A STUDY ON NPA IN VIJAYA BANK IN TUMKUR BRANCH

1.INDUSTRY PROFILE BANKING BACKGROUND Meaning of a bank:

A bank is an institution, which accepts deposits and lends money.

Functions of bank:
The functions of bank may be divided into two broad categories * Primary function * Secondary function 1. Primary function: * Accepting deposits. * Leading money or investment. 2. Secondary functions: * Agency services * General utility services.

TYPES OF BANK:
RBI has statistical tables related to the bank in India. Banking structure of the country is broadly composed of commercial banks both scheduled and non-scheduled, foreign banks and co-operative banks, even through organized controlled and governed by separate Acts and Rules. They are all engaged in providing credit to different segment of our economy Commercial and foreign banks are engaged in providing credit to the highly organized industrial and commercial undertakings. The co-operative banks have assumed the different role of providing banking facilities on widely extended basis to the disorganized agricultural sector of the Indian economy.

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1. CENTRAL BANKS:
The important functions of the central bank on India-RBI are as follows. 1. To issue currency notes. 2. To regulate and supervise commercial banks and other financial institutions. 3. To regulate and control money market. 4. To frame credit policy, regulate and control credits. 5. To implements the banking and financial policy of the government of India. 6. To regulate & control the foreign exchange. 7. To publish monetary and financial indicators.

2.

COMMERCIAL BANK:
It can be defined as A financial institution which accept deposit, draws cheques,

and lends money to commerce industry & society. Commercial bank borrows money or accepts deposits and lends to those who needs funds for commercial and industrial purpose. Thus they act as dealers for the need of funds of the society. Commercial bank accepts deposits in the from of: a. Fixed deposits b. Savings bank account c. Current account and miscellaneous account as pigmy deposits home safe deposit etc. Deposits are accepted to make advances in the from of i. Cash credit ii. Overdraft iii. Loans for short & long periods. Apart from these full functions they also render a number of services to their customers such as collection of cheques, bill of exchange, discounting of bills, handle and promissory notes, Safe custody of valuables, remittance facilities, payment of insurance premium, payment of electricity bills etc. commercial banks. They are owned and controlled by central government where as private sector bank are owned & controlled by the shareholders. Some banks are functioning in co-operative banks incorporated under co-operative societys act of the respective state.

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3.

INDUSTRIAL BANKS:
These banks provide long-term funds to industrial enterprises. They are also

known as development banks as they provide financial technological and managerial assistance for the development of industries. They perform the following functions. 1. Provide long term loan to industrial organization for expansion & modernization programs. 2. Promotions of new industrial centers by working as under writers. 3. To provide technological guidance in the management of industries. 4. Controlling the affairs of the industrial undertaking by securing representation on their board of directors. Till 1947 there were no industrial banks in India. RBI and center government have taken active part in the setting up of such banks to finance large medium and small-scale industries. E.g. of Industrial banks are industrial Finance corporation state finance corporation, industrial credit and Investment Corporation of India & industrial Development bank etc. 1. EXCHANGE BANK: These banks undertake the usual banking business but they specialize in foreign exchange transaction. At present there are 16 exchange banks in India and they conduct foreign trade transaction. They also render other service incidental to financing such as collecting and supplying formation about foreign customers, providing remittance facilities etc. these banks have also entered in the field of internal trade. They compete with Indian commercial banks in their specialization the licensing of these is controlled by the Banking regulation Act 1949. RBI controls foreign exchange control regulations & other banking transactions. 2. RURAL BANKS: In India, regional rural banks have been setup in backward and rural areas. Where coverage of commercial and co-operative banking is not well spread. The purpose of such banks is to finance agriculture, and provide employment to rural educated youth who V.V.C.E, Mysore Page No: 3

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possess the requisite orientation to look after the need of the rural areas. Rural banks try to combine advantages of both co-operative and commercial banks. The regional rural banks have been included in second schedule of the RBI act therefore enjoy the same privilege and facilities of the scheduled banks.

3. AGRICULTURE BANKS: These banks provide long-term finance to farmers for purchase of tools, equipments machinery and for permanent improvement of land. In India these banks were set up to provide loans for the purpose of repayment of loans to village moneylenders and indigenous bankers. These banks were also known as land mortgage banks but now emphasis have been shifted to providing long term loans facilities. In India these banks have been developed in the co-operative sector.

4.

EXIM BANKS: The export and import bank of India was set up in January 1982 with its head

office in Bombay. If part of normal banking functions are conducted by there connected with import and export of goods. This bank performs several other functions for example financing of export out of India and imports into India, Financing joint ventures in foreign countries financing the import and export of machinery and equipment lease etc. It also undertakes purchasing discounting and negotiation of export bills.

5. CO-OPERATIVE BANKS: These banks are formed under the principle of co-operative to provide the loans to farmers. Small scale industrial concerns, promote in general Self- Help among the lower and middle-income groups of the society. Services are the base of such co-operative organization. These banks are helpful to small farmers, artisans and in mobilizing rural deposits.

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2. COMPANY PROFILE: A. Background of vijaya bank `

Vijaya Bank was flagged off on 23rd October 1931. Late Shri A.B.Shetty, along with other enterprising farmers in Mangalore, Karnataka, founded the bank to inculcate banking habits in the farming community of Dakshina Kannada district in Karnataka State. In 1958, it was promoted and became a scheduled bank. From 1963 to 68, the Vijaya bank grew both in terms of size and stature - 9 small banks had merged with it, thus contributing to its growth and advancement. On April 15, 1980, the bank was nationalized. Vijaya Bank boasts of being one of the few banks which has undertaken the principal membership of VISA International and MasterCard International. Vijay Bank has been constantly focusing on technological up gradation. As on October 2005, all the 913 branches have been computerized, covering 97% of the banks total system.

Inception:
Vijaya Bank was founded on 23rd October 1931 by late Shri A.B.Shetty and other enterprising farmers in Mangalore, Karnataka. The objective of the founders was essentially to promote banking habit, thrift and entrepreneurship among the farming community of Dakshina Kannada district in Karnataka State. The bank became a scheduled bank in 1958. Vijaya Bank steadily grew into a large All India bank, with nine smaller banks merging with it during the 1963-68. The credit for this merger as well as growth goes to late Shri M.Sunder Ram Shetty, who was then the Chief Executive of the bank. The bank was nationalised on 15th April 1980. The bank has built a network of 1180 branches,47 Extention Counters and 500 ATMs as at 30.11.2010, that span all 28 states and 4 union territories in the country.Each branch provides effective and efficient services and significantly contributes to the growth of the individual, and the nation

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B. NATURE OF THE BUSINESS CARRIED

Over the years, the Bank has been scaling up its market position to emerge as a major Financial Conglomerate' with as many as nine subsidiaries/sponsored institutions/joint ventures in India and abroad. As at June 2010, the Bank has further expanded its domestic presence, with 3057 branches spread across all geographical segments. Keeping customer convenience at the forefront, the Bank provides a wide array of alternative delivery channels that include over 2000 ATMs- one of the highest among nationalized banks- covering 732 centers, 2681 branches providing Internet and Mobile Banking (IMB) services and 2091 branches offering 'Anywhere Banking' services. Under advanced payment and settlement system, all branches of the Bank have been enabled to offer Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities. The service includes accepting deposits, commercial and institutional credit, treasury, investment, risk management and other related financial services. It operates through two segments. Banking operations consist of corporate Banking. Retail Banking, personal and commercial Banking, Cash management services, Deposits and other allied services. Treasury operations consist of dealing in SLR and Non-SLR securities and Money Market operation.

C. VISION AND MISSION STATEMENT Mission

"Vijaya Bank mission is to emerge as a prime national banked by modern technology, meeting customer aspirations with professional banking services and sustained growth contributing to national development." VISION customers not as means of income but as a family member. Develop services that cater to the need of different size of investors. Maintain current high standard for asset quality through disciplined risk management. Providing all kinds of standards services with the Indian touch.

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D. Products & Services

Deposit Schemes

Savings Bank V Platinum Savings Bank Account Vijaya Saral Savings Current Account VStar Savings Scheme Term Deposit

Loans & Advances

Retail Lending Schemes Loans Against Securities Non Fund Based Facilities Advances to Agriculture, SSIs and Others Government Sponsored Schemes Special Schemes for Women

NRI Services

Deposits Loans Remittances FOREX Branches FCNR(B) Branches Helpline for NRIs

Remittance Collection and Facilities

FOREX Remittances Inland Remittances Electronic Remittance Services Inward / Outward Collection Instruments

Credit Cards

Domestic Cards Global cards Debit cards

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Forex

FOREX market Information Card Rates Treasury

Other Services

Merchant Banking Vijaya Raksha V-Arogya Bima Policy Credit Cards Mutual Funds Leasing Hiring

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E.AREA OF OPERATION; LOCATIONS IN NATION

S.No.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Location Type
Ahmedabad Bangalore North Bangalore South Chandigarh Chennai Delhi Guwahati Hubli Hyderabad Kochi Kolkata Lucknow Mangalore Mumbai Mysore Shimoga Udupi Vijayawada Nagpur Hassan

Place
47 58 55 55 77 75 25 70 59 69 62 62 71 62 59 36 69 43 51 53

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F. OWNERSHIP PATTERN: Vijaya bank is a public company. Board of director For any organization its people are its chief assets. Especially, the people who guide the organization through diverse phases. Our Board of Directors are proficient professionals who are averse with the highs & lows of the banking sector. S.No Name Designation

1 2 3 4 5 6 7 8 9 10 11 12

Shri Narayanbhai Keshavlal Patel Shri Chaturbhai Revabhai Patel Shri Sanjiv Kiritkumar Patel Shri Kalidas Gopaldas Patel Shri Gordhanbhai Bahechardas Patel Shri PravinChandra Naranbhai Patel Shri Vinodbhai Girdharlal Patel Shri Rameshchandra Chandulal Patel Shri Dahyabhai Bahechardas Patel Shri Pravinchandra Jethalal Kadakia Shri Digneshbhai Harilal Khatri Shri Narendrabhai Jivanlal Patel

Chairman Vise chairman Managing Director Director Director Director Director Director Director Professional Banker Director Charter Accountant Director Director

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G. 16 COMPETITORS

BANKS Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Caar Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Orienta bank of Commerce Punjab National Bank Syndicate Bank UCO Bank Union Bank of India

LOCATIONS India India India India India India India India India India India India India India India India

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H.INFRASTRUCTURCTURAL FACILITIES:

AMBIENCE AND VISIBALITY:

Good ambience encompassing neat been ensuring and tidy business services premises attractive and comfortable interiors coupled with proper visibility has been ensured in all branches and offices, since these factors substantially impact the business.

FURNISHING AND SITE PREPARATION:

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Timely and appropriate furnishing of premises to open new branches and offices, refurnishing the branches cutting out CBS and TBM: OMNI was adequately taken care.

LOCKER PLAZES:

Within the twin objective of providing much needed safety and security for valuables of locker users and to augment the fee based income for the bank by optimum utilization of available surplus space in select branches in certain strategic centers, a scheme to establish locker plaza in metro towns has been launched. Locker plazas have already functioning in 4 centers and a few more will commence functioning shortly.

RECORDS POOL: With the right to information Act(RTI), the nature and volume of Banks records to be preserved for a longer period has become necessary.

I. AWARD
NABARD Award for microfinance Our Banking Bureau 13 July 2005 The National Bank for Agriculture and Rural Development (NABARD) has awarded Vijaya Bank the first prize (indirect category) in the credit linkage to self help groups (SHGs), for the year 2003-2004. M S Kapur, chairman and managing director of Vijaya Bank received the award from R V Deshpande, the Karnataka minister of cooperation. V.V.C.E, Mysore Page No: 13

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Speaking at the ceremony, Kapur said that Vijaya Bank has credit linked 3,500 SHGs in Karnataka during the year 2003-04 with a financial assistance of Rs8 crore. Cumulatively, bank has so far credit linked 13,000 SHGs, of which 8,600 SHGs are in Karnataka. Recovery of loans granted to SHGs is as high as 95 per cent. Kapur also suggested that a regulatory body should be set up to co-ordinate lending to rural sector and also requested NABARD to lower the interest rates on refinance to enable banks to increase credit flow to rural sector substantially. Vijaya Bank has received a similar award for its operations in Andhra Pradesh for the year 2004.

J. WORK FLOW MODEL (END TO END) :

The primary activities are accepting deposits and lending loans and advances. Accepting deposits by way of savings, Current account, fixed Deposit and Recurring Deposits. The collected money will be safeguarded according to regulation of the RBI. Besides these syndicate Bank must concentrate on stationary control. The stationary includes application Cheque Books, challans and some other stationery. It must maintain a sound control on these to balance the activities and services. The Circle will report to Head Office in respect of both functional and administrative matters. The Circle shall handle credit proposals up to the delegated powers V.V.C.E, Mysore Page No: 14

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and also handle other general administration and staff matters (including disciplinary matters) as the existing Circles are doing now. The branches have been provided with adequate operational flexibility and credit sanctioning powers by the policies/guidelines spelt out by Head Office. The circle is fixes with targets by the Head Office in all business parameters. And in term the circle has fixed the target to the branches under its administrative purview. The performance will be reviewed periodically at various forums. Circle office before distributing target to the branches. They should consider the size of the branches. The service units like accounts section and currency chests attached to their base branches and would continue to function under the same circle as the base branch circle will report of both functional and administrative matters. Circle shall handle credit proposal up to the delegated powers and also handle other general administration and staff matter (including disciplinary matters). With this the bank will be broadly moving into a three-tier system of administration of operation.

k. Future Plans Challenges for the Next Year (Future Outlook)

Deployment across various business. Driving productivity

1. Stress in certain Sectors of the Economy Potential NPAs arising in real Estate and Capital Markets.

2. Containing Overheads

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Keep C/I ratio in control, while at the same time driving branch and ATM Network expansion.

3. Capital requirements Need to raise additional Capital for funding Balance sheet Growth as well as for subsidiaries and acquisitions. Aim to maintain 13% Capital in the Next Year.

4. Leadership Development Need to groom leaders for the future at all levels.

3. MCKENSYS 7S FRAME WORK WITH SPECIAL REFERENCEE TO ORGANIZATION UNDER STUDY

INTRODUCTION

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The need for variety of analysis for understanding the various aspects of organizational functioning gave rise to Mckinseys 7-s model. The main purpose was to evolve working on strategic planning and management of the firm and to lay foundation for implementing strategy in order to outwit, outflank and outmanoeuvre the competitors. S. Consultants Mckinsey & Company developed this holistic approach towards the end of 1970s. Mckinseys 7-s frameworks help both at the stage of analysis and diagnosis and later developing appropriate strategy for acceptance and implementation.

The seven aspects of Mckinseys framework are inter-twinned as shown in the diagram below:

Contents of McKinseys 7-s Framework 1. Strategy:

A set of decisions and actions aimed at gaining a sustainable competitive advantage.

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Vijaya banks strategy is to set out Vision, Mission, Objective, Major action plans and the policies of the entire enterprise. This sets out a broad framework to guide manager at all levels in all functions in their specific short-term objectives. Mission "Vijaya Bank mission is to emerge as a prime national banked by modern technology, meeting customer aspirations with professional banking services and sustained growth contributing to national development."

SHARE HOLDERS
BOARD OF DIRECTORS

PRESIDENT

VICE PRESIDENT

GENERAL MANAGER/CEO

DEPUTY GENERAL MANAGER

ASSISTANT GENERAL MANAGER

MANAGER

2. Structure:

ASSISTANT MANAGER

SENIOR ASSISTANT MANAGER

JUNIOR ASSISTANT MANAGER V.V.C.E, Mysore Page No: 18

SUB-STAFF & ATTENDERS

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The organization chart and associated information that shows who reports to whom and how tasks are both divided up and integrated. Vijaya banks sets out the formal reporting relationship, mode of communication among members, their respective roles, rules and regulations for carrying out different task, etc. The Flat organization structure provides the framework for relationship among different parts of the organization with the Assistant General Manager. All the Five departments in State Bank Of India, Commercial branch, Cuttack have their own responsibility and all of them report to the Assistant General Manager, who is in charge of the administration and the operations of the entire Branch.

3. Systems:
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The flow of activities involved in the daily operation of a business including its core processes and its support systems. Vijaya banks systematic framework stands for rules and regulations, procedures and practices that must be followed to carryout tasks in the organization these include Formal system procedure of using Intranet facility being the whole organization is computerized.

4. Staff:
Companies developing their attitude and shaping basic values. Vijaya bank describes staffing through the process Selection, Placement, Training and Development of qualified employees. They encourage young talents and are introduced in to the organization through Induction programmes. They help the professionals to develop their career through Assessment, cross functioning and various development programmes.

5. Skills:
An organizations dominant capabilities and competencies. Vijaya bank, Commercial Branch, Cuttack includes all industrial and commercial advances.This branch deals with high value of more than 25lakhs. This Branch has well qualified staff members with excellent skills and capabilities.

6. Style:
Managers collectively spend their time and attention to achieve their objectives. The Acts is more important than what it. Vijaya banks style according to its framework includes culture of the organization through Teamwork. Their style of management over a period of time is evident from the pattern of decisions and actions taken by them. V.V.C.E, Mysore Page No: 20

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7. Shared values:
Commonly held beliefs, mindsets, and assumptions that shape how an organization behaves. Its corporate culture. Vjaya bank is taking its state-of-the-art technological know-how into areas like different new schemes which are beneficial and attractive to the customers in every respect. They are also introducing various products, which are providing greater satisfaction and flexibility to the customers and even the staff members.

4. SWOT ANALYSIS (Strength, Weakness, Opportunity, Threats)

It refers to analysis of an organisations strengths, weaknesses, opportunities and threats. It is used as a tool for planning exercise in banks at various levels and is used for setting goals and evolving marketing strategies.

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This comprehensive SWOT profile of Indian Overseas Bank provides you an in-depth strategic analysis of the companys businesses and operations. The profile has been compiled by GlobalData to bring to you a clear and an unbiased view of the companys key strengths and weaknesses and the potential opportunities and threats. The profile helps you formulate strategies that augment your business by enabling you to understand your partners, customers and competitors better.

Strength
The Branch has efficient management . It has well qualified and talented personnel. It has well established system and procedure. It has good capital adequacy ratio. It deals with high value credit facility The bank provides various kinds of trade credit facilities

Weaknesses
The branch is suffering from high cash. The cost of intermediation remains high and bank penetration is limited to only a few customer segments and geographies. The branch is suffering due to decline in its market share. V.V.C.E, Mysore Page No: 22

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Opportunity:
Operating in an open / Globalised Economy. Opening of insurance sector to banks Diversification by way of Factoring, Hire purchase, Leasing, Merchant Banking, Depository, Non-Fund based Business etc. Marketing of ATMs, Tele-banking Services Redeployment of Staff and recruiting it savvy personnel.

Threats
Intensive competition from new private banks and foreign banks Introduction of new products by competitors. Stringent regulations followed in branch. Cash and provisions requirements and disclosure of defaulters.

5. ANALYSIS OF FINANCIAL STATEMENT.

Profit & Loss account

------------------- in Rs. Cr. ------------------Mar '08 Mar '09 Mar '10

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12 mths Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative Exp Capitalised Operating Expenses Provisions & Contingencies Total Expenses

12 mths

12 mths

3,983.41 532.03 4,515.44 3,058.42 404.92 239.00 30.80 426.40 0.00 801.84 299.28 4,159.54 Mar '08 12 mths

5,237.83 698.81 5,936.64 4,113.02 597.47 283.94 36.98 697.35 0.00 1,058.94 556.80 5,728.76 Mar '09 12 mths 207.87 54.61 750.69 1,013.17 0.10 50.72 0.00 4.79 10.00 53.47 211.90 -0.01 50.82 750.47 1,013.18

5,200.65 679.45 5,880.10 3,751.57 705.62 633.14 48.93 257.55 0.00 1,545.92 99.32 5,396.81 Mar '10 12 mths 483.30 24.00 750.47 1,257.77 35.10 126.80 0.00 10.34 25.00 61.44 239.72 2.38 161.90 853.77 1,257.77

Net Profit for the Year 355.91 Extraordionary Items 5.37 Profit brought forward 606.13 Total 967.41 Preference Dividend 0.00 Equity Dividend 101.44 Corporate Dividend Tax 0.00 Per share data (annualized) Earning Per Share (Rs) 8.21 Equity Dividend (%) 20.00 Book Value (Rs) 48.59 Appropriations Transfer to Statutory Reserves 115.32 Transfer to Other Reserves -0.05 Proposed Dividend/Transfer to 101.44 Govt Balance c/f to Balance Sheet 750.69 Total 967.40

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BALANCE SHEET OF VIJAYA BANK

Balance Sheet ------------------- in Rs. Cr. ------------------Mar '08 Mar '09 Mar '10 12 mths Capital and Liabilities: Total Share Capital Equity Share Capital V.V.C.E, Mysore Page No: 25 12 mths 12 mths

433.52 433.52

933.52 433.52

933.52 433.52

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Share application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities Provisions Total Liabilities

0.00 0.00 1,672.89 352.64 2,459.05 47,952.01 1,918.87 49,870.88 & 3,854.37 56,184.30 Mar '08 12 mths

0.00 500.00 1,884.55 331.22 3,149.29 54,535.42 619.24 55,154.66 4,078.64 62,382.59 Mar '09 12 mths 5,730.41 1,941.78 35,468.11 17,387.70 944.71 451.46 493.25 0.00 1,361.36 62,382.61 10,804.62 2,414.95 53.47

0.00 500.00 2,229.96 311.68 3,475.16 61,931.75 1,938.56 63,870.31 2,876.63 70,222.10 Mar '10 12 mths 4,099.58 1,449.68 41,521.72 21,107.45 1,008.88 515.72 493.16 0.00 1,550.50 70,222.09 9,654.29 2,295.90 61.44

Assets Cash & Balances with RBI 5,661.55 Balance with Banks, Money 435.81 at Call Advances 31,689.22 Investments 16,617.32 Gross Block 907.88 Accumulated Depreciation 400.06 Net Block Capital work in Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs) 507.82 0.00 1,272.59 56,184.31 11,341.68 2,120.04 48.59

Summary of balance sheet and Profit and loss of vijaya bank

The following financial Performance reviews are observed after analyzing the annual reports of the company which are put into the annexure of this CEL Report. : V.V.C.E, Mysore Page No: 26

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Financial performance:
1. Profit: The profit of the bank for the year 2009 was Rs.1013.17 Crore

whereas it has increased to Rs. 1257.77 Crore in the year 2010. There is an in Net interest income. 2. Dividend: The Bank has declared a dividend at the rate of 125% for the year, up from 110% declared in the previous year. 3. Non-Interest Income: Non-Interest Income declined by 6.47% , from Rs.698.81 Crore in 2009 to Rs.679.45 Crore in 2010 . The decline was mainly due to decline in profit on sale of investment. However, Non-Interest income other than profit on sale of investment increased by 17.75%. 4. Operating Expenses: There was an increases from Rs.1058.94 Crore in 2009 to Rs. 1545.92 Crore in 2010. This was mainly due to higher contribution to Pension Fund and Gratuity Fund. 5. Assets: The total Assets of the Bank increased from Rs. 62382.61 Crore at the end of march 2009 to Rs.70222.09 Crore at the end of March 2010. A major portion of the investment was in the domestic market in Government and other approved securities. 6. Liabilities: The Banks Aggregate Liabilities rose from Rs.62382.59 Crore on 31st March 2009 to Rs.70222.10 Crore on 31st March 2010. The increase in liabilities was mainly contributed by increase in deposits.

Ratio And Analysis:

Current Ratio = (Current Assets / Current Liabilities) = (5549.26/2876.63) =1.92: 1 V.V.C.E, Mysore Page No: 27

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Interpretation : This ratio of 1.92: 1 shows that the bank has the ability to pay its current obligations in time as and when they become due. Debt-Equity Ratio = (Debt / Equity) = (63870.31/933.52) = 68.41: 1 Interpretation: This Ratio of 68.41: 1 shows that It is fairly good that the capital structure of the bank includes 68.41 times more debt than equity Fixed Assets Ratio = (Fixed Assets / Total Long Term Funds) = (64672.83/67345.47) = 0.960 times Interpretation: This Ratio 0.960 shows that Part of the working capital Requirements is met out of the long-term funds of the Bank.

6.LEARNING EXPIRIANCE
My learning experience in the bank was very pleasant. The response and support I got from the management and staff was appreciable. In the training in the bank helped me to know the practicalities. I learned about management From practical perspective and I learnt about organization as to how it works in management aspects and V.V.C.E, Mysore Page No: 28

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The policies and procedures. Totally it was a highly useful training for me in the bank. During the first week, it was a new experience entering into the bank organisation. During the training I have been working in the accounts department, where I learnt about processing of the bill for payment, Tax deducted at source (TDS) and at what section it comes, Sales tax, Central excise duty and about Cenvat Credit, Payment methods, Capital Assets management in the company and how the physical verification of inventory is done by the company, how the inventories are categorized, coded, controlled and managed by the company.

PART - B A. GENERAL INTRUDUCTION:

Research and design is a statement or specification of procedures for collecting and analyzing the information required for the solution of specific problem. It provides a scientific framework for conducting some research investigations.

TITLE OF THE STUDY:

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The title of the study for the dissertation work is A study on non-performing assets and its impact on performance of bank with reference to VIJAYA BANK.

STATEMENT OF THE PROBLEM:

This study is carried out to identify the problems of managing Non performing assets, to minimize their impact on the profit performance of a bank and in particular the extent to which VIJAYA BANK., has been successful in controlling its non performing assets.

OBJECTIVES OF THE STUDY:

The main objectives of the study are: To study the problem of Non-performing assets. To study the regulations of Reserve Bank of India and NABARD regarding nonperforming assets. To understand how it affects the profitability of a Bank. To understand the extent to which VIJAYA BANK., has been successful in cutting down its nonperforming assets level. To give recommendations this would help them in controlling their level of nonperforming assets.

SCOPE OF THE STUDY:

This study confines to VIJAYA BANK. The study is based on the regulation of Reserve Bank of India and NABARD. And recommendations on the committees appointed by it. Being a project scope will be based on the day-to-day teamwork operations. The data has been collected from various aspects of loans and advances. Selection of the suitable borrowers and in general banking and government sponsored schemes.

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Involvement, Orientation and motivation of staff with system of the bank and reducing the NPA.

METHODOLOGY OF THE DATA COLLUCTION :

The study is based on the discussions conducted with officials of the bank. The various data provided by them. The RBI/NABARD circulars, journals, magazines, data from internet where thoroughly studied and interpretations made thereof. Source of data Data sources: The data collecting for the study is divided in to two ways. 1. Primary data. 2. Secondary data. 1) Primary source Primary data was collected from officials through discussions. Non-Performing Assets details and their Actual reasons fortheir occurrence. Different Details about the working of various departments like cash, accounts, International Business etc. Various methods obtained or followed by the bank to reduce the NPA. 2) Secondary source Annual reports, management reports, NABARD circulars, were studied. sources from internet

Collection of secondary data includes data from Credit Department , Accounting records like balance sheet and profit and loss account of the bank, Magazines, Websites and also Manual handbook on Conference of branch statutory auditors provided by the Credit department.

LIMITATIONS OF STUDY: Access to the information is limited V.V.C.E, Mysore Page No: 31

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This study is confined only to VIJAYA BANK. There were time constraints. Difficulty in obtaining primary data as non-performing assets reputation of the bank. NPA Management being a vast topic to be covered to study in a short period is a difficult task. Lack of NPA Details, which are, limited could not be accessed intervals. Non-Performing Assets cannot be eliminated totally but can be only reduced by following some methods, which are very limited. at regular hampers the

NON PERFORMING ASSETS: Definition:

An asset which ceases to yield income is an NPA Income from NPA should not be recognized on accrual basis and should be booked as income only when it in actually received. This will apply to all the NPAs. No interest should be applied on NPA, but calculation of interest (as prescribed periodically) should be recorded in the account. V.V.C.E, Mysore Page No: 32

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As asset becomes non performing asset when it ceases to generate the profit to its owner. Earlier assets were considered as non performing assets based on the concept of past due or non performing asset was defined as credit in respect of which interest and/installment of principal has remained past Due for the specific period of time. The specific period was reduced in a phased manner as under. Year ending 31st March 1993 1994 1995 Specific Period 4 quarters 3 quarters 2 quarters.

An amount is considered as past due when it remains outstanding for 30 days beyond the due date. However, with effect from March 31st 2001 the past due concept has been dispensed with accordingly. Front the date 31st March 2004 the non performing assets is an advance where

1. Interest and/installment of principal remain over due for a period of more than 90 days in respect of term loan. 2. The account remains out of order @ for a period of more than 90 days in respect of an overdraft. 3. The bills remains overdue for a period of more than 90 days in the case of bills purchased and discounted. 4. Interest or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half year in the case of and advance granted for agricultural loans. 5. Any amount received remains overdue for a period of more than 90days in respect to other accounts. CONSEPTUAL DEFINATION OF THE STUDY:

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1. Non Performing Assets:

An asset is to be treated as non-performing asset when its ceases to generate any income for the bank and if interest or installment remain past due to two or more quarters as on the date of balance sheet. In other words while classifying the advance as standard asset, there should not be more than on one quarter installment or interest remaining past due on the balance sheet date.

2.

Past due concept:

The interest or installment becomes past due after 30 days from the date becomes

due. For example the interest due of quarter ended 30th September becomes due on 30th October.

3. Interest non collected account:

It is interest not collected account it is cumulative in nature and the new interest due which is not collected would be added to the previous year interest not collected account and recorded in their books of accounts.

4.

Sub-standard assets:
An asset is classified as sub-standard if it remain as a non-performing for period not exceeding two years. However RBI has reduced the period of two yrs to18 months. NOTE: The information stated on the basis of research methodology of O.R. Krishna Swamy.

REVIEW OF LITERATURE:
Prof. Sanjay Kumar has discussed NPA in regional rural banks, Impact and Management The study was undertaken for a period of 1995-1999. The study was conducted to analyze the loan asset, impact of NPA & Management of NPA. NPA have become most

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critical factor governing the performance of banks. NPA have various implications on profitability, liquidity & solvency of the regional rural banks. The study has shown that out of the legal, policy and operational support, it is the latter which is critical to management of NPAs. The recovery of NPAs through crystallized collateral and other bank - stopping is subject to a prolix process, as the present legal and other systems normally do not provide a fast and effective exit route. As regards policy support, it is time consuming if provided externally. Hence, the RRBs have to mostly depend on the internal guidance and operational support in devising suitable policy and strategies for NPAs have successfully experimented in this regard and with internal interventions at the organizations and staff level, have been able to contain the menace of NPAs and to improve recovery to a great extent. Some of the prominent practice adopted by the RRBs is hello borrowers campaign, liking of social status of borrowers with good and regular loan accounts, effective involvement of revenue authorities and informal efforts. Thus, RRBs should devise alternative strategies specific to their area, clientele and environment to manage NPAs efficiently and effectively.

MANAGEMENT OF NON PERFORMANCE ASSETS:

An effective and prudent management of non-performing asset consists of: To check creation of NPAs in the first place particularly of fresh loans Improvement in the quality of NPAs i.e. to reduce slippage of a low grade NPA to the next higher level Reduction of NPAs. Thus, efforts to improve NPAs position or in other words quality of loan portfolio can be broadly groped. V.V.C.E, Mysore Page No: 35

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TREATMENT OF ACCOUNTS AS NPA: Record of Recovery:

The treatment of assets as NPA should be based on the record of Recovery. Banks should not treat an advance as NPA merely due to existence of some deficiencies, Which are of temporary in nature Such as non availability of adequate balance, Outstanding balance exceeding the limit and non submission of stock statement, non renewable of the limits on the due date, etc.. Where there is a threat of loss or the recoverability of the advances is in doubts, the assets should be treated as NPA.

Borrowers wise not facility wise:

In respect of a borrower having more than one facility with a bank all the facilities granted by the bank will have to be treated as NPA. However in respect of financing under multiple banking arrangements, each bank may classify the borrower accounts according to its own records recovery and other aspects.

Determination of NPA under different types of loans and advance: 1. TERM LOAN:
Term loan accounts will be treated as NPA if interest/installment remain past due for period of two quarters i.e., there should not be more than one quarter interest/installment remaining past due to avoid the account from NPA status.

Cash Credit and Overdraft:

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A cash credit or overdraft will be treated as NPA if the account remains out of order for a period of 2 quarter during the year ending 31st March. An account should be treated as out of order if the outstanding balance remains continuously in excess of sanctioned limit. Drawing power in case where the outstanding balance in the principal operation account is less than the sanctioned limit/drawing power but there are no credit continuously for six months as on the date of the balance sheet or credit are not enough to cover the interest debited during the same period, such account should be treated as order.

2. BILLS PURCHASED AND DISCOUNTED:

The bill purchased/discounted should be treated as NPA if the bill remains overdue and un-paid for a period of two quarters as on the date of balance sheet. However, overdue interest should not be charged and taken to profit and loss a/c in respect of over due bills unless they are realized.

3. OTHER ACCOUNTS:
Any other facilities should be treated as NPA if any account to be received in respect of that facility remains past due for periods.

4. CASH CREDIT AND OVERDUES:

A cash credit overdrafts account will be located as NPA the account remains out of order to a period of more than 180 days during a year. An account should be treated as out of order, where out standing balance remains continuously in cases of the sanctioned limit/drawing power. The cases when the out standing as with in the limit/drawing power, but no credit in the account continuously for a period of more than 180 days or on its date of balance sheet of the bank. I.e. 1st March of the each year.

PROVISIONING FOR LOANS AND ADVANCES: Taking in to accounts the time lag between an accounts becoming doubtful of recovery. Its recognition as such, the realization of the security and the erosion over time in the value of security and the erosion over time in
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the value of security charged to the bank, it has been decided that bank should make provision against sub standard assets, Doubtful assets and loss assets. Detailed instructions in this regard are furnished bellow. SUB-STANDARD ASSETS: A general provision of 10% of total outstanding while arriving at the provisioning requirement value of security in any form including term deposits. NTSCs surrender value of life policies could be deducted. DOUBTFUL ASSETS: 1.100% of the extent to which the advance is not covered by the realizable value of the security to which the bank has a valid resource and the realizable value is estimated on a realistic basis 2. Over and above item 1 depending upon the period for which the assets have remained doubtful. 20% to 50% of the secured portion on the following basis.

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Consideration period of Advances as doubtful Up to 3years 3 to 5 years More than 5 years Doubt full assets are not covered by Any securities

% of provision.

20 % 30 % 50 % 100 %

In case of the advances guaranteed by ECGC provision should be made only after the realizable value of securities is deducted from the out standing. The quantum of provision is based on the quality of loan assets. Standard assets are perfectly good and no provision is required on these. Sub standard assets are non-performing for less than tow years and there is a high chance of recovery. 10 percent of the amounts due on sub standard assets need to be provided. Doubt full assets are non performing assets for two or more years. These may be covered by security or not covered by any society.

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Rate of interest on loans: 1. 2. 3. 4. 5. 6. 7. 8. Pledge Loan Gold Loan & Housing Loan Joint Loan, Term Loan an Machinery Loan Hypothecation Loan (Commercial) (Old Vehicle) (New Vehicle) Hypothecation Loan (Personal/Private) (Old Vehicle) (New Vehicle) 11.50% 12.50% 12.50% 13.50% 13.00% 13.00% 12.50%

Loan on Mortgage of Property, Consumable Article Loan, Cash Credit 13.00% Loan, Over Draft Loan, NSC/LIC/Share/Bonds/ and all other Loans.

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ASSETS CLASSIFICATION:
Co-operative banks should classify their advance in to two broad Categories:

Standard assets:
Standard assets is one which does not disclosed any problem and which does not carry more than normal risk attached to the business such an asset is not an NPA.

Non Performing assets:

Banks are required to classify non-performing assets further into the following three categories based on the period for which the assets has remained non-performing and reliability of the dues. 1) Sub-standard Assets. 2) Doubtful Assets. 3) Loss Assets.

1) Sub-standard assets:
A sub-standard assets is one, which has remained NPA for a period less than or equal to 12 months. Further sub-standard assets shall be segregated in to secured exposure & unsecured exposure for the purpose of determining the rate of provision. Un secured-exposure is defined as an exposure where the realizable value of the security, as assessed by the bank/approved values/ Reserve Banks inspecting officers, is not more than 10% abilities, of the o/s exposure exposure shall include all funded and non-funded exposures (including underwriting & similar commitments) security means tangible security properly changed to bank and will not including in intangible securities like guarantees, comfort letters et. Therefore all clean loans and loans with security less than 0% under sub-standard category may be treated as unsecured exposure.It may be noted that each sub-standard asset shall be classified as either secured exposure or un secured exposure & provision shall be made on o/s balance.

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2) Doubtful assets: A doubtful asset is one, which has remained NPA for period exceeding 12 months. Doubtful assets shall be bifurcated in to doubtful assets less than one year b/w 1 and3 years, above 3 years doubtful assets and above 3 years shall be further bifurcated in to existing stock. Further each doubtful asset shall be bifurcated in to secured portion and unsecured portion for provisioning purpose.

3) Loss assets: A loss asset is one where loss has been identified by the bank or internal or external auditors or RBI inspection. In other words, such as asset is considered un collectable & of such little value that its continuance as a bankable asset is not warranted although there may be some salvage or recovery value. A NPA shall be treated as loss asset, irrespective of age of NPA, if it is un collectible due to, Serious credit impairment viz fraud etc. Realizable value of securing has become nil or negligible due to erosion in the value of security. (Value may be treated as negligible if it is less than 10% of the o/s in the borrower account).

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% of provision. Consideration period of Advances as doubtful 20 % Up to 3years 30 % 3 to 5 years 50 % More than 5 years 100 % Doubt full assets are not covered by Any securities

In case of the advances guaranteed by ECGC provision should be made only after the realizable value of securities is deducted from the out standing. The quantum of provision is based on the quality of loan assets. Standard assets are perfectly good and no provision is required on these. Sub standard assets are non-performing for less than tow years and there is a high chance of recovery.10 percent of the amounts due on sub standard assets need to be provided. Doubt full assets are non performing assets for two or more years. These may be covered by security or not covered by any society.

NPA AT DIFFERENT STAGE: D1 stage: If NPA exists for more than two years but does not exceed 3 years than the
asset is said to be in the D1 stage.

D2 stage: The NPA exists for more than 3 years but up to 5 years. D3 stage: If the NPA exists for the more than 5 years then assets is said to have entered
the D3 stage.

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Adoption of 90 days Norm for Recognition of Loan Impairment:

At present, a loan is classified as non-performing when the interest and/or installment of principal remain overdue for a period of more than 180 days as against the international best practice of 90 days payment delinquency. With a view to moving towards international best practices and to ensure greater transparency, it has been decided to adopt the 90 days norm from the year ending March 31, 2004. NOTE: This information stated with the help of Indian Financial System by P.N. Vershney and D.K. Mittal.

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DATA ANALYSIS AND INTERPRETATION:

Introduction: Analysis and interpretation are giving meaning to the collected information by comparing them with the existing information. Analysis is placing the collected data in some order or format so that the data acquire a meaning. Raw data become information only when they are placed in a meaningful form. Interpretation involves drawing conclusions from the gathered data. There are three tasks to be performed if the collected data are to be used in the most effective manner. 1. An intensive review must be made of all the data collected for the project with reference to the studies objectives. 2. These data are then analyzed with the help of techniques selected earlier. 3. The results emerging from these analyses are then related to the studies objectives. The collected data have to be analyzed fully on the basis of the data collected, an analysis has been made. Some researchers make the mistake of postponing the selection of their analytical techniques until they collect the data. There are numerous articles published in various trade and academic journals describing new models and techniques for analysis, besides text books on statistics which outline various analytical techniques. These documents should be consulted before deciding the framework of analysis. The analysis may be descriptive analysis and casual analysis. Interpretation means drawing inferences from the collected facts after the analytical study. Interpretation helps the researcher to understand the abstract principle that works beneath his findings. He can line up his finding with those of other studies having relationship with the established concept. Interpretation also enables the researcher to establish concepts, which will be the basis of future research. Moreover, interpretation helps the target audience to understand the real significance of his research findings.

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TABLE: 1 TYPE OF DEPOSIT (Rs. In Crs) Particulars Fixed Deposit Saving Deposit Current Deposit TOTAL SOURCE: Annual Report Fixed deposit includes cash certificates, R/D, Maturity deposit, NRE deposit, NER certificate, Matured deposit, Matured R/D, Matured jayalaxmi small deposit, matured cash certificate, etc. 2009 44173.69 7089.60 3272.13 54535.42 2010 48926.08 8360.79 4644.88 61931.75

TABLE: 2 V.V.C.E, Mysore Page No: 46

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PAID UP SHARE CAPITAL AND RESERVE AND OTHER FUNDS (Rs in Crs) Sl. No 1 2 3 Year 2008 2009 2010 GRAPH:2 PAID UP SHARE CAPTIAL AND RESERVE AND OTHER FUNDS Paid up share capital 433.52 933.52 935.52 Reserves and other funds 1672.89 1884.55 2229.96

SOURCE: Annual Report. V.V.C.E, Mysore Page No: 47

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Concepts: The table shows the constant increasing in the reserves and other funds and also paid up share capital should be increasing. Analysis: In the years 2008, 2009 and 2010, the paid up share capital Rs 433.52, Rs 933.52 and Rs 935.52 respectively increasing, And , bearing 2008, 2009 and 2010 the reserves and other funds is Rs 1672.89, Rs 1884.55 and Rs 2229.96 respectively increasing. Interpretation: It shows that it is a healthy trend of the bank.

TABLE: 3
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DEPOSITS AND ADVANCES

(Rs in Crs) Sl. No 1 2 3 Year 2008 2009 2010 Advances 31689.22 35468.11 41521.72 Deposits 47952.01 54535.42 61931.75

GRAPH:3 DEPOSIT AND ADVANCES

SOURCE: Annual Report.

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Concepts: The above table statement shows that advances and deposits of the vijaya bank limited. Analysis: Here the bank advances shows in an increasing trend the years 2008,2009,and 2010 is Rs , Rs 19678.30 and 21363.58 is respectively increasing. And, the 4th column of this table shows deposits of the bank it is also increasing in year by year. for like 2008,2009 and 2010 the amount is Rs31689.22,Rs35468.11,and 41521.72 is respectively. Interpretation: The advances and deposits is gradually increasing year by year .This is a healthier position of the bank.

TABLE: 4
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NET PROFIT
(Rs in Crs) Sl. No 1 2 3 Year 2008 2009 2010 Net profit 355.91 207.87 483.30

GRAPH:4 NET PROFIT

SOURCE: Annual Report. Concepts: The bank has maintained good conditions when compared to 3years net profit, it shows an increasing trend. Analysis: The net profit of the bank Rs.207.87Crs and 2010 is Rs 483.30. Interpretation: The net profit is compared to last years is increasing, this shows the healthier position of the bank. in 2008 it was Rs. 355.91Crs, in 2009 it was

TABLE: 5 QUALITY ASSETS

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(Rs. In Crs) Sl.No 1 2 3 Year 2008 2009 2010 Standard Assets (%) 13968 (97.01%) 14878.80 (96.87%) 19245.30 (97.80%) NPA (%) 14.90 (2.07)

SOURCE: Annual Report. Concepts: As against the standard assets the movement of NPA is shown in the table. Analysis: Percentage of performance of the standard assets is in the increasing trend, which can be called a healthier development of performance of the bank as a whole, at the same time the level of NPA in percentage-wise shows the decreasing trend. Interpretation: This shows that the bank is taking proper steps to recover the dues by the customer, etc.; when the rate of NPA is decreasing it will help the growth of the bank.

TABLE: 6 ASSETS CLASSIFICATION AT VIJAYA BANK LTD (Rs. in Crs) Year Total loan Standard Sub-standard Doubtful assets

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assets 2008 2009 2010 14398.60 15359.63 19678.30 13968 14424.21 18730.97

assets 421.89 511.12 553.39 298.04 424.30 393.95

GRAPH: CLASSIFICATION OF ASSETS

SOURCE: Annual Report. Concepts: The above table shows the bank total loan, standard assets, substandard assets and doubtful assets. Analysis: The table shows the constant increasing in the standard assets from the financial year 2008 to 2010, the comparative of columns 1 and 2 reveals that the standard assets as V.V.C.E, Mysore Page No: 53

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against total loans are increasing when the standard assets will increasing from year to year. In sub-standard assets the data shows the assets increasing from year to year. A doubtful asset shows that only in the financial year 2008 is Rs. 298.04 Crs, in the year 2009 it was Rs. 424.30 Crs, and 2010 it is Rs. 393.95 Crs in doubtful assets. Interpretation: It shows that it is a healthy trend of the bank.

TABLE: 7 PROFIT & PROVISION OF VIJAYA BANK AN ANALYSIS

(Rs. in Crs) Year 2008 Gross profit 4515.44 NPA provision 2.89 Net profit 355.91

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2009 2010

5936.64 5880.1

---------------

207.87 483.30

SOURCE: Annual Report. Concepts: The above statement shows the gross profit, provision made on NPAs and the Net profit of Vijaya Bank ltd for last three years. Analysis: Here the researcher analyzed the impact of NPA on the profitability of the NPA. In the year 2008 the bank earned a gross profit of Rs.4515.44 while provision made during the year was Rs. 2.89 Crs. Provisioning norms were first introduced to co-operative bank, RBI, the net elect was on the profit which had sub statistically increased to posture figure it amounted to Rs.355.91 Crs. In the year 2009 the gross profit of Rs. 5936.64 Crs whereas provision made is Nil and the Net profit was Rs. 207.87 Crs which was position figure. Bearing 2010 the gross profit is Rs. 5880.10 Crs respectively and NPA provision made Nil in this year and net profit is Rs. 483.3 Crs. Interpretation: The profit rate compare to last years is increasing this shows the healthier position of the bank.

TABLE: 8 TURNOVER OF THE BANK IN LAST THREE YEARS (Rs.in Crs) Year 2008 2009 2010 Previous year profit 852.51 967.41 1013.17 Current year profit 967.41 1013.17 1257.77 Turnover of the year 23111.87 25016.49 28315.45

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GRAPH: TURNOVER OF THE BANK IN LAST THREE YEARS

SOURCE: Annual Report. Concepts: The above table shows the compression of the bank previous year profit and current year profit trends, and also increasing trend of the turnover. Analysis:

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The turnover of the bank in 2008 was Rs. 23111.87 Crs, in 2009 it was 25016.49 lakhs, in 2010 it is 28315.45 Crs. There is a study increase in the turnover from year to year. Current year profit Previous year profit Growth rate = ----------------------------------------------------- *100 Previous year profit or loss Interpretation: There is a steady increase in turnover from year to year

TABLE: 9 GROWTH RATE OF THE BANK

(Rs.in Crs) Current-Previous-yearprofit *100 Year 2008 2009 Previous year profit/loss 0.13477 0.0473 Percentage 13.47% 04.73%

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2010

0.2414

24.14%

SOURCE: Annual Report. Concepts: The term, bank growth rate percentage has been increasing trend from year to year. Analysis: The growth rate of the bank is decreasing in the year 2009 i.e., 4.73% but after 20 it shows an increasing trend over the years. The growth rate of the bank in 2010 is 24.14% it is very high when compared to 2008-09. Interpretation: The rate and growth is gradually increasing year by year and it shows a very healthier trend of the bank.

TABLE: 10 NPA Position (whole Bank)

(Rs. in crores) Rs. In Crores Total Advances Total NPAs Net NPA % 2008 31689.22 11341.68 3.57 2009 35468.11 10804.62 3.04 2010 41521.72 9654.29 2.32

Position of NPA chart of whole Vijaya bank

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45000 40000 35000 30000 25000 20000 15000 10000 5000 0

Net Advances Net NPA

2008

2009

2010

The net advances has increased by 13.85% from 2008 and by 29.07% from 2009 but the net NPA has been constantly decreased by 1.02 % in 2008 and by 0.83 in 2009.

NPA trend of the branch

Rs. In cr. Total Advances Total NPA Net NPA% March 2008 106.53 32.44 30.45 March 2009 116.10 33.38 28.75 March 2010 132.71 48.85 36.80

NPA trend chart of the branch

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140 120 100 80 60 40 20 0 2008 2009 2010 Advances NPA

The total advances in the Branch has increased by Rs.9.57 crores from 2008-09 and by Rs. 16.61 Crores in 2009-10 whereas Non-performing Assets has also increased by Rs. 0.94 Crores in 2008-09 and Rs. 15.47 Crores in 2009-10 but the percentage of NPA to total advances has decreased by 1.7 % in 2008-09 but it has again hiked up by 8.05% in 2009-10.

Based on the above data an analytical comparison of NPA trend of the whole Bank with the NPA trend of both circle and the Branch was made and following conclusion was drawn :
Category/Years % of NPA to Total Advances(whole Bank) % of NPA to Total Advances(Branch) V.V.C.E, Mysore Page No: 60 March 2008 3.57 30.45 March 2009 3.04 28.75 March 2010 2.32 36.80

A STUDY ON NPA IN VIJAYA BANK IN TUMKUR BRANCH

GRAPH: Based on the above data an analytical comparison of NPA trend of the whole Bank with the NPA trend of both circle and the Branch was made and following conclusion was drawn :

Interpretation: The percentage of NPA to Total Advances in the whole Bank has shown a decreasing trend. The percentage has decreased by 3.57 % in 2008 and by 3.04 % in 2009, whereas the percentage of NPA to Total Advance but in the branch it has shown a decreasing trend in the year 2009 by 1.7% but suddenly it has shown a upward trend in the year 2010 by 8.05% which shows that this branch is highly suffering from the NPA with respect to the whole.

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TABLE: 11 Comparison of NPA position of VIJAYA BANK with other banks

Net NPA 2008 4.50 4.90 0.4 0.9 7.1 Net NPA 2009 3.48 2.90 0.2 0.2 2.4 Net NPA 2010 2.65 2.0 0.24 0.1 1.28

VIJAYA Bank ICICI HDFC IDBI Bank Allahabad Bank

GRAPH NPA Position chart of VIJAYA BANK with other Banks

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8 7 6 5 4 3 2 1 0 2008 2009 2010 VIJAYA Bank ICICI HDFC IDBI Allahabad Bank

Interpretation:
NPA position of Vijaya bank has decreased from 4.50 to 3.48 by 1.02 crores in 2008-09 and by 0.83 crores in 2009-10.NPA position was the highest of Allahabad bank in 2008 but Net NPA position of VIJAYA BANK became highest than compared to other banks like ICICI, HDFC, IDBI, Allahabad bank in 2008-09 because of the fast ability of other banks for recovery of loans. ICICI banks NPA has decreased by 2 crores in 2008-09 and by 0.90 crores in 2009-10. HDFC banks NPA has decreased by 0.2 crores in 2008-09 and remained constant even in 2009-10. IDBI banks NPA has decreased by 0.7 crores in 2008-09 and by 0.1 crores in 2009-10. and Allahabad banks NPA has decreased by 4.7 crores in 2008-09 and by 1.12 crores in 2009-10.

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Vijaya bank now is competing with all other private and foreign banks and trying to reduce the NPA as much as possible as compared to other banks with the help of various measures followed by them.

TABLE: 12 Position of NPA in different segments

(Rs. in crores) Segment C&I SSI AGL SBF PER Total 63.26 24.26 16.06 0.02 0.66 2008 NPA 12.05 10.87 9.56 % of Total 74.69 25.11 15.22 0.02 0.66 2009 NPA 15.58 8.72 9.08 % of Total NPA 20.85 34.74 59.66 89.92 25.28 16.57 1.90 0.92 2010 NPA 28.96 7.42 12.40 % of

NPA 19.04 44.64 59.53 -

NPA 32.20 29.35 74.83 -

Percentage of NPA chart in different segments

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80 70 60 50 40 30 20 10 0 2008 2009 2010 C&I SSI AGL SBF PER

Interpretation :
The agricultural segment has incurred more NPAs as compared to all other segments. The % of NPA in agricultural segment has increased by 0.13% in 2004 and 15.17% in 2005. Even the C & I segment also has incurred a increasing trend of NPAs. The % of NPA in C & I segment has increased by 1.81% in 2004 and 11.35% in 2005. whereas the SSI segment also has followed a decreasing trend of NPAs. The % of NPA in SSI segment has decreased by 9.9% in 2004 and 5.9% in 2005. The last two segments SBF and PER have not faced any NPAs till date.

Summary:
The amount of deposits like fixed, saving & current deposit are increasing year by year. The bank, paid up share capital and reserves and other funds shows an increasing trend from year to year. The advances and deposits are gradually increasing year by year. This indicates healthy position of the bank. The bank has maintained an increasing trend of profits for the last 3 years According to financial report it is observed that the standard assets are increasing every year for the year 2008, 2009 and 2010.The standard assets V.V.C.E, Mysore Page No: 65

A STUDY ON NPA IN VIJAYA BANK IN TUMKUR BRANCH

are Rs.13968.0 Crs (97.01%),14878.8 Crs (96.87%) and 19245.8 Crs (97.80%). The assets classification of NPA in VIJAYA Bank for the year 2010 -Sub standard assets is Rs 553.39 Crs - doubt full assets is 393.95Crs. The provision made for NPA only in the year 2008 is Rs 14.90 Crs, during the years 2009 and 2010 there is no NPA and no provision made. The net profit of the bank in years 2008 and 2009 is Rs 355.91 Crs and 207.87 Crs respectively .During the year 2010 the net profit has increased to Rs 483.30 Crs it is a good sign due to effective recovery of NPA.

SUMMARY OF FINDINGS AND SUGGESTION FINDINGS

Based on the analysis of the bank , the standard assets is increasing year by year, at the same time the level of NPA has been decreasing and also shows Nil in past three years . This shows the healthy trend in the performance of the bank. In the years 2008, 09, and 10 the bank has reached comfortable position in terms of earning of the profit and effective recovery of NPA.

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The efforts made by the managers and there subordinates is reducing the level of NPA in their branches is satisfactory.NPA and the provision made during the 2008, 09 and 10 is Nil. The growth rate of the bank is decreasing in the year 2009 i.e., 04.73% but after 2009 it shows an increasing trend over the years. The growth rate of the bank in 2010 is 24.14% it is very high when compared to 2008. In September 2000 bank was got schedule bank status by achieved deposit of Rs 100 crores. Bank gives all types of loans and advances except agriculture loans and educational loan. Bank sanctions the loans and advances to all customers. In every audit it getting A grade.

SUGGESTIONS
The steps taken by the bank in reducing the level of NPA is satisfactory. They have to maintain the same steps in future also.

The growth rate of the bank is fluctuating year by year; it is not a good sign to bank. Hence, they should take proper steps to increase their growth rate efficiently.

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Try to avoid investments on NPA because their will be no profit from those assets.

They should improve the efficiency and profitability.

They should adopt some measures for timely recovery of loan.

Where an asset becomes necessary to be treated as bad or doubtful, the bank should deliberate seriously go for settlement through compromise, as formal legal process for recovery is not only ineffective but might hurt the reputation of the bank, if the public sees them happening frequently.

Proper recovery facilities should be provided for the employees

Incentives should be provided for the employees to make higher recovery Adequate training to all the staff members of the bank regarding the management of the non performing assets should be given.

Special task force should be appointed in order to recover loss assets.

CONCLUSION

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I feel happy to express my views and share my knowledge and what I learnt in my project study. By analyzing NPA of the VIJAYA Bank Limited for the last three years. The NPA is nil during the year 2009 and 2010 which is satisfactory. It is a healthy and good sign of bank; it is possible by bank because of its increase in efficiency in sanctioning the quality advances and recovery of over dues by sincere efforts. The efforts taken by the management to reduce the level of NPA is up to the mark... Performance of the bank is satisfactory in 2010 compared to its previous year. Vijaya Bank Limited is having satisfactory financial position. The Vijaya bank is facing a problem because of NPA. The extent of NPA is comparatively higher in public sectors bank. To improve the efficiency and profitability, the NPA has to be scheduled. Various steps have been taken by government to reduce the NPA. It is highly impossible to have zero percentage in NPA. But at least vijaya bank can try competing with foreign banks to maintain international standard.

BIBLIOGRAPHY:

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Books: Financial management -I.M.Pandey -M.Y.Khan & P.K.Jain Company Records and Publications. Annual Reports Of Vijaya Bank. Websites:
www.vijayabank.co.in www.google.com www.wikipedia.org www.scribd.com

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