITH

SPECIAL RFERENCE TO THE BANGALORE CITY

CO-OPERATIVE BANK LTD.” has been carried out
by me under the guidance and supervision of
Dr.H.PRAKASH, M.Com, M.B.A., Ph.D,
Govt.R.C.College of Commerce & Management,
Bangalore., submitted in partial fulfillment for the
award of degree of Master of Commerce of
Bangalore University.
I also declare that no part of this

representation has been previously published or
submitted as a project representation for any degree,
diploma, fellowship or any other similar title to any
university or institution.
Place: Bangalore
SHIVAKUMAR S.L.
Date: Reg. No.
08ATC M1028

ACKNOWLEDGMENT
I am happy to express my gratitude to
Prof.H.K. KUMARARAJ URS, Principal of
Govt. R. C. College of commerce and
management & Dr.M.ASHFAQ AHMED, Co-
ordinator of M.com for their encouragement,
guidance and many valuable ideas imported to
me for my project, with great pressure.
I extend my gratitude towards internal

guide of the project Dr. H.PRAKASH, Co-
odinator of MBA, and external guides
Mr.N.MANJUNATHA, General Manager,
Mr.K.G.RAJU, Deputy General Manager and
Mr.B.GANGADHARA, Asst. General
Manager of the BCCB Ltd., and also
Mr.SATHISHA.H.K. (Asst. Prof. GFGC,
Nagamangala), under whose valuable
guidance, constant interest and
encouragement I have been able to complete
the project successfully. This co-operation is
not useful only for this project but, will also be
a constant source of inspiration for the future.
I am also thankful to my parents, all my

lecturers and my friends for theirs constant
help in preparation of my project successfully.

SHIV
AKUMAR S.L.
Re
g. No. 08ATCM1028
CERTIFICATE BY THE PRINCIPAL
This is to certify that the project “AN

EXPLORATORY STUDY ON DEBT RECOVERY
MANAGEMENT OF CO-OPERATIVE BANKS
WITH SPECIAL RFERENCE TO THE
has been completed by Mr. SHIVAKUMAR S.L.
bearing Reg.No.08ATCM1028 under the guidance
of Dr.H.PRAKASH, Co-ordinator of M.B.A.

This dissertation is based on original result

and has not formed the basis for the award previously
of any degree, diploma, associate ship, fellowship or
any other similar title.
Prof. H.K.KUMARARAJ URS

Principal
CONTENTS
CHAPT PAGE
DESCRIPTION
ER NO. NO.
CHAPTER INTRODUCTION 1 - 45
–1  Introduction about banking industry
 History of modern banking in India
 Classification of banks
 Functions of Banking
 Co-operative Banks
 Definitions & features of Co-
operative banks
 Structure of Co-operative Banks
 Introduction of Debt Recovery
Management
 Meaning of Debt Recovery
Management
 Introduction to NPAs
 Meaning of NPAs
 RBI guidelines on Income
Recognition

 Accounting Standard – 9 on
Revenue Recognition issued by ICAI
 RBI Guidelines on Classification &
provisioning requirement of Bank
Advances
 Impact of NPAs
 Consequences of NPAs
 Objectives of Debt Recovery
Management
 Factor affecting the recovery of
Loans & Advances
 Recovery Methods
CHAPTER RESEARCH DESIGN 46 - 49
–2  Title of the study
 Statement of the problem
 Objectives of the study
 Scope of the study
 Research Methodology
 Plan of analysis
 Limitations of the study
 Chapter layout
CHAPTER BANK PROFILE 50 - 57
–3  History of the bank
 Goals & objectives of the bank
 Vision statement
 Organization structure
 List of board of directors
 Statement of growth of the bank
 Braches of the bank
 Awards & competitors details
CHAPTER ANALYSIS & INTERPRETATION OF 58 - 78
–4 DATA

CHAPTER SUMMARY OF FINDINGS, 79 - 83

–5 SUGGESTIONS & CONSLUSIONS
BIBLIOGRAPY
ANNEXTURE – QUESTIONNAIRE

LIST OF TABLES
TABLE Showing Recovery as a Percentage of Loans

65
4.1 & Advances
TABLE
Showing Status of NPAs in the bank 67
4.2
TABLE Showing Net NPAs & Recovery performance of
69
4.3 the bank
TABLE Showing Net NPAs as a percentage of Loans &
71
4.4 Advances
TABLE
Growth of Deposits 73
4.5
TABLE
Loan Position of the Bank 75
4.6
TABLE
Profit Position of the Bank 77
4.7
LIST OF GRAPHS
GRAPH Showing Recovery as a Percentage of Loans

66
4.1 & Advances
GRAPH
Showing Status of NPAs in the bank 68
4.2
GRAPH Showing Net NPAs & Recovery performance of
70
4.3 the bank
GRAPH Showing Net NPAs as a percentage of Loans &
72
4.4 Advances
GRAPH
Showing Growth of Deposits 74
4.5
GRAPH
Showing Loan Position of the Bank 76
4.6

GRAPH
Showing Profit Position of the Bank 78
4.7
CHAPTER – 01
INTRODUCTION
INTRODUCTION ABOUT BANKING INDUSTRY:
The word bank originated the French word ‘benque’ or

Italian ‘banco’ which means an office for monitory transaction
over the counter. In those days banks or desks were used as
centers for monitory transactions.
During the barter system also, there existed traces of

banking, i.e. people used to deposit cattle and agricultural
products in specified places get loans of some other form in
exchange for these. There is solid evidence found in records
excavated from Mesopotamia, showing some bank existed
around 1700 B.C. During this time barley, silver, gold, copper,
etc., were used as a standard for valuation.
ORIGIN OF BANKING INDUSTRY:
Greece was the first country to introduce a satisfactory

system of coinage. After the invention of coins started, a

meaningful system of banking came into existence taking

into account all the avenue of banking a credit system.
Rome was the first country to start a bank at the

department of state level in the 4th century B.C. with
transactions such as depositing and investments in other
forms. In India ancient records show that banking was
popular and money lending was a common practice among
the common people.
In the olden days’ Goldsmith, merchants and money lenders

conducted the business. They had transactions among
themselves by which funds were transferred from one
business firm to another. They had no general or uniform
principles of banking, lending, rate of interest, etc.
INTRODUCTION TO BANKING IN INDIA
The Indian Companies Act defines the term banking as

“accepting for the purpose of lending or investment of
deposits of money from the public, repayable on demand or
otherwise and withdrawable by cheque, draft or otherwise”.
A Banker is a dealer in money and credit. The business

of Banking consists of borrowing and lending banks acts as
financial intermediaries between savers (lenders) and

investors (borrowers) by accepting deposits of money from a

large number of customers and lending a major position of a
accumulated ‘pool’ of money to those who wish to borrower.
In this process banks secure reasonable return for the savers,
make funds available to the investors at a cost and earn a
profit for themselves after covering the cost of funds and
providing for corporate taxes to the government. Thus, the
banking institutions in a country mobilizes savings by
accepting monetary deposits from the people, participate in
the mechanism for the exchange of goods and services and
extend credit while lending money.
HISTORY OF MODERN BANKING IN INDIA
 Pre-nationalization period:
The history of modern banking in India dates back to the

last quarter of 18th century. During this period the English
agency houses of Bombay and Calcutta started banking
business to India. They setup the Bank of Hindustan around
1770 followed by setting up of quasi government banking
institutions like presidency bank of Bombay in 1840 and
presidency Bank of Madras in 1873.

In 1921 all these banks were amalgamated and imperial

bank was constituted. In the late 19th and early 20th centuries,
the Swadeshi Movement inspired to start banks in India. The
Indian Banks were established during this period. In 1935 the
Reserve Bank of India was established as a central bank for
regulating and controlling the Banking business in the
country. Soon after independence, the Reserve Bank was
nationalized in September 1948. The outlook of Reserve Bank
further changed after the inception of planning in 1950-51
and the country adopting a socialistic pattern of society.

 Post-nationalization period:
On an account of the top-sided growth of the banking

system and to bridge the gap between a few industrial
houses and banks, the scheme of the social control was
imposed on banks with effect from Feb 1, 1969. It resulted in
setting up of National Credit Council for more equitable
distribution of bank credit and legislative changes in the
Banking Regulation Act for making the board of directors of
the banks more board based. As a result the government
resorted to a more radical measure by nationalizing 14 major
banks on July 1969. Later on in April 1980, six more banks
were nationalized to achieve the objective.
The objective of nationalization was to control the

commanding heights of economy and to meet progressively
and serve the needs of the developing economy in
conforming to the national policy and objectives. Another
welcome feature of post – nationalization period is setting up
of regional rural banks setting up of regional rural banks as
per the provisions of the Regional Rural Bank Act 1976.
These banks confine in themselves the simplicity of
operations as required by local conditions and the efficiency
and business like approach of commercial banks. At the end
of June 1986 there were 194 regional rural banks covering
342 districts. Thus, the banking system, during the post –

nationalization period has undergone a major structural

transformation. There has been a phenomenal expansion of
branch network particularly the hitherto under banked areas.
 Present scenario of banking industry:
The Indian banking can be broadly categorized into

nationalized (government oriented), private banks and
specialized banking institution. The RBI acts as a centralized
body monitoring any discrepancies and shortcoming in the
system. Since the nationalized banks have required a place
of prominence and has then seen tremendous progress.
The need to become highly customer focused has forced

the slow of moving public sector banks to adapt a fast track
approach.
The Indian Banking has come a long way from a sleepy

business institution to a highly proactive and dynamic
activity. This transformation has been largely brought by the
large close of liberalization and economic reform that allowed
banks to explore new business opportunities rather than
generating revenue from conventional stream i.e. borrowing
and lending. The Co-operative banks too have invested
heavily in information technology to after computerized
banks services o its clients.

 New Generation Banking:
The liberalized policy of government of India permitted

entry of private sector in banking, the industry has witnessed
the entry of new generation private banks. The major
parameter that distinguishes these banks from all the other
banks in Indian Banking is the level of services that is offered
to the customer. Verifying the focus has always being
centered on the customer understanding his needs and
delighting him with various configurations of benefits and a
wide portfolio of product and services. The popularities of
these banks can be gauged by the fact, that in as short span
of time, these banks have gained considerable customer
confidence and consequently have shown impressive growth
sales.
CLASSIFICATION OF BANKS
Banks are classified into several types based on the

function they perform. Generally banks are classified into
1. Investment banks
2. Exchange banks
3. Commercial banks

4. Co-operative banks
5. Land development banks
6. Savings banks
7. Central banks
FUNCTIONS OF BANKING
A. The main functions are as follows;
1. Borrowing of money in the form of deposits.
2. Lending or advancing of money in the form of different

types of loan.
3. The drawing, making, accepting, discounting, buying

and selling, collecting and dealing in bills of exchange,
promissory notes, coupons, drafts, bills of lading, railway
receipts, warrants, debentures, certificates, securities
both negotiable and non-negotiable.
4. The granting and issuing of credit, travelers cheques,

etc.

5. The acquiring, holding, issuing on commission,

underwriting, dealing in stock, funds, shares,
debentures, bonds, securities of all kinds.
6. Providing safe deposits vaults.
7. Collecting transmitting of money and securities.
8. The purchasing and selling of bonds scripts and other

forms of securities on behalf of constituents or others.
9. Buying and selling of foreign notes.
B. The subsidiary functions are as follows;
1. Acting as agents for governments or local

authorities or any other persons.
2. Carrying out agency business of any description.
3. Contracting for public and private loans and

negotiation and issuing the same.
4. Carrying on guarantee and indemnity business.
5. Managing to sell and realize any property or any

interest in any such property.
6. Undertaking and executing of trusts.

7. Granting of pensions and allowances and making

payments towards pensions.

CO-OPERATIVE BANKS
The Co operative banks in India started functioning

almost 100 years ago. The Cooperative bank is an important
constituent of the Indian Financial System, judging by the
role assigned to co operative, the expectations the co
operative is supposed to fulfill, their number, and the number
of offices the cooperative bank operate. Though the co
operative movement originated in the West, but the
importance of such banks have assumed in India is rarely
paralleled anywhere else in the world. The cooperative banks
in India play an important role even today in rural financing.
The businesses of cooperative bank in the urban areas also
have increased phenomenally in recent years due to the
sharp increase in the number of primary co-operative banks.
While the co-operative banks in rural areas mainly

finance agricultural based activities including farming, cattle,
milk, hatchery, personal finance etc. along with some small
scale industries and self-employment driven activities, the
co-operative banks in urban areas mainly finance various
categories of people for self-employment, industries, small
scale units, home finance, consumer finance, personal
finance, etc.

Co operative Banks in India are registered under the Co-

operative Societies Act. The cooperative bank is also
regulated by the RBI. They are governed by the Banking
Regulations Act 1949 and Banking Laws (Co-operative
Societies) Act, 1965.
Cooperative banks in India finance rural

areas under:
1. Farming
2. Cattle
3. Milk
4. Hatchery
5. Personal finance
Cooperative banks in India finance urban

areas under:
1. Self-employment
2. Industries
3. Small scale units

4. Home finance
5. Consumer finance
6. Personal finance
According to NAFCUB the total deposits & landings of

Cooperative Banks in India is much more than Old Private
Sector Banks & also the New Private Sector Banks. This
exponential growth of Co operative Banks in India is
attributed mainly to their much better local reach, personal
interaction with customers and their ability to catch the nerve
of the local clientele.
EVOLUTION OF CO-OPERATAIVE BANK IN INDIA
The Cooperatives were first started in Europe to serve

the credit-starved people in Europe as a self-reliant, self-
managed people’s movement with no role for the
Government. British India replicated the Raiffeisen-type
cooperative movement in India to mitigate the miseries of
the poor farmers, particularly harassment by moneylenders.
The first credit cooperative society was formed in

Banking in the year 1903 with the support of Government of
Bengal. It was registered under the Friendly Societies Act of
the British Government. Cooperative Credit Societies Act of

India was enacted on 25th March 1904. Cooperation became

a State subject in 1919. In 1951, 501 Central Cooperative
Unions were renamed as Central Cooperative Banks. Land
Mortgage Cooperative Banks were established in 1938 to
provide loans initially for debt relief and land improvement.
Cooperatives have played an important role in the

liberation and development of our country. The word
Cooperative has become synonymous for dedicated and
efficient management of rural credit system. Reserve Bank of
India started refinancing cooperatives for Seasonal
Agricultural Operations from 1939. From 1948, Reserve Bank
started refinancing State Cooperative Banks for meeting the
credit needs of Central Cooperative Banks and through them
the Primary Agricultural Cooperative Societies. Only 3% of
rural families availed farm credit in 1951.
In 1954, the All India Rural Credit Survey Committee

recommended strengthening of DCC Banks and PACS with
State partnership and patronage to solve the farmers’ woes.
Registrar of Cooperative Societies became the custodian of
Cooperatives from 1962 with the enactment of respective
State Acts. Reserve Bank introduced Seasonality and Scale of
Finance for crop loans and provided for conversion,
replacement and reschedulement to tide over crop loss due
to calamities.

The Primary Agricultural Cooperative Societies became

multipurpose. Reorganization of PACS into viable units, FSCS,
LAMPS started under action programme of RBI in 1964. The
finding of All India Rural Credit Review Committee that
coverage of cooperatives is limited to hardly 30% of farmers
led to nationalization of Banks. However, Cooperatives have
played a key role in meeting the credit needs of weaker
sections of farmers.
The establishment of Regional Rural Banks from 1975

has not reduced the problems of rural credit as they reached
only 6% of the farmers. Cooperatives have contributed their
part in the implementation of 20-point programme and
Integrated Rural Development Programme. Though the
Cooperatives were lagging behind in rural credit till 1991,
they regained their prime place with 62% share in rural crop
loans between 1991 and 2001
DEFINITION OF CO-OPERATIVE BANKS:
In the words of Henry Wolff “Co-operative banking is an

agency which is in a position to deal with the small means on
his own terms”.
Devine defines “a mutual society formed composed and

governed by working people themselves for encouraging

regular saving and generating miniature loans on easy terms

of interest and repayments”.
FEATURES OF CO-OPERATIVE BANK:
1. They are organized and managed on the principles of

co-operation self-help and mutual help. They function
with the rule of “one member one vote”.
2. Co-operative banks perform all the main banking

function of deposit mobilization, supply of credit and
provision for remittance facilities.
3. Co-operative banks belong to the money market as

well as the capital markets.
4. Co-operative banks are perhaps the first

government supported agency in India.
5. Co-operative banks accept current, saving, fixed

and other types of time deposits from individuals and
institutions including banks.
6. Co-operative banks do banking business mainly in

the agricultural and rural sector.
7. Some co-operative banks are schedule co-

operative banks while others are non-schedule co-
operative banks.

8. Co-operative banks also required to comply with

requirement of statutory liquidity ratio [SLR] and cash
reserve ratio [CRR] liquidity requirements as other
scheduled and non-scheduled banks.
STRUCTURE OF COOPERATIVE BANKS
Co-operative
Banks
STATE URBAN
STATE LAND
CO- CO-
DEVELOPMEN
OPERATIVE OPERATIVE
T BANKS
BANKS BANKS
CENTRAL CENTRAL
CO- LAND
OPERATIVE DEVELOPME
BANKS NT BANKS
PRIMARY BRANCHES OF
PRIMARY
AGRICULTU STATE LAND
LAND
RAL CREDIT DEVELOPMENT
DEVELOPME
SOCIETIES BANKS
NT BANKS
REFORMS IN CO-OPERATIVE BANKS

The field of rural credit is so vast in India the problems

so diverse and complex and the field of experimentation so
wise that only if the important issues and challenges before
the rural credit are taken adequately cooperative banks as
major purveyors of rural credit would be able to make the
crucial difference in the lives of millions of our countrymen in
the countryside.
The financial sector reforms 1991 aimed at promoting a

diversified and efficient, competitive financial sector with the
ultimate objective of improving the efficiency of available
resources, increasing the return on investments and
promoting an accelerated growth of the real sector of the
economy. In conformity with this and banking sector reforms
gave raise to reforms in cooperative sector, which is an
integral part in delivery of rural credit and promote its
growth.
Reserve Bank of India has over the years put its faith in
cooperative banks as they hold a major share in agricultural
credit. With its number if branches it can percolate to all the
corners of the country. The Indian financial system has
undergone several changes and now comprises of
widespread network of financial institutions. Accordingly the

co-operative credit structure has also grown. Despite the

progress reforms are required to bring out efficiently reduce
non-performing assets and increase capital base.
These reforms aim at improving the financial health and

capabilities by prescribing prudential norms. Prudential
norms are required for cooperative banks to reduce non-
performing assets. Due to the non-performing assets co-
operative credit system is affected as a whole.

DEBT RECOVERY MANAGEMENT
INTRODUCTION:
The efficiency of a financial institution as a financial

intermediary depends to a great extent on timely recovery of
loans. Abnormal delay in recovery of loans builds up NPAs
which affect FI’s adversely with respect to liquidity and
impair their ability to service the maturing liabilities. The
blocked funds in NPAs increase the cost of financial
intermediary as FI’s resort to raising deposits and borrowings
at a higher cost as a measure to minimize the imbalance
between cash outflow and cash inflow arising out of the
NPAs. This has an adverse impact on the profitability of the
banks both in the short run and long run.
Good recovery is an important ingredient for profitability

of any financial institution as it leads to increased financial
capacity to deliver credit.
The business of a bank is managing risks and its

effectiveness lies in an efficient recovery management.
Better recovery performance corresponds to lower NPAs.
MEANING OF RECOVERY MANAGEMENT:

Recovery Management is the process of planning,

testing, and implementing the recovery procedures and
standards required to restore service in the event of a
component failure; either by returning the component to
normal operation, or taking alternative actions to restore
service.
Recovery Management is the acknowledgement that

failures will occur regardless of how well the system is
designed. The intent is to anticipate and minimize the impact
of these failures through the implementation of predefined,
pretested, documented recovery plans and procedures.
DEBT:
The word debt comes from the Latin Debere which means “to
owe”.
DEFINITION OF DEBT:
According to Recovery of debts due to Banks and

Financial Institutions Act, 1993 debt means “Any
liability(inclusive of interest) which is alleged as due from any
person by a bank or a financial institution or by a consortium
of banks or FI’s during the course of any business activity
undertaken by the bank or the FI or the consortium under
any law for the time being in force , in cash or otherwise ,
whether secured or unsecured or whether payable under a

decree or order of any civil court or otherwise and subsisting

on , and legally recoverable on , the date of the application” .
RECOVERY:
In simple words recovery means to get back our own

thing back which we have given it to others. In banks
recovery means to get back the amount back which they
have given to the customers in the form of loans and
advances.
Recovery is “the process of regaining and saving

something lost or in danger of becoming costs”. Recovery is
a key to the stability of the banking sector.
OVERDUES, RECOVERY AND NPAs:
Overdues and Recovery:
The term "over dues" is used to convey the meaning

that installments of loans and Interest thereon are not paid
on due date.
The term "recovery" of dues relates to repayments of

loans and interest thereon in time. Therefore, over dues exist
if recovery of loans is not in time.

NON PERFORMING ASSETS
INTRODUCTION TO NON-PERFORMING ASSETS
Indian laws permitted banks to conceal much with the

result that the balance sheet and profit and loss account
rarely revealed the true state of their affairs.
The Narasimhan committee therefore strongly

emphasized the need for bringing transparency in the
financial statements of the banks and recommended for a
new set of formats for balance sheet and profit and loss
statements which were made effective from 1991-1992.
Banks provide loans advances subjects to borrowers

promise for the payment of principal and interest in the
future. In this process banks are exposed to various types of
risks including credit risk arising from Non-performing of
loans and defaults of borrowers.
Moreover with globalization and diversified ownership

where credit rating agencies constantly review the strength
of the banks managing the levels of NPAs assumes greater
importance.
The cost of financial intermediation by banks is high

partly because of the cross subsidization of NPA. NPAs are
inevitable burden of the banking industry. NPAs badly affect

the financial health of the banks. Hence control and

management of NPAs have assumed serious importance. It is
well known fact that NPAs are the threat on the profitability
of the banks because the banks have not only to make
provisions but they have to meet the cost of funding these
unremunerative assets.
ADVANCES IN THE BANKING SECTOR ARE CLASSIFIED

INTO TWO CATEGORIES ARE AS FOLLOWS:
 Advances which are yielding revenue and there is no

immediate likelihood of their going other way called as
standard assets.
 Advances which have stopped yielding revenue beyond a

period have the instances of irregularity in repayment,
chances of recovery bleak in some cases, chances of
recovery absolutely in some other cases categorized as
sub standard assets doubtful assets and loss assets
depending on their nature of irregularity and chance of
recovery.
MEANING OF NON-PERFORMING ASSETS
An asset is classified as non-performing asset

(NPAs) if dues in the form of principal and interest are not
paid by the borrower for a period of 180 days. However with

effect from March 2004, default status would be given to a

borrower if dues are not paid for 90 days. If any advance or
credit facilities granted by bank to a borrower become non-
performing, then the bank will have to treat all the
advances/credit facilities granted to that borrower as non-
performing without having any regard to the fact that there
may still exist certain advances / credit facilities having
performing status.
RBI GUIDELINES ON INCOME RECOGNITION

(INTEREST INCOME ON NPAS)
Banks recognize income including interest income on

advances on accrual basis. That is, income is accounted for
as and when it is earned.
The prima-facie condition for accrual of income is that it

should not be unreasonable to expect its ultimate collection.
However, NPAs involves significant uncertainty with respect
to its ultimate collection.
Considering this fact, in accordance with the guidelines

for income recognition issued by the Reserve Bank of India
(RBI), banks should not recognize interest income on such
NPAs until it is actually realized.

WHAT DOES ACCOUNTING STANDARD 9 (AS- 9) ON

REVENUE RECOGNITION ISSUED BY ICAI SAY?
The Accounting Standard 9 (AS 9) on `Revenue

Recognition' issued by the Institute Of Chartered Accountants
of India (ICAI) requires that the revenue that arises from the
use by others of enterprise resources yielding interest should
be recognized only when there is no significant uncertainty
as to its measurability or collectability.
Also, interest income should be recognized on a time

proportion basis after taking into consideration rate
applicable and the total amount outstanding.
IS RBI GUIDELINES ON NPAS AND ICAI ACCOUNTING

STANDARD- 9 ON REVENUE RECOGNITION CONSISTENT
WITH EACH OTHER?
In view of the guidelines issued by the Reserve Bank of

India (RBI), interest income on NPAs should be recognized
only when it is actually realized.
As such, a doubt may arise as to whether the aforesaid

guidelines with respect to recognition of interest income on
NPAs on realization basis are consistent with Accounting
Standard 9, `Revenue Recognition'.

For this purpose, the guidelines issued by the RBI for

treating certain assets as NPAs seem to be based on an
assumption that the collection of interest on such assets is
uncertain.
Therefore complying with AS- 9, interest income is not

recognized based on uncertainty involved but is recognized
at a subsequent stage when actually realized thereby
complying with RBI guidelines as well.
In order to ensure proper appreciation of financial

statements, banks should disclose the accounting policies
adopted in respect of determination of NPAs and basis on
which income is recognized with other significant accounting
policies.
RBI GUIDELINES ON CLASSIFICATION OF BANK

ADVANCES:
Reserve Bank of India (RBI) has issued guidelines on

provisioning requirement with respect to bank advances. In
terms of these guidelines, bank advances are mainly
classified into:
 STANDARD ASSETS: Standard accounts are those

which are well conducted and in which no threat of
default. All “performing assets are to be classified as
“standard”.

 SUB-STANDARD ASSETS: It is classified as non-

performing asset for a period not exceeding 18 months.
 DOUBTFUL ASSETS: Asset that has remained NPA for
a period exceeding 18 months is a doubtful asset.
 LOSS ASSETS: Here loss is identified by the banks
concerned or by internal auditors or by external auditors

or by Reserve Bank India (RBI) inspection.
In terms of RBI guidelines, as and when an asset

becomes a NPA, such advances would be first classified as a
sub-standard one for a period that should not exceed 18
months and subsequently as doubtful assets.
It should be noted that the above classification is only

for the purpose of computing the amount of provision that
should be made with respect to bank advances and certainly
not for the purpose of presentation of advances in the bank’s
balance sheet.
The Third Schedule to the Banking Regulation Act, 1949,

solely governs presentation of advances in the balance sheet.
Banks have started issuing notices under the

Securitization Act, 2002 directing the defaulter to either pay
back the dues to the bank or else give the possession of the

secured assets mentioned in the notice. However, there is a

potential threat to recovery if there is substantial erosion in
the value of security given by the borrower or if borrower has
committed fraud. Under such a situation it will be prudent to
directly classify the advance as a doubtful or loss asset, as
appropriate.
RBI GUIDELINES ON PROVISIONING REQUIREMENT OF

BANK ADVANCES:
As and when an asset is classified as an NPA, the bank

has to further sub-classify it into sub-standard, loss and
doubtful assets. Based on this classification, bank makes the
necessary provision against these assets.
Reserve Bank of India (RBI) has issued guidelines on

provisioning requirements of bank advances where the
recovery is doubtful. Banks are also required to comply with
such guidelines in making adequate provision to the
satisfaction of its auditors before declaring any dividends on
its shares.
In case of loss assets, guidelines specifically require that

full provision for the amount outstanding should be made by
the concerned bank. This is justified on the grounds that such

an asset is considered uncollectible and cannot be classified

as bankable asset.
Also in case of doubtful assets, guidelines requires the

bank concerned to provide entirely the unsecured portion
and in case of secured portion an additional provision of 20%-
50% of the secured portion should be made depending upon
the period for which the advance has been considered as
doubtful.
For instance, for NPAs which are up to 1-year old,

provision should be made of 20% of secured portion, in case
of 1-3 year old NPAs up to 30% of the secured portion and
finally in case of more than 3 year old NPAs up to 50% of
secured portion should be made by the concerned bank.
In case of a sub-standard asset, a general provision of

10% of total out standings should be made.
Reserve Bank of India (RBI) has merely laid down the

minimum provisioning requirement that should be complied
with by the concerned bank on a mandatory basis. However,
where there is a substantial uncertainty to recovery, higher
provisioning should be made by the bank concerned.
IMPACT OF NON PERFORMING ASSETS:

a) Non-Performing Assets are drag on profitability of

banks because besides provisioning banks are also
required to meet the cost of funding these unproductive
assets.
b) Non-Performing Assets reduce earning capacity of

assets. Return on assets also gets affected.
c) As Non-performing Assets not earn any income,

they adversely affect capital adequacy ratio.
d) No recycling of funds.
e) Non-Performing assets also attract cost of capital

for maintaining capital adequacy ratio.
f) Non-Performing assets demoralize the operating

staff and the stake holders.
g) It will badly affect the image of the bank

concerned.
h) Affect the moral of the employees and decisions

making for fresh loans suffer.
i) Enhances administrative, legal and recovery costs.
CONSEQUENCES OF NON-PERFORMING ASSETS

DIRECT:
A. It affects profitability of the unit substantially.
B. Affects banks credibility and render rising of fresh

capital from the market difficult.
C. Recycling of funds gets blocked.
INDIRECT:
A. Reduction in lending rate is made difficult.
B. Affect risk taking ability which ultimately affects

competitiveness of the branch unit.
C. Lack of market competitiveness results in slump in

credit expansion. The cost of poor quality loans is
shifted to bank customers through higher spread
OBJECTIVES OF DEBT RECOVERY MANAGEMENT
1. To review customer account details
2. To identify overdue transactions.
3. To resolve overdue and disputed transactions.
4. To reduce Non-Performing Assets and thereby avoiding

its impact on the performance of the bank.

5. To minimize the imbalance between cash outflow and

cash inflow arising out of the non performing assets.
FACTORS AFFECTING THE RECOVERY OF LOANS

BY BANKS:
The factors may be broadly classified in to two;
(1) INTERNAL FACTORS
A. BANKS RELATED:
 Improper Identification Of Borrower
 Lack Of Appraisal Skills
 Delay In Loan Sanctioning
 Lack Of Post-Disbursement Follow- Up
 Poor Management Information System.
B. BORROWER RELATED
 Diversion Of Funds
 Willful Default

 Personal Accident, Death Etc.
 Shifting Of Place Of Residence / Business
(2) EXTERNAL FACTORS
 Natural Calamities
 Loan Waiver, Write off etc.
 Changes In Policy Environment
 Changes In Economic Conditions
 Legal Process
RECOVERY METHODS:
As soon as the borrower becomes defaulter, generally the

bank follows two methods of recovery.
1. General recovery methods.

2. Legal recovery methods.
GENERAL RECOVERY METHODS
The general recovery methods are usually the primary

collection process consists of the following activities.
 AWARENESS CALLING: When the first payment is

due from the customer, a call is initiated to make him
aware of the date of payment of his dues to the bank.
Customer details are also verified during the process.
 COLLECTION CALLING: This activity involves

contacting the customer over the phone, making him
aware that he has missed the due date and thereby
requesting him to pay the arrears at the earliest.
Repeat calls are made if the customer does not
honour his promises.
 DEMAND NOTICES: In the event of the customer not

responding to the telephonic calls, a written
communication is issued to the customer informing
him of the status of the account and calling upon him

to effect payment towards the overdues in the

account.
 FIELD COLLECTION: This activity involves meeting

the customer at his place of meeting or residence.
Repeat visits will be made to persuade the customer
to repay the loan or even to strike a compromise deal
if it is found that the financial position of the
customer has deteriorated as a result of which
recovery of the entire dues may not be possible.
 Finally, if the customer has disappeared or refuses to

have any contact with the bank a final detailed notice
should be issued to the borrower through the legal
council better taking legal proceedings against him.
LEGAL RECOVERY METHODS:

When all efforts to recover an advance in the normal course
fail, banks have to resort to legal and other remedies. The
options available to banks are the following:
1. Civil Courts
2. Criminal Court

3. Lok Adalats
4. Debt Recovery Tribunals (DRT)
5. SARFAESI Act
a. Taking possession and sale of assets of the

borrower
b. Securitization of the debt and sale to Asset

Reconstruction Companies
6. Sale of Debt to other banks / NBFCs.
7. Compromise and write off
CIVIL COURTS
When all efforts to recover an advance fail, banks resort to

legal action. However, recovering any money through the
civil courts is a time consuming process due to the elaborate
procedures to be followed and the large number of cases
pending in all courts. Often it takes more than a decade to
effect recoveries. The procedure involved is as follows;
1. Bank’s lawyer will issue a notice (legal notice) to the

borrowers and guarantors giving them one more chance
to settle their dues within the time specified in the
notice.

2. On the borrowers/guarantors ignoring the legal notice
the bank’s lawyer will draft a “plaint” to be filled in the

court to initiate legal action. The plaint will be drafted
based on the information provided by the bank. The
plaint has to be drafted on judicial stamp paper of
required value, as specified by the state governments.
3. The plaints will be filed in the civil court under whose

jurisdiction the bank branch is.
4. The court will admit the case and allot a number
5. The court will issue a summons to the plaintiff (bank)

and defendants (borrowers and guarantors) to appear
before the court for a hearing.
6. If the defendants deny the allegations of the plaintiff,

which they usually do, the plaintiff is asked to prove the
charges made by them in the plaint.
7. The process of proving the charges could take several

hearings and stretch over a long period.
8. After the hearings are completed the court will deliver

its judgment.
9. If the court decides in favour of the bank, they will issue
a “decree” or order directing the defendants to pay the

amount decreed to the plaintiff and authorizing the

plaintiff to take possession and dispose of the securities,

if any, with the help of the court.
10. The plaintiff will file with the court a petition for
execution of the decree. The bank will request the court

to appoint a receiver to take possession of the securities
and dispose them off on behalf of the bank. In case it is
a clean advance, the bank has to ascertain the assets of
the borrowers / guarantors and provide the details in the
execution petition to enable the “receiver” to attach the
assets, take possession and sell them to recover the
dues to the bank.
CRIMINAL COURT
Under section 138 of Negotiable Instruments Act,

causing a cheque to be dishonoured is a criminal offence. If a
cheque is dishonoured, the payee can initiate criminal
proceedings against the drawer of the cheque, provided
notice of dishonour was given to him. Normally, before filing
a case the lawyer of the plaintiff would send a notice to the
drawer of the cheque and give him one more opportunity to
pay the amount of the cheque. Once a case is filed, the court
can impose a fine equivalent to twice the amount of the
cheque and / or imprison the drawer of the cheque for up to 2
years.

Banks and finance companies resort to this remedy

whenever post dated cheques taken by them for payment of
loans / installments are dishonored.
LOK ADALATS
To facilitate speedy settlement of cases involving small

amounts and to reduce the burden on courts, the
Government of India passed the legal services authorities act
1987 under which the National Legal Services Authority was
set up. Similar authorities were set up at the state, district
and taluk levels too. The primary role of the agencies is to
resolve disputes, both civil cases involving amounts up to
Rs.10 lakhs and simple criminal cases including cases under
section 138 of NI Act for dishonour of cheques, through
reconciliation and settlement. When disputes are affected
through compromise the settlement is much faster. Such
settlements are effected by Lok Adalats which are run by the
respective legal services authority Lok Adalats which are run
by the respective legal services authority. Lok Adalats do not
levy any charge from the parties to the dispute. Their role is
conciliatory only and cannot hear arguments and pass an

order like a court. The orders passed by Lok Adalats have the
legal status of Decrees issued by courts.
Lok Adalats can entertain only cases referred to them by

civil and criminal courts or the legal service authority. No
other person can directly approach a Lok Adalat. Parties to
the dispute have to first file a case in a civil court. After
hearing both the sides, if the court decides that it is a fit case
for compromise, the court may refer it to the Lok Adalat for
settlement.
The Lok Adalats are presided over by the judges of

courts, as an additional responsibility. The judge of a district
court may also head a Lok Adalat at the centre. As a district
judge, he may refer a case to the Lok Adalat and then decide
the case as the presiding officer of the Lok Adalat. If the
Adalat is not able to work out a compromise, the parties can
continue the case in the court.
DEBT RECOVERY TRIBUNALS
Alarmed by the large amounts of bank funds blocked in

litigation, government if India passed the recovery of debts

due to banks and financial institutions act in 1993, under

which a new set of institution called debt recovery tribunals
or DRTs were set up to deal with cases for recovery of dues
to banks and financial institutions, expeditiously. DRTs being
tribunals and not courts are not required to follow the
elaborate procedures that courts are required to follow under
the civil procedure code. Hence they are able to dispose of
cases expeditiously. Further, since they deal with only cases
relating to dues to banks and FIs, they have developed
necessary expertise to deal with such cases which also
facilitates speedy disposal. To prevent DRTs from getting
clogged with small value cases, it has been specified that
only cases for Rs.10 lacs and above can be filed with DRTs.
THE PROCEDURE INVOLVED IN DRT PROCEEDINGS ARE:
1. Filing of application with the registrar of DRT.
2. Admission of the application after scrutiny and allotment

of number by the registrar.
3. Issue of summons by the presiding officer. Repeated

attempts are made till the summons is served. In case
summons cannot be served in the usual manner
summons could be made by publication in newspapers.
4. Once the summons is served the case is listed for

hearing by the presiding officer.

5. In case the bank seeks any interim order such as
attachment of the security an affidavit has to be

submitted to the presiding officer on the case being
listed.
6. Within 30 days of receipt of summons the defendants

have to file their written statements on the points raised
by the bank in their interrogatory.
7. At the subsequent hearings the arguments of the parties

will be heard, witnesses will be examined and
documentary proof presented by the parties examined
by the presiding officer.
8. The presiding officer will pass final orders, asking the
defendants to pay the amount that is proved to be

owing by them within the permitted period.
9. If the defendants do not pay the amount within the
permitted period, the presiding officer will issue a

“Recovery Certificate”. Details of the security will be
given in the RC.
10. The recovery officer will issue a demand notice

asking the defendants to pay the due to the bank.
11. If the defendants do not pay the amount due within

15days from the date of receipt of the RC, the recovery
officer will attach the properties of the defendants,

appoint a receiver to manage the properties and auction

them. Even without appointment of ea receiver the
recovery officer can proceed to sell the attached
properties.
12. The recovery officer has powers to order arrest of

the defendants in case they refuse to pay the dues
despite having the means to pay or obstructs recovery
proceedings by trying to abscond, removing / alienating
his properties or giving false information about his
properties.
Recovery of debt through DRT being much faster than

through civil courts, banks have practically stopped filing civil
suits for recovery except for recovery of amounts up to Rs.10
lakhs for which there is no other alternative.
SARFAESI Act
The Securitization and Reconstruction of Financial

Assets and Enforcement of Security Interest Act were passed
in 2002 to give greater powers to banks to recover amounts
due to them. The act also facilitated sale of loans by the
banks to asset Reconstruction Companies.

• Recovery of debt without intervention of DRT/court
• The SARFAESI Act authorizes banks to do the following

without the intervention of the court or DRT provided at
least 75% of the secured creditors, by value, of the
company agree to initiate action under SARFAESI act:
• Issue a notice and restrain the borrower from

transferring the charged assets by sale or lease.
• Take possession of the charged assets of the borrower,

subject to giving a notice period of 60 days to enable
the debtor to pay their dues.
• Appoint a person to manage the assets taken over

(similar to appointment of receiver)
• Sell the charged assets.
• Order those who owe money to the borrowers to deposit

the amounts with the bank(similar to issuing garnishee
order)
Effectively, the act authorizes banks to do all that is

necessary to recover money due to them without having to
go to DRT or court. The only limitation is that the bank should
be a secured debtor to initiate action under SARFAESI Act.
Banks can take action under SARFAESI Act even when a case
relation to the same debt is pending in a DRT or a court.

Since banks can recover only secured debt under SARFAESI

Act, they need the help of DRT for recovery of unsecured
debt. Bank can initiate action under the SARFAESI Act even in
the case of a company under liquidation. However, the banks
have to give an undertaking to the official liquidator that out
of the sale proceeds, the amounts due under the Workmen
Compensation Act will be paid first.
In case the borrower has a grievance against the bank

that has initiated proceedings under SARFAESI Act, they can
file an appeal with the local DRT after depositing with them
50% of the dues to the bank. This condition has been
stipulated to prevent frivolous appeals to prevent banks from
proceeding under the SARFAESI Act.
While the DRT Act and SARFAESI Act have improved the
recoverability of bad debts fact remains that it involves a lot
of effort, cost and time. Legal remedies are inherently time
consuming even if they are administered by the banks
themselves or by specialized institutions like DRT. Since
recovering bad debts as expeditiously as possible is
beneficial to banks in terms of being able to redeploy the
funds profitably and using the time and effort spent on
recovery for generating new business, banks prefer to
recover bad debts by sale to others who are willing to buy the
bad debts at a discount or by making a compromise

settlement with the borrowers themselves and waiving some

portion of the dues in return or recovering the balance
amount immediately.
SECURITIZATION OF DEBT AND SALE TO ARC’S
SARFAESI Act authorized setting up of Asset

Reconstruction Companies (ARCs) to enable banks to get rid
of their NPAs by selling them to ARCs. The RBI was
authorized to issue detailed guidelines regarding ARCS and to
regulate them.
ARCs primary business being buying and recovering bad

loans, they are in a better position to pay focused attention
to recovery of bad loans and to develop necessary expertise
in the activity. The banks are benefited as the bad loans are
moved out of their balance sheet, which helps them to
present a better financial picture. The bad loans are
transferred to ARCs at a discount to the book value so that
the ARC can earn a profit from the activity. For instance, if
the loan outstanding is Rs.23lacs, an ARC may take it over at,
say Rs.19 lacs. The sale price will be decided by mutual
agreement. At the time of takeover, the ARC will issue
Security Receipt for Rs.19 lacs to the Bank. As and when
recoveries are made, the amount, less expenses incurred for
recovery, will be paid by the ARC to the bank. Any recovery

in excess of Rs. 19 lacs will usually be shared at some pre-

decided ratio between the ARC and bank. ARC’s profit comes
from such excess recovery.
If the entire or part of the amount is not recovered even

after 5 years, the bank has to buy back the unrecovered
portion of the loan from the ARC and make a provision in
their books.
Every year the portfolio taken over by ARC has to be

rated by CRISIL. If according to their assessment the amount
recoverable is less than the amount of the outstanding
security receipt, the bank has to make a provision for the
short fall. For instance, suppose the ARC does not recover
any part of the Rs.19 lacs during the first year. At the end of
the first year, if CRISIL assesses the recoverable amount to
be Rs.17.5 lakhs only, the bank has to make a provision of
Rs.1.5lacs to cover the shortfall.
SALE OF NPAS TO OTHER BANKS/NBFCs
Some banks like Kodak Band and Standard Chartered

Bank have created a business out of bad loans. They buy bas
loans from other banks at a discount with a view to make a
profit from higher recoveries. They have set up specialized
departments for buying and recovering bad loans. The prices
at which bad loans are sold are decided mutually by the
selling and buying banks. The selling bank gets immediate

cash for loans sold and gets rid of the bad loans from their
balance sheet. Sale of bad loan to another bank is more
attractive to banks compared to sale to ARCs because of
immediate receipt of cash as against receipt of Security
Receipt from ARCs. RBI has issued the following guidelines
with respect to sale of bad loans by a bank to another bank
or NBFC.
• Banks can sell only assets which have remained

NPAs in their books for at least two years.
• The sale has to be on without recourse basis, i.e.,

the entire risk should pass on to the buyer.
• The buyer has to make upfront payment. The price

cannot be contingent upon recovery.
• The selling bank cannot buy back the assets sold.
• The selling band cannot provide and guarantee or

other comforts to the buyer.
• The buyer cannot sell the asset purchased from

one bank to another bank within 15 months from the
date of purchase.
The buyer has to do all due diligence before negotiating a

price and buying the bad assets. The seller can sell individual
assets or a pool of assets as one unit.

COMPROMISE SETTLEMENTS AND WRITE OFF
A. Compromise settlements
Since legal remedies take time and sale of bad debts to

ARCs and other banks involve large discounts, banks find it
more expedient to effect compromise settlements with the
borrowers and recover as much of the bad debts as possible.
In certain situations like defective documents or poor security
cover, compromise settlement may be the only viable option
as legal remedies or sale of asset may not be possible at all.
The starting point in negotiating a compromise

settlement is crystallizing the total amount due. This would
include the following;
a. Balance Outstanding In The Account
 Principal
 Unpaid interest
 Unpaid penal interest
b. Uncharged interest from the date the account

became NPA till the date of settlement.
c. Expenses incurred since the account became NPA

 Insurance premium paid
 Expenses on security arrangements, if any
 Legal expenses
When negotiating compromise settlements, banks are guided

by the following factors;
a. Value of security available.
b. Likely time taken for realization of the security
c. Likely cost involved in making the recoveries
d. The present value of the likely net cash inflows from

the above discounted at a reasonable rate of interest.
e. The sacrifice to be made in terms of
 Waiver of unpaid interest / penal interest
 Waiver of uncharged interest
 Write off of principal amount
f. Whether the provision made in the account is

sufficient to cover the concessions or whether the
account has already been written off.
g. Impact on profit and loss account in the current year;

amount of concession in excess of provision available

will reduce current year profit, if the provisions are

more than the concessions there will be a net credit
to the profit and loss account. Similarly if the account
has already been written off, any recovery will help to
increase the current year profits.
B.WRITE OFF
Banks make provision to cover NPAs as per guidelines

issued by RBI. While the NPA will remain as a debit balance in
the advances accounts, the provisions will accumulate as a
credit balances in the provisions account. The total amount of
NPAs outstanding in the books is known as Gross NPA. The
Gross NPA less the provisions made against them is called
Net NPA. Effectively the net NPA is the actual bad debts of
the bank.
Banks continue to carry both the NPA and the provisions

in their books rather than adjusting the provisions against the
balance in the accounts in the hope that the bad debt will be
recovered, in which case the provision can be credited back
to the profit and loss account or used to cover another bad
accounts. A point comes when the provisions made for an
account has to be adjusted against the balance in the
account by debiting the provision account and crediting the
advance account. Setting of the provision against the debit

balance in the advance account is called write off. When an

account is written off, the balances in both the provision
account and the advance account come down.
Writing off the balance in an account does not take

away the right of the bank to recover the amount from the
customer. Even after write off banks continue their recovery
efforts including cases filed with DRT. Banks maintain records
of all written off accounts to facilitate such recovery efforts.

CHAPTER-02
RESEARCH DESIGN
TITLE OF THE STUDY:
“An Exploratory study on Debt Recovery

Management of co-operative banks with
special reference to The Bangalore City Co-
operative Bank Ltd”.
STATEMENT OF THE PROBLEM:
Banks were never so serious in their efforts to ensure

timely recovery and consequent reduction of NPA’s as they
are today. As we all know growing percentage of non-
performing assets is a big concern for modern as well as
traditional financial institutions. If recovery is been made
effective then certainly it will reflect positively on reducing
percentage of NPA’s. So recovery management, of fresh

loans or old loans, is central to NPA management. Hence the

focus is on Debt Recovery Management of “The BCCB Ltd.”

OBJECTIVES OF THE STUDY:
(1) To study the objectives of Debt Recovery

Management of the bank.
(2) To study the Debt Recovery Policy and Debt

Recovery Methods of the bank.
(3) To study the position of NPA’s in the bank.
(4) To understand how non-performing asset affect the

performance of the bank.
(5) To offer suggestions on the basis of analysis and

interpretations made.
SCOPE OF THE STUDY:
The scope of this study is limited only to the study of

Debt Recovery Management in “The Bangalore City Co-
operative Bank Ltd”.
RESEARCH METHODOLOGY:
The methodology used in the study is an exploratory

research design and in order to arrive at the above objective
both primary data and secondary data has been collected.

1. PRIMARY DATA: “Primary data is first hand information
which is collected a fresh and thus happens to be original

in character”.
This data is collected through personal discussions with

the DEPUTY GENERAL MANAGER, ASSISTANT GENERAL
MANAGER and other officials in charge of recovery
department through structured questionnaire were held.
2. SECONDARY DATA: “Secondary data are those which
have already been passed through the statistical process”
This data is collected through Annual Reports of the bank,

Books on Research Topic, Journals, and Websites.
PLAN OF ANALYSIS:
The data collected is raw and it is complied, classified,

tabulated and then analysed using statistical tools like simple
percentages. Graphs and Charts are used to highlight the
statistics. Based on these data analysed and interpreted,
suggestion and conclusions are drawn.
LIMITATIONS OF THE STUDY:

 Due to time constraint depth analysis could not be made.
 Some of the information is considered confidential and not

available for the study.
 The data taken for analysis and interpretation is for a

limited period (only the recent three years data has been
considered i.e. from 2006-07 to 2008-09).
 The study is confined to only one Bank i.e., The Bangalore
City Co-operative Bank Ltd.
 The study is subject to the views and statistics as

expressed by the concerned officials of the bank.
CHAPTER LAYOUT:
The chapter layout of this project is as follows.
CHAPTER-1: INTRODUCTION
CHAPTER-2: RESEARCH DESIGN
CHAPTER-3: BANK PROFILE
CHAPTER-4: ANALYSIS AND INTERPRETATION OF DATA
CHAPTER-5: SUMMARY OF FINDINGS, SUGGESTIONS

AND CONCLUSION

BIBLIOGRAPHY AND ANNEXURE
CHAPTER – 03
BANK PROFILE
History of “The Bangalore City Co-Operative Bank
Limited”
“THE BANGALORE CITY CO-OPERATIVE BANK LIMITED” was
the first urban co-operative bank in the country started in April 06,
1907 by Sri.K.Ramaswamy and others.
[Administrative Office: No.3, Pampamahakavi Road, Chamarajpet,

Bangalore – 560018.]
The Bangalore City Co-operative Bank Limited was
established under the Co-operative society act bearing

registration number 314/CS, dated 08.04.1907 from the Registrar

of Co-operative Societies in Karnataka and the License was
granted by RBI No.UBD/KA/642, dated 11.11.1986 for conducting
the “Banking Business”. The bank has 12 branches along with one
administrative office and all branches have been
computerized under the jurisdiction of Bangalore
City Co-operative Corporation, Bangalore
Development Authority and Bangalore urban &
peripheral areas. The operation of the bank is
throughout Bangalore Co-operative Limited.
Trademark of “The Bangalore City Co-operative

Bank Ltd”:
In consideration of the application submitted to the Govt. of India,

to get registered the above image of godess Lakshmi as
Trademark, as per the Trademark Act of 1959, sec 23(2), rule
62(1) Trademark No.943843 dated 31-7-2000 the Govt. approved
and registered the above image as a trademark and has been
given letter of approval on 15-03-2008.
GOALS AND OBJECTIVES OF THE BANK:

The Bangalore City Co-operative Bank Ltd., believes that every
individual from each status of society needs affordable, relevant
and quality services. The goals and objectives of bank are as
follows;
1. To take measures / steps to increase the deposits to
Rs.500 crores and loans and advances to Rs.370 crores.

2. To earn more than Rs.9 crores of net profit.

3. To reduce the net non-performing assets to 0%.
4. To give more advantages to customers by converting
all the branches into core- banking system.
5. To take steps to have own building for all the branches.
6. To provide more and more training and development
programmes to increase efficiency of employees.
7. To encourage savings, self help and co-operative
principles among the members and depositors of the bank.
8. To undertake banking transaction and co-operative
system as per direction of RBI, Central Government and
State Government.
9. To reduce the cost of the management through the
honorary services of members and thereby keep the cost of
credit as low as possible.
10. To promote the effectiveness of credit and to reduce
the risk in granting a credit through careful and continuous
supervision of the operations of the borrowing members.
VISION STATEMENT
OUR VISION IS OUR MISSION
Founded in 1907, this unique financial institution rests on

the pillars of thrift, fellowship, character, accommodation and the
selfless service of all individuals and organizations who wish to
help themselves progress. We see ourselves as a family of honest,
loyal and committed professionals, harmoniously employing

technology, innovation and the human touch to achieve customer

satisfaction and goodwill the corner stones of our success and the
focus of all our efforts.
The prosperity of our customer is the engine of our success

and they will find in us a fast, timely, flexible, co-operative and
competitive partner in their progress. We are committed to
approachability, simplicity and transparency in our dealings with
all our stakeholders and shall be a temple of their trust.
We shall use our employee involvement and sense of

togetherness to generate high levels of teamwork, efficiency,
excellence and profits. We shall mobilize aggressively, invest
wisely, disburse prudently, recover assiduously, reduce costs and
create a learning organization that offers products and services in
tune with and ahead of the time.
ORGANIZATION CHART OF THE BANGALORE CITY CO-

OPERATIVE BANK LTD.


LIST OF BOARD OF DIRECTORS:
PRESIDENT: Sri. Avalahalli chandrappa.R
VICE-PRESIDENT: Dr. Devaraj T.M., MBBS, D.H.A.,

FAGE
DIRECTORS: Sri. Obanna raju (up-to 7-4-2008)
Dr.T.P.Yoga, B.sc., M.A. (lit), LLB, PGDPM,

MBA., P.hd
Sri.B.K.Ashwatha Narayana
Sri.Dayashankar
Sri. G.S. Rajendra
Sri. T.D.Dananjaya, B.sc.
Sri.K.Krishnappa
Sri.Anjanappa
Sri.M.Hanumaiah, B.A., H.D.C
Sri.N.Raghavendra, M.A
Sri.Basavaraju (co-opt from 30-4-

2008)
Smt.L.Bhagyalakshmamma
Sri.N.Thimmiah
Sri.U.P.puranik, M.com, LLB, RBP,

C.A.I.I.B

Sri.K.Krishnamurthy, FCA, C.A.I.I.B

GENERAL MANAGER: Sri.N.Manjunath,B.sc, M.A,
H.D.C
BRANCHES:
At the end of the financial year 2008-09, including administrative

office “The Bangalore City Co-operative Bank Ltd” is having 13
branches throughout the Bangalore City. Its branch wise deposit,
loans & advances and net profit are as follows.
Rs. 000’s
Total
Total Loans Net
Sl. Date of
Branches Depos & Prof
No. Started
its advan it
ces
Main Branch, 06-04- 90658 81950 332
1.
Chamarajpet. 2007 0 6 02
24-02- 64212 41962 877
2. Vijaynagar
1980 9 6 7
Vijayanagar 9th 25.01.1 39681 17311
3. 302
Block 981 3 2
19-12- 57179 18228 153
4. Indiranagar
1983 8 7 5
Chamarajpet 07-02- 16338 24852 146
5.
West 1988 2 3 17
03- 14354 649
6. Shanthinagar 94564
09.1992 5 2
Mahalakshmipu 07-07- 26420 16086 120
7.
ram 1994 1 1 4
11-08- 22025 104
8. Sanjaynagar 95412
1994 7 5
Padmanabhana 04-09- 14409 11370 215
9.
gar 1995 8 3 7
30-10- 16543 18185 108
10. Koramangala
1996 1 5 49

16-01- 15460 21087 100

11. Avalahalli
2002 4 6 21
15-02- 15925 903
12. R.T.Nagar 57433
2002 0 8
Jnana Jyothi 22-03-
13. 3019 838 3
Nagar 2009

3.8 AWARDS:
Since from the opening of the bank, it is been

functioning effectively. The Bangalore City Co-operative
Bank Ltd. was awarded by “Shri. Kanteerava Narasimha Raja
Odeyar Bahadur” Ex. King of Mysore in 1926, 1927 and 1928
as the “Best Urban Co-operative Bank”.
In 2001-2002, 2003-2004 and 2007-2008 the State

Government of Karnataka awarded as the “Best Urban Co-
operative Bank”.
3.9 COMPETITORS INFORMATION:

As The Bangalore City Co-operative Bank Ltd., is the
urban Co-operative Bank, it is facing competition from the
commercial banks. Commercial banks undertake a number
of banking services. Since the urban co-operative banks are
localized and do not have network of bankers they are not in
a position to meet all the banking services. Therefore the
institution like Government, public sector undertakings and
the urban co-operative banks are facing competition from
the commercial banks.

CHAPTER-04
DATA ANALYSIS AND INTERPRETATION
DEBT RECOVERY MANAGEMENT OF BANK
The Debt recovery management of The Bangalore City

Co-operative Bank Ltd is analysed and interpreted with the
following selected parameters.
OBJECTIVES OF RECOVERY MANAGEMENT OF

“THE BCCB LTD”
 NPA REDUCTION: Abnormal delay in recovery of loans
builds up NPA’s which affect the financial performance

of the bank. Better recovery performance corresponds
to lower NPA’s.
 DEPOSIT GROWTH: If NPA occurs then lots of bank

assets are being blocked and they are converted into
bad debts so it reduces the assets of the bank which
creates a lot of problem in generating the banks
business. So if Debt recovery is done properly then it
will help the bank to generate the outstanding amount

that is due from the customer and it will increase its

deposit growth and do its business efficiently without
any problem.
 ADVANCE GROWTH: If recovery is being properly

made then it will help to generate fund and then the
bank will have sufficient fund and it could provide loans
and advances to its customer and generate its business.
So it could be said that if recovery is properly done then
it will help in all round development of the bank.
 PROFITABILITY GROWTH: Good recovery is an

important ingredient for profitability of any financial
institutions it leads to increased financial capacity to
deliver credit. So it could be said that if recovery is
properly done then it will help in all round development
of the bank by increasing profits.
LOAN RECOVERY POLICY OF “THE BCCB LTD”
The debt collection policy (Recovery policy) of the bank

is built around dignity and respect to customers. The bank
will not follow policies that are unduly coercive in recovery of
dues from borrowers. The policy is built on courtesy, fair
treatment and persuasion.

The bank believes in following fair practices with regard

to recovery of dues from borrowers and taking possession of
security (properties / assets charged to the bank as primary
(or) collateral security) (known as security repossession) and
thereby fostering customers confidence and long term
relationship.
• The repayment schedule for any loan sanctioned by the

bank will be fixed taking into account the repaying
capacity and cash flow pattern of the borrower.
• The bank will explain to the customer upfront the

method of calculation of interest and how the Equated
Monthly Installments (EMI) or payments through any
other mode of repayment will be appropriated against
interest and principal due from the customers.
• The bank would expect the customers to adhere to the

repayment schedule agreed to and approach the bank
for assistance and guidance in case of genuine difficulty
in meeting repayment obligations.

• The bank’s security Repossession policy (taking

possession of the mortgaged properties under SARFAESI
Act (or) acquiring the property as non banking asset
through enforcement of decree) aims at recovery of
dues in the event of default and is not aimed at
whimsical deprivation of property.
• The policy recognizes fairness and transparency in

repossession, valuation and realization of security.
• All the practices adopted by the bank for follow up and

recovery of dues and repossession of security will be in
consonance with the law.
RECOVERY METHODS FOLLOWING BY “THE

BANGALORE CITY CO-OPERATIVE BANK LTD”:
As soon as borrower becomes defaulter, generally the bank

follows two methods of recovery.

 General recovery method.
 Legal recovery method.
GENERAL RECOVERY METHODS:
(1) When the first payment is due from the customer, a call
is initiated to make him aware of the date of payment of

his dues to the bank.
(2) In the event of the customer not responding to the

telephonic calls, a written communication is issued to
the customer informing him of the status of the account
and calling him to effect payment towards the overdues
in the account.
(3) If there is no response, further letters may take a

strong line insisting on immediate reply.
(4) If these are ignored, the recovery team of the bank

goes for field collection. This activity involves meeting
the customer at his place of meeting or residence.

Repeat visits will be made to persuade the customer to

repay loan.
(5) Finally, if the customer has disappeared or refuses

to have any contact with the bank a final detailed notice
will be issued to the borrower through the legal council
better taking legal proceedings against him.
LEGAL RECOVERY METHODS:
(1) When all efforts to recover loans in the normal course
fail, the file is referred to legal department of

arbitration.
(2) The legal department will initiate all the steps to

recover the amount, finally E.P (Execution Petition)
will be filed.
(3) The E.P FILES are handed by Sale Officer / ARCs

who is appointed from co-operative department. As soon
as the file is received, the sale officer will send the
recovery force to identify the defaulter and his property.

After identification, form no.6 will be issued attaching

the property for sale and to pay the amount within
10days.
(4) If the party does not settle the amount with in

10days, then Form no.8 & 9 (sale date of the mortgaged
property) will be fixed giving one month time.
(5) Even though after issuing of Form No.8 & 9, if the

party does not give fruitful then a paper publication
“fixing the sale of property” will be advertised.
(6) Before three days of option, the locality people

where the mortgaged property exists and the others are
invited to participate.
(7) Then auction of that property will be conducted among
the bidders and the auction will be confirmed to the

highest bidder.
Measures to recovery Non performing Assets

with regard to SARFAESIA – 2002:

With an objective of speedy recovery of NPA’s that

arises in the banking organizations , the central government
of India has implemented securitization and reconstruction of
financial assets and enforcement of security interest act 2002
(SARFAESIA-2002).
SARFAESI Act 2002 extends to whole of India including

the State of Jammu & Kashmir. The act is effective from
21.06.2002. It also covers the earlier loans which are
outstanding.

The same act has been made applicable for URBAN

CO-OPERATIVE BANKS also, with effect from 28-01-2003.
As per the directions of RBI if any loans of the bank has

been classified as NPA the securities taken on such loans can
be taken to possession by giving notice and advertisement in
the newspapers and there is an opportunity in this act to
adjust such loans by disposing of securities that has been
taken to possession through above mentioned process.
In order to implement the measures that can be

taken under this act the bank has appointed
Sri.K.G.Raju, the Deputy General Manager as an
authorized officer and all branch managers as
assistant authorized officers.

TABLE-4.1:
SHOWING RECOVERY AS A PERCENTAGE OF LOANS

& ADVANCES
Total loans &

advances Percentage of
Year
Issued recovery
Recover
(Amount In
Lakhs)
ed
14436.9
2006-07 15017.48 96.13
1
22858.7
2007-08 23367.94 97.82
9
28889.1
2008-09 29484.43 97.98
7
Analysis:
It is clear from the above statement that the

recovery of loans and advances is increased from 96.13%
to 97.98% during the year 2006-2007 to 2008-2009.

GRAPH-4.1:
SHOWING RECOVERY AS A PERCENTAGE OF LOANS

& ADVANCES
Interpretation:
From the above analysis it is found that the recovery

performance of the bank is increasing year by year and the
bank has taken effective measures to collect the loans and
advances.


TABLE-4.2:
SHOWING STATUS OF NPAs IN THE BANK
Gross NPAs Net NPAs

Year Amount Percent Amount Percent
(in Lakhs) (%) (in Lakhs) (%)
2006-07 2339.84 15.58 359.23 2.76
2007-08 2268.83 9.71 203.71 0.96

2008-09 3499.30 11.87 1332.04 4.88
Analysis:
From the above table it is observed that the NPAs in the

bank is considerably decreasing from 2006-07 to 2008-09.
Gross NPAs during the year 2006-07 was Rs.2339.84
lakhs at a % of 15.58, in 2007-08 it is decreased to
Rs.2268.83 at 9.71% and during 2008-09 it is Rs.3499.30
lakhs at 11.87%.
The net NPAs of the bank during 2006-07 was Rs.359.23
at the rate of 2.76%, it was Rs.203.71 lakhs at 0.96% in
2007-08 and increased to Rs.1332.04 lakhs in 2008-09 at
4.88%.

GRAPH-4.2:
SHOWING STATUS OF NPAs IN THE BANK
Interpretation:
From the above analysis it can be interpreted that

the level of NPAs is decreasing year by year. In 2008-09
the NPAs is increased compared to 2007-08 by 2.16%
(11.87% - 9.70%). As it is said by bank officials, this is due
to the impact of economic crisis in India. There was
fluctuation in the income level of the borrower, due to this
the recovery performance was little bit low because of

which the NPAs are slightly increased during the year

2008-09.

TABLE-4.3:
SHOWING THE NET NPAs & RECOVERY

PERFORMANCE OF THE BANK
% age of
% age of
Year Net NPA to
Recovery
Loans
2006-07 2.76 96.13
2007-08 0.96 97.85
2008-09 4.88 97.98
Analysis:
From the above table it is analysed that in the year

of 2006-07 net NPAs in the bank was 2.76%
corresponding to Recovery performance at 96.13%, In the
year of 2007-08 net NPAs has reduced to 0.96% where
Recovery performance increased to 97.82% and during the
year of 2008-09 net NPAs suddenly increased to 4.88%
where recovery performance is also increased to 97.98%.

GRAPH-4.3:
SHOWING THE NET NPAS & RECOVERY

PERFORMANCES OF THE BANK
Interpretation:
As it is said higher the recoveries lower the NPA’s.

Thus recovery and level of NPA’s are inversely related.
From the above analysed data it is clear that

recovery performance of NPA’s is increasing year to year
though in the year of 2008-09 the net NPA’s has increased
to 4.88% compared to previous years. The reason for this
is the impact of economic crisis in India the bank was also
not exceptional to this. There was fluctuation in the
income level of the borrower due to this the recovery

performance was little bit low because of which the net

NPA’s are slightly increased during the year 2008-09.
TABLE-4.4:
SHOWING THE NET NPAs AS A PERCENTAGE OF LOANS

& ADVANCES
Total Loans & %age of Net

Net NPAs
Advances NPAs to
Year (Amount
(Amount in Total Loans
in Lakhs)
Lakhs) & Advances
2006-07 15017.48 359.23 2.76
2007-08 23367.94 203.71 0.96
2008-09 29484.43 1332.04 4.88
Analysis:
From the above collected data it is observed that

total loans and advances were Rs.15017.48 lakhs, Rs
23367.94 lakhs and Rs.29484.43 lakhs on which net NPA’s
were 2.76% , 0.96% and 4.88% during the year 2006-07 ,
2007-08 and 2008-09 respectively.

GRAPH-4.4:
SHOWING THE NET NPAs AS A PERCENTAGE OF LOANS

& ADVANCES
Interpretation:
It is found from the above analysis that total loans

and advances are increasing year by year and net NPA’s
on total loans and advances are decreasing except during
the year 2008-09 which should be taken care of.

TABLE-4.5:
SHOWING THE GROWTH OF DEPOSITS
Total
Growth of
Deposits
Year deposits in
(Amount in
Percentage
Lakhs)
2006-07 22443.62 100.00
2007-08 28910.54 128.81
2008-09 37863.10 168.70
Analysis:
From the above data collected it is found that the

growth of deposit of the bank has been increased from
100% to 128.81% and 168.70% during the year 2006-07,

GRAPH-4.5:
SHOWING THE GROWTH OF DEPOSITS
Interpretation:
It is clear from the above analysis that there is

increasing trend in the growth of deposit in the bank. It
shows that bank is following effective recovery methods.

TABLE-4.6:
SHOWING THE LOAN POSITION OF THE BANK
Loans (Amount Percentage of loan

Year
in lakhs) position
2006-07 15017.48 100.00
2007-08 23367.95 155.61
2008-09 29484.43 196.33
Analysis:
As the transaction of the bank increased lending of

funds also raised from Rs.15017.48 lakhs to Rs.23367.94
lakhs, Rs.29484.43 during the year 2006-07, 2007-08 and
2008-09 respectively where there is increase of 96.33%
(196.33-100) and 40.73% (196.33-155.61) in lending of
funds during the year 2008-09 compared to the year of

GRAPH-4.6:
SHOWING THE LOAN POSITION OF THE BANK
Interpretation:
The above analysis shows that the growth of

lending position of the bank is being considerably
increased. As it is clear that the bank has been taken
effective recovery measures.

TABLE-4.7:
SHOWING PROFIT POSITION OF THE BANK
Net Profit
Year (Amount Rs.
Percentage
lakhs)
2006-07 355.49 100.00
2007-08 427.24 120.18
2008-09 517.00 145.43
Analysis:
Net profit of the bank as shown a good growth

during the years. As it has steady growth in earning profit
from Rs.355.49 lakhs to Rs. 427.24 lakhs and Rs.517.00
lakhs in the financial year 2006-07, 2007-08 and 2008-09
respectively where there is increase of profit by 45.43%
(145.43-100) and 25.25% (145.43-120.18) during the year
2008-09 compared to the year of 2006-07 and 2007-08
respectively.

GRAPH-4.7:
SHOWING PROFIT POSITION OF THE BANK
Interpretation:
As though the bank is earning profit steadily it

requires earning more profit by recovering the non
performing assets through effective measures .So there
will be further growth in profit earnings of the bank.

CHAPTER-05
SUMMARY OF FINDINGS, SUGGESTIONS AND

CONCLUSION
FINDINGS OF THE STUDY:
 It is observed that the debt collection policy (Recovery

policy) of the bank is built around dignity and respect to
customers. The bank will not follow policies that are
unduly coercive in recovery or dues from borrowers.
The policy is built on courtesy, fair treatment and
persuasion.
 It is found that all the practices adopted by the bank for

follow up and recovery of dues and repossession of
security will be in consonance with the law.
 It is observed that the level of non-performing assets of

the bank is decreasing year by year except during the
year 2008-09 compared to previous years. It is due to
the impact of economic crisis in India, there was
fluctuation in the income level of the borrower because

of this reason the NPAs are slightly increased in the year

2008-09.
 As per the information given by the bank officials, the

main reason for loans becoming due /accounts
becoming non performing asset in the bank are willful
default and diversion of fund.
 It is examined that though the position of deposit, loan

and profit of the bank is in increasing trend during the
year 2006-07 to 2008-09 it requires recovering the non
performing assets through effective measures .So there
will be further growth in the performance of the bank.
 It is found that before the enactment of the

Securitisation Act the banker had limited options for
recovery which consisted of having an intensive follow-
up and interaction with the borrower and initiating legal
action through courts.
 It is observed that the securitization Act empowers

banks to change or take over the
management/possession of secured assets of the
defaulting borrowers and sell or lease out the assets
without the intervention of the court.


SUGGESTIONS:
 It is suggested to bank that the proper documentation and
verification to be made before sanctioning the loan.
 It is suggested to bank empower staff to make decisions
related to sanctioning of loans.
 The borrowers are constantly reminded about their

overdues and notices to clear them are regularly sent.
 Constant interactions have to be maintained with the

customers to keep track of their loan payment.
 Strict measures have to be taken while issuing or

sanctioning the loan. The measures can include
verification of job and salary slips, verification of securities
and the like.
 While sanctioning loans to customers past credit history is
to be considered, along with current income and assets.
 The guidelines issued both by the RBI and concerned

statutory board of the bank regarding the issue of loans as
well as recovery methods should be strictly considered and
implemented.
 List of defaulters is displayed in the notice board of the

branch with out disclosing the account number, amount of

loan, overdue etc., the idea is simply to draw attention of

the defaulters to contact the branch manager.
 Identify critical branches for intensive recovery, fix targets
of recovery and draw time bound action programme.

Monitor implementation of time bound action plan.
 In order to increase the recovery, rebates should be given

on interest amount to its old customers so that they can
recover the amount. As it brings loyalty towards bank.
 Effective policies should be framed regarding the process

of recovery of loans/debts during the time of changes in
economic conditions of the country like recession, inflation
etc.
 “The Bangalore City Co-operative Bank Ltd” is trying to

reduce NPA through various techniques and it is suggested
that these measures have to be continued.

CONCLUSION
It has been said that a bank “never” makes a bad loan -

a loan goes bad after it has been made. If a customer fails to
make repayment on due date it is considered a sticky
account. Any customer who becomes defaulter may bring
problems to the banker who grants the loan from depositor’s
money and that money has to be returned to the depositors
with regular interest. Then recovery of such loans and
advances become inevitable.
Recovery management system will design a collection

strategy to meet bank’s objectives. Bank can recover their
debts without losing customers.
“The Bangalore City Co-operative Bank Ltd “which had

started 103 years back has occupied a prestigious place in
India and it Is one among the top urban co-operative banks of
the country, also it is 3rd among the urban co-operative
banks of Karnataka state. It is providing excellent services to
its depositors, shareholders, borrowers through its
computerized branches and motivated staff. It is highly

appreciative that the bank has reached this position within

the period. Overall the bank is found to be one of the
pioneers among the urban co-operative banks and has
become instrumental in the economic development of its
members. But of bank is facing the problem of increasing
level of NPA’s over the years which should be taken care of.
QUESTIONNAIRE
TOPIC:
An Exploratory study on Debt Recovery Management of

Co-operative banks with special reference to “THE BCCB ltd.”
Dear sir/ madam,
This is with respect to MY M.com project in ‘THE BCCB Ltd” On Debt

Recovery Management. This questionnaire is to be answered for my

research purpose. I request you to give your co-operation to do my

survey as the same will be kept confidential.
Name:
Designation:
Department:
Phone no.:
1. What are the types of loans you are providing to customers?
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2. What are the terms and conditions to get loan in your bank?
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--------

3. What are the measures you are taking when loans are become due
Or Debt?
--------------------------------------------------------------------------------------
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-
--------------------------------------------------------------------------------------
--
--------------------------------------------------------------------------------------
--
4. Under which guidelines you are taking steps to collect the Debts?
-------------------------------------------------------------------------------------
--
--------------------------------------------------------------------------------------
--
--------------------------------------------------------------------------------------
--
--------------------------------------------------------------------------------------
--
5. When will you consider the loans and advances given, as NPAs?
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
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6. Does NPAs are classified into ,
a. substandard assets

b. doubtful assets
c. loss assets
d. all the above
7. Have you been conducted any surveys on “why loans are becoming
due in the bank”?
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
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8. What are the main reasons for NPAs in the Bank?
-------------------------------------------------------------------------------------
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9. What are the effects of NPAs on growth of “THE BCCB Ltd”?
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10.Do you have loan or Debt recovery committee on your bank?
*Yes *No

If yes, give the details

-------------------------------------------------------
11.What are the measures for the recovery of NPAs adopted by the
bank?
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12. Does bank have made any insurance coverage on NPAs ,
*Yes No
If yes, give details --------------------------------------------
13. Details of NPAs of the bank for the following years,
particulars 2006-07 2007-08 2008-2009

Standard Assets
Substandard Assets
Doubtful Assets
Loss Assets

BIBLIOGRAPHY
1. BOOKS REFERRED
AUTHOR
SL. BOOK
PUBLICATION EDITION
NO NAME
S.Scott
Management MacDonald / South Western – Sixth
1.
of Banking Timothy W. Cengage Learning 2006
Koch
Banking
Snow white First
2 principles & M.N.Gopinath
publications ltd. 2008
operation
Vijayaragavan
Introduction First
3 Iyengar Excel Book
to banking 2007
Management
H.R. Suneja Himalaya publishing First
4 of
house 2008
bank credit
2. THREE YEARS ANNUAL REPORTS OF THE BANK:

(2006-07, 2007-08 & 2008-09)

3. WEBSITES
• www.rbi.org.in
• Search Engine: www.google.com & Yahoo.com

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An Exploratory study on Debt Recovery Management at “The BCCB Ltd”

Dissertation submitted to the

Under the guidance of

Govt. R.C.College of Commerce & Management

Govt. R.C. College of Commerce & Management 1

Palace Road, Bangalore – 560 001.

This is to certify that the dissertation entitled

Govt. R.C. College of Commerce & Management 2

Place: Bangalore Dr. M.ASHFAQ

This is to certify that the dissertation entitled

Govt. R.C. College of Commerce & Management 3

I hereby declare that the dissertation entitled

Govt. R.C. College of Commerce & Management 4

SPECIAL RFERENCE TO THE BANGALORE CITY

I also declare that no part of this

Govt. R.C. College of Commerce & Management 5

I extend my gratitude towards internal

I am also thankful to my parents, all my

Govt. R.C. College of Commerce & Management 6

CERTIFICATE BY THE PRINCIPAL

This is to certify that the project “AN

Govt. R.C. College of Commerce & Management 7

This dissertation is based on original result

Prof. H.K.KUMARARAJ URS

Govt. R.C. College of Commerce & Management 8

Govt. R.C. College of Commerce & Management 9

CHAPTER SUMMARY OF FINDINGS, 79 - 83

Govt. R.C. College of Commerce & Management 10

TABLE Showing Recovery as a Percentage of Loans

GRAPH Showing Recovery as a Percentage of Loans

Govt. R.C. College of Commerce & Management 11

INTRODUCTION ABOUT BANKING INDUSTRY:

The word bank originated the French word ‘benque’ or

During the barter system also, there existed traces of

ORIGIN OF BANKING INDUSTRY:

Greece was the first country to introduce a satisfactory

Govt. R.C. College of Commerce & Management 12

meaningful system of banking came into existence taking

Rome was the first country to start a bank at the

In the olden days’ Goldsmith, merchants and money lenders

INTRODUCTION TO BANKING IN INDIA

The Indian Companies Act defines the term banking as

A Banker is a dealer in money and credit. The business

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investors (borrowers) by accepting deposits of money from a

HISTORY OF MODERN BANKING IN INDIA

The history of modern banking in India dates back to the

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In 1921 all these banks were amalgamated and imperial

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On an account of the top-sided growth of the banking

The objective of nationalization was to control the

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nationalization period has undergone a major structural

 Present scenario of banking industry:

The Indian banking can be broadly categorized into

The need to become highly customer focused has forced

The Indian Banking has come a long way from a sleepy

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 New Generation Banking:

The liberalized policy of government of India permitted

Banks are classified into several types based on the