NPA (AMIT GHAWARI Vision School of Mgmt. Chittorgarh

8/9/2019 NPA (AMIT GHAWARI Vision School of Mgmt. Chittorgarh

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WHAT IS NON PEWHAT IS NON PE

Non Performing Asset

borrower, which has be

financial institution as s

asset, in accordance wit

relating to asset classifi

Presented ByPresented ByHarry Mills /Harry Mills /PRESENTATIONPROPRESENTATIONPRO

FORMING ASESTSFORMING ASESTS

eans an asset or account of

n classified by a bank or

b-standard, doubtful or loss

the directions or guidelines

ation issued by RBI.


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WHAT IS NON PEWHAT IS NON PE

An asset, including a

performing when it ceases

bank.

A credit facility in res

and/or instalment of princi

duefor a specified time.


FORMING ASESTSFORMING ASESTS

eased asset, becomes non-

o generate income for the

ect of which the interest

pal has remained past


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ASSETASSET CLACLA

Standard Asset / Performi

These are loans which do

Sub-Standard Asset

Non-performing loans orless than 180 days shall, at a

Loss AssetsNon-performing loans or

shall be classified as Loss.

Doubtful AssetsNon-performing loans or

but less than 360 days shall be cla


SIFICATIONSIFICATION

g Asset

not have any problem are less risk.

dvances past due 90 days or more butinimum, is classified sub standard.

dvances past due 360 days or more

dvances past due 180 days or more,

ssified, at a minimum, as doubtful.


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NON PERFORNON PERFOR

In accounting, originally

In 1980s, RBI followed 8

Also called Non Performi

or Stressed Assets

An advance where inte

remain overdue for

respect of Term Loan / investments, expor

housing loan, educatio

Sub-standard, Doubtful


ING ASSETSING ASSETS

Bad & Doubtful Debts

point Health Code

ng Loans (NPLs)

rest and / or instalment of principal

a period of more than 90 days in

OD / CC /BP / BD / other accountsfinance, SSI/SME/ agricultural,

al loan, lease and hire purchase .

nd Loss Assets


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IDENTIFICAIDENTIFICA

Cash Credit / Overdrafts

The account is treated as ou

* Outstanding Balance remsanction limit/drawing po

* No credit continuously foof Balance Sheet.

* Credits in the account aredebited during the same


ION OF NPAION OF NPA

Account remains outof order for 90 days ormore.

t of order if :

ins continuously in excess ofwer for 90 days or more.

90 days or more as on the data

not sufficient to cover interesteriod.


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IDENTIFICATIIDENTIFICATI

Term Loans

Bills Purchased & Discounted

Agricultural Advances

Others


N OF NPA N OF NPA

Interest and/or instalment remainsoverdue for 90 days or more.

Bill remains overdue for 90daysor more.

Interest and/or installmentremains overdue for two harvestseasons for short duration crop,

one harvest season for longduration crop.

Any amount to be received remainsoverdue for 90 days or more.


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Why Loan accWhy Loan acc

BORROWER-SIDE

Lack of Planning

Diversion of Funds

Disputes within

No contribution

No modernisation

Improper monitoring

Industrial Relations..


unts go bad ?unts go bad ?

BANKER SIDE

Defective Sanction

No post-sanctionsupervision, etc

Delay in releases

Directed lending

Slow decision makingprocess

Etc etc etc .


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Health CodHealth Cod

Indian BanksIndian Banks

1. Satisfactory Accounts

2. Irregular Accounts

3. Sick-viable : Under Nu

4. Sick Non-viable : Sti

5. Advances Recalled

6. Suit Filed Accounts

7. Decreed Debts and8. Debts classified by the

Bad/Doubtful Account


System inSystem in

during 1980sduring 1980s

rsing

ky accounts

Bank as


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RecoverRecover

Field Visits, Personal p

Notices on due dates

Civil Procedure, Windi

Seizure and disposal of

Criminal Action per Se

Compromises Interes

Simple or Compound c Lok Adalat, DRT / BIF

Asset Securitisation un


of Loansof Loans

rsuasion, StockStatements

rdy, Regd, Legal

g Up Notices,

assets thro auctions

138 of NI Act

reduction / waiver, deferment,

lculationAwards, OTS, CDR

er SARFAESI Act


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Some facts regardiSome facts regardi

banks ofbanks of

Net non-performing assets (

an average 21.75 per cent in Q

FY 09 as against Q2 FY08

performing assets (NPA) of 25

crore in second quarter of 200

the same period ofFY08

The average capital adequac

slipped to 12.68 per cent in Q

the previous year.


g NPA of major 25g NPA of major 25

India areIndia are

PAs) of 25 banks have risen by

2

.The aggregate net non-

banks increased to Rs 17,992.82

-09 from Rs 15,462.84 crore in

ratio (CAR) of 25 banks

-FY 09 from 13.41 per cent in


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Cont....Cont....

Seven major PSBs recorde

NPAs.

Among the private sector

registered an improvement i

16 banks witnessed a fall i

fiscal, but they still managed

limit of nine per cent posed


d a significant decrease in net

anks only South Indian Bank

n net NPAs by -29.82 per cent.

n their CAR from the previous

to remain above the prescribed

y the Basel II accord.


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SCHEDULED COSCHEDULED CO

IN IIN I

Publi

$ Allahabad Bank

$ Andhra Bank$ Bank of Baroda

$ Bank of India

$ Bank of Maharashtra

$ Canara Bank

$ Central Bank of India

$ Corporation Bank

$ Dena Bank


MERCIALMERCIAL BANKSBANKS

DIADIA

c Sector

$ Indian Bank

$ Indian Overseas Bank$ Oriental Bank of Commerce

$ Punjab & Sind Bank

$ PunjabNational Bank

$ Syndicate Bank

$ UCO Bank

$ Union Bank of India

$ United Bank of India

$ Vijaya Bank


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Cont...Cont...

Priv

$ Bank of Punjab$ Bank of Rajasthan

$ Catholic Syrian Bank

$ Centurion Bank

$ City Union Bank

$ Dhanalakshmi Bank$ Development Credit Bank


te Banks

$ Federal Bank$ HDFC Bank

$ ICICI Bank

$ IDBI Bank

$ IndusInd Bank

$ ING Vysya Bank$ Jammu & Kashmir Bank


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Setting up of ARSetting up of AR

1. Asset Reconstruction C

(SBI+ HDFC+ IDBI+ I

2. Asset Care Enterprise (

3. ARC to be floated by K

4. ASREC Andhra Ban

Bk?

5. Corp Bank, ING Vysya


ompanies in Indiaompanies in India

ompany India Ltd (ARCIL)

ICI Bk)

CE) (IFCI + PNB)

otak Mahindra Bank?

, Stanchart, Deutsche and UTI

and Actis to start?


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Definition of ARCDefinition of ARC

A company which is set

over distressed assets (

banks or financial instit

pack these assets to mak


(RBI _ April 2003)(RBI _ April 2003)

p with the objective of taking

on Performing Assets) from

tions and to reconstruct or re-

those assets saleable


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SUGGESTIONS TO OVSUGGESTIONS TO OV

OFOF

Operating staffs credit sk

Timely sanction and or re

avoid time and cost overruns.

Better taking up any fresh

sources for margin money sh

As for as possible, repay

on monthly basis rather than

Personal guarantees of th

holders should normally be i

Effective inspection syste


RCOME THE PROBLEMRCOME THE PROBLEM

PAsPAs

lls should be up graduation.

ease of loans by the bank is to

/exciting proposals for assessment,

uld be thoroughly examined.

ent of term loans should be fixed

n quarterly or semi annual basis.

promoter directors/major share

sisted upon.

should be implemented.


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NPA (AMIT GHAWARI Vision School of Mgmt. Chittorgarh

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