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A STUDY ON NPA MANAGEMENTPROCESS IN SBI WITH FOCUS ON
REHABILITATION & RESTRUCTURING
OF SMEs
Ayesha Patnaik
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An overview of the presentation
Objectives, methodology and limitations
Conceptual Study
NPA management- the SBI way
Restructuring and Rehabilitation of SMEs
Case Study
Data Analysis Findings, Sugestions and Conclusion
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Objectives
To learn the practical aspectof NPA management
To gain familiarity withrestructuring and rehabilitation process
To assess SBI BhubaneswarCircle¶s performance withrelation to restructuring
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Methodology
Collecting information from NPA manual of thebank
Talks with SBI officers
Data Collection
Primary Data
Secondary Data
Data Analysis
Simple statistical tools like ratios and percentages
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LIMITATIONS
Time Constraint
Only a single case study
Financial statements belonging to pre-rehabilitation phase of the unit studied notavailable
Unavailability of appointment with the promotersof the unit discussed in the case
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ASSET
QUALITY- an
introduction
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STANDARD
SPECIAL MENTION
ACCOUNT
NPA
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NPA-Defined
As per IRAC norms issued by RBI, NPA is aloan where
installment of principal/interest or
both remains unpaid for 90 days
the account remains out-of ±order incase of an cash credit account
the installment of principal remainsoverdue for 2 or more crop seasons incase of short duration crops and 1 cropseason in case of long duration crops
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NPA-classes
Sub Standard
Doubtful
D1
D2
D3
Loss
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Resolution Strategies
Restructuring / Rehabilitation
Compromise Settlement Schemes
Legal ProceedingsFiling case in civil courts
Debt Recovery Tribunal
Lok AdalatsRecovery through SARFAESI act
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Contd.
Sale of NPA to other banks
Sale of NPA to ARC/ SC under Securitization andReconstruction of Financial Assets and
Enforcement of Security Interest Act 2002
(SARFAESI)
Write offs
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NPA MANAGEMENT
The
Way
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NPA Budget
MONITORING
REPORTING
SPECIAL MENTION ACCOUNT
STRESSED ASSETS REVIEW
SPECIAL BODIES FOR NPA MANAGEMENT
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NPA BUDGET
Prepared annually by Corporate centre
Sets targets for NPA reduction
It is prepared for individual circle
Performance is monitored and reviewed on a monthly basisin NPA review meetings
Responsibility is fixed on respective branch manager
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MONITORING
AT BRANCH/FIELD LEVEL-branchmanager/field officer
Monthly checklist and committees
RASMECC,SMECCC and RACPC
CIS & CBS
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REPORTING SYSTEM
IRREGUL A RITY REPORT
STRESSED A SSETS REVIEW REPORT
ST AFF ACCOUNT ABILITY REPORT
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SPECIAL MENTION
ACCOUNT
SMA ISMA
II SUB
STANDARD
DOUBTFUL
I2
3
LOSS
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SPECIAL MENTION ACCOUNTS
SMA lies in a zone in between standard asset and NPA.
2 categories of SMA
SMA I ² Interest not paid within 30 days of notice SMA II ² Accounts that are not in default but display early
warning signals
For better follow-up
Stressed Assets Review (SAR), but only for accounts withoutstandings above Rs 10 lacs.
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STRESSED ASSETS REVIEW
For accounts with outstandings above Rs 10lacs
SMA I, SMA II and sub standard assets
Branch level activity
Done in a time bound manner
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Process Time Frame
Preparation and Submission
of report
10
Approval of measuresreccomended
5
Viability study if needed 45
TOTAL 60
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SPECIAL BODIES
Stressed Assets Resolution Centre (SARC) NPAs originating in Business Process
Reengineering (BPR)
Follow-up
Filing of suit in DRTs or Civil Courts Appearing before the court
Seizure and sale of mortgaged assets
Formulation of rehabilitation package
Stressed Assets Management Branches ( S AMB) Deal with high value accounts i.e. accounts worth
Rs 50 lac or more, on an exclusive basis.
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MEANING
ELIGIBILITY
REMEDIES AVAILABLE
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The borrower is passing through
a temporary phase of loss making
Accounts only classified understandard, sub standard and doubtful categories may be
restructured
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