NON-PERFORMING ASSETS
IN BANKING SECTOR WITH SPECIAL REFERENCE TO J&K BANK LTD.
COMPANY INTRODUCTION
Jammu and Kashmir bank limited was incorporated on 1 st October 1938 and
commenced its business from 4th July 1939 at Kashmir (India).
The main aim behind making this report is to know how J&K
Bank is operating its business and how NPAs play its role to the
operations. Thats why the study of NPAs become necessary duo
to the above mentioned reasons:
What is NPA
Research Methodology
To know the policies that the J&K Bank follows to cover its
NPAs.
Research design
DATA COLLECTION
Data collection is very important for conducting any research. Success or failure of a research
primarily depends on data collection. Data may be collected by any of the following methods:
Primary sources
Secondary sources
Personal interviews
Questionnaire
Telephonic interviews
The secondary sources through which data have been collected for this project include the
following:
Internet
Newspapers
SAMPLING PLAN
Population:
Sample size:
100
Q.1) Are you satisfied with the ways J&K Bank grants loans?
a) Yes
b) NO
With the help of this question an attempt was made to know whether
J&K bank grants loans with ease or apply strictness to cover their
NPAs.
No. of respondents
Yes 80
No 20
The data in the table is shown with a chart for more clarification:
100
Analysis -:
The above chart shows that majority of the population is satisfied with the
ways J&K Bank offers loans to the public. About 80% of the respondents
favoured that J&K Bank offers them loans with ease and with the banks
effective policies it covers the risk.
YES
NO
CAN'T SAY
With the help of this question, the purpose was to get aware whether the
people know that
J&K Banks NPA level is at a point where they will feel satisfactory.
No. of respondents
100
YES
50
NO
25
CAN'T SAY
25
Chart 2
50
50
45
40
35
30
25
25
25
20
15
10
5
0
YES
NO
CAN'T SAY
Analysis
After critical interpretation of the data it is clear that though most of the
respondents say that the NPA level of J&K Bank is controllable, still there are a
good portion of people who either say that NPA level of J&K Bank is not
controllable or dont have any knowledge. About 25% of respondents were
having no knowledge about the subject and the same amount of respondents
say that the NPA level of J&K Bank is not controllable.
YES
NO
CAN'T SAY
The main purpose by putting this question in the questionnaire was to get
the responses of the people that what they feel about the NPAs. Whether
more NPAs reduce the performance of the bank or not.
No.of respondents
100
YES
30
NO
15
CAN'T SAY
55
Chart 3
55
50
45
40
35
30
percentage
25
20
15
10
5
0
Analysis
YES
NO
C AN' T SAY
YES
NO
CAN'T SAY
The purpose by asking this question was to know whether people feel that
the techniques for recovery of NPAs applied by J&K Bank are good or they
need to be changed.
No. of respondents
100
Yes
45
No
20
Cant say
35
Chart 4
45.00%
yes
no
can't say
20.00%
35.00%
Analysis
The analysis of the above data is made in this way that majority of the respondents
favoured that the NPA reduction techniques of J&K Bank are standardized. A little
percentage of about 20% say that the NPA reduction techniques of J&K Bank need to be
changed and about 35% of respondents say that they cant say anything whether the
techniques of JKB are standardized or not.
YES
NO
No. of respondents
100
Yes
50
No
50
Chart 10
YES
NO
Analysis
The analysis of above data shows that there is a balance among respondents whether
NPA percentage of J&K Bank can be minimized to zero percent.
FINDINGS
J&K Banks ratio of Non Performing Assets (NPA) to net advances stood at 0.22% as on 31
march 2014. Compared with 0.22%as on 31 December 2013 and 0.14% as on 31 March 2013.
J&K Banks ratio of Non Performing Assets(NPA)to net gross advances stood at 1.66% as on 31
march 2014. Compared with 1.65%as on 31 December 2013 and 1.62% as on 31 March 2013.
The Jammu & Kashmir Bank has recorded a conspicuous growth in deposits which is the
backbone of any bank. It has increased its Deposits from Rs. 38,337.37cr. to 71,100.86 cr.
from the last five years. The advances are also in increased trend from Rs 37,237.16cr. in
2009-2010 to Rs 69,335.86cr. in 2013-2014.
The Net NPA was maximum in 2013-2014 that is 1.91% and it was minimum in 2012-2013 that
is 0.55%.
The gross NPA ratio was minimum in 2013-2014 that is 1.54% and it was maximum in 20122013 that is 1.95%.
The increase in NPA coverage ratio in 2013-2014 that is 94.01% has decreased the both Net
NPA ratio and Gross NPA ratio.
Bank ltd. is adequate as suggested by 66% of respondents agree that there is an enough
period to pay the money back.
SUGGESTIONS
On the basis of findings following suggestions have been provided to the concern.
The Jammu & Kashmir Bank should utilize the Idle fund to decrease the NPA.
Once a loan becomes non-performing, the earlier bleeding is stopped, the less the losses will be,
which is an internationally accepted principle.
A careful and rigorous appraisal of bank assets quality in relation to financial situation has to be
made regularly.
The overall banking environment should be improved through reduction of government intervention
in credit management.
The Jammu & Kashmir Bank should lend more money as there is huge difference between deposits
and advances.
The Jammu & Kashmir Bank ltd. should increase the NPA coverage ratio and the collection efforts to
decrease the NPA.
The Jammu & Kashmir Bank ltd. should lay strategies to boost doubtful assets as NPA volume of
these assets is increasing year by year.
Most of the customers suggested that the rate of interest charged should be brought down so the
bank should work on the strategies to fix up the competitive interest rates to satisfy the customers.
Conclusion
For any bank to serve in this competitive world it has to ensure that its
non-performing assets are minimized by improving new strategies on
credit collection from the customers.
THANK YOU