Roopa

1
NPA analysis
EXECUTIVE SUMMARY
The incidence of Non Performing Assets is
affecting the performance of the Bank both financially and
psychologically which has been reflecting ultimately on the balance
sheet of the Bank. With increased concern towards Non Performing
Assets, this study was undertaken to analyze the Non Performing assets.
Attempts tate Bank of !ndia "okul #oad, Branch $ubli. Attempts are
also made to identify the area or sector which is more inflicted by Non
Performing assets.
Primary data from the tate Bank of !ndia "okul
#oad, Branch constituted the pre%ious three years data relating to Non
Performing assets. Also a sur%ey also conducted to understand officers&
perception of Non Performing assets. A tructured 'uestionnaire was
administered for the sur%ey. The primary data collected from Bank were
found to be interesting. As commonly known Non Performing assets
should be more in industrial sector at this branch. !t was found that it
was not so, but more in Personal Banking sector. This has been
concluded from the data which was analyzed for the pre%ious three
years. !t is also found that Non Performing asset as a percentage to total
ad%ance has been decreasing and the amount of Non Performing assets
has come down.
#eco%ery has not been effecti%e in the Branch.
All the analyses done ha%e been arranged in a summery table, which
reflect the performance of the Branch during the pre%ious three years. !t
is found that (ebt #eco%ery Tribunal )(#T* as set up for reco%ering
Bank dues from the defaulters has not been as effecti%e as it should ha%e
been. The a%erage time taken to gi%e a decree is one year and it is more
than a year in some cases. There are also many formalities to be
followed while referring a case to (#T.
All those finding are based on analyses of through
the sur%ey about the repayment of loans and the ineffecti%eness of
functioning of (#T.
INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH,HUBLI.
2
NPA analysis
Recommend!"on#$
The Bank has to go for securitization of those accounts, which
ha%e been in the NPAs category from a long time.
Negotiations ha%e to be made for reco%ery of the +oans Non
Performing assets.
The Bank has to carefully analyze the indi%idual sectors for which
they are pro%iding loans.
!mmediate action has to be taken for reduction in the NPAs in the
sectors like !, B,, and A"+, P-B etc.

%
NPA analysis
CHA&TER '1
IN(IAN BAN)ING SYSTEM
ince the dawn of independence, !ndian financial
sector in general and banking in particular has leaped giant strides into a
systematized growth en%ironment. !ndian Banks ha%e consolidated their
growth year after year. .easures like setting up of #eser%e Bank of
!ndia as the regulator, bank nationalization and other reforms ha%e
worked as catalyst in the de%elopment dri%e. There was always a need to
ha%e regulated, uniform and prudent accounting policies for the banks
with special reference to the credit risk in%ol%ed in lending acti%ities so
that the significant growth in the business %olumes of banks was ably
supported by a well set regulatory norms.
Bank is a financial institution that borrows money
from the Public and +ends money to the public for producti%e purposes.
The !ndian Banking #egulation Act of /010 defines the term Banking
2ompany as 3Any company which transacts Banking business in !ndia3
and the term Banking as 3Accepting for the purpose of lending all
in%estment of deposits, of money from the public, repayable on demand
or otherwise and withdrawal by che4ue, draft or otherwise5
Banks play important role in economic
de%elopment of a country, like Banks mobilise the small sa%ings of the
people and make them a%ailable for producti%e purposes. Promotes the
habit of sa%ings among the people thereby offering attracti%e rates of
interests on their deposits. Pro%ides safety and security to the surplus
money of the depositors and as well pro%ides a con%enient and
economical method of payment. Banks pro%ide con%enient means of
transfer of fund from one place to another. $elps the mo%ement of
capital from regions where it is not %ery useful to regions where it can
be more useful.
As part of the reform process, there were other
changes, which also had an impact the traditional role of the Banker in
*
NPA analysis
terms of resource mobilization and deployment. These were caused by
the entry of Pri%ate Banks, deregulation of interest rates, deepening and
widening of capital markets enabling the corporate with good rating to
access the capital markets and finally Pri%atization and broad basing the
ownership of the Public sector Banks. While the earlier changes affected
the Banks business profile, the last factor made the Banks accountable
for profits to a new group of stakeholders namely the shareholders. This
meant that the Banks had to ha%e balance sheets that are transparent and
drawn as per the re4uirements of the best accounting standards practiced
in !ndia and else where 6 raising capital abroad meant following global
standards.
!n /077, #B! ac4uired control of the !mperial
Bank of !ndia, which was renamed as tate Bank of !ndia. !n /070, B!
took o%er control of eight Pri%ate Banks floated in the erstwhile princely
states, making them as its /889 subsidiaries. #B! was empowered in
/0:8, to force compulsory merger of weak Banks with the strong ones.
The total number of Banks was thus reduced from 7:: in /07/ to ;7 in
/0:0. !n <uly /0:0, go%ernment nationalized /1 Banks ha%ing deposits
of #s.78 crores and abo%e. !n /0;8, go%ernment ac4uired : more Banks
with deposits of more than #s.=88 crores. Nationalization of Banks was
to make them play the role of catalytic agents for economic growth. The
Narsimham 2ommittee #eport suggested wide ranging reforms for the
Banking sector in /00= to introduce internationally accepted Banking
practices. The number of Bank offices in the country recorded more than
a se%en>fold rise in the post nationalization era mo%ing up from ;,=:=
branches in /0:0 to :7,7=; by .arch =881. As a result of the e?pansion
in banking facilities, the a%erage population ser%ed by a Bank Branch
has declined from :7,888 to //,888.
+
NPA analysis
1.1 STRUCTURE OF IN(IAN BAN)ING$
The !ndian Banking industry has #eser%e Bank of
!ndia as its regulatory authority. The !ndustry is a mi? of the Public
sector, Pri%ate sector, 2o>operati%e Banks and ,oreign Banks. The
Pri%ate ector Banks are again split into @ld Banks and New Banks.

,
NPA analysis
CHA&TER '2
STATE BAN) OF IN(IA &ROFILE
tate Bank of !ndia )B!* is Public sector undertaking, which was
born with a new sense of social purpose aided by the 1;8 offices
comprising branches, sub offices and three +ocal $ead @ffices
inherited from the !mperial Bank. The concept of Banking as mere
repositories of the communityAs sa%ings and lenders to creditworthy
parties was soon to gi%e way to the concept of purposeful Banking
sub>ser%ing the growing and di%ersified financial needs of planned
economic de%elopment. The tate Bank of !ndia was destined to act
as the pacesetter in this respect and lead the !ndian Banking system
into the e?citing field of national de%elopment. The concept of
Banking as mere repositories of the communityAs sa%ings and lenders
to creditworthy parties was soon to gi%e way to the concept of
purposeful Banking sub>ser%ing the growing and di%ersified
financial needs of planned economic de%elopment. The tate Bank
of !ndia was destined to act as the pacesetter in this respect and lead
the !ndian Banking system into the e?citing field of national
de%elopment.
!ncorporated in /077, tate Bank of !ndia is a
Public sector Bank pro%iding Banking, ,inancial and +easing ser%ices.
!t is also in%ol%ed in .utual fund and 2apital market acti%ities through
its subsidiaries. B! has the largest asset base among Ind"n Bn-# nd
F"nnc". In#!"!/!"on#, All /B:B8 Branches of tate Bank of !ndia and
its C Associate Banks are fully computerised. The implementation of
D# in the year =888>8/ has enabled B! to effect significant reduction
in staff e?penses.
0
NPA analysis
EVOLUTION OF SBI
The origin of the S!!e Bn- o1 Ind" goes back to the first
decade of the nineteenth century with the establishment of the Bank of
2alcutta in 2alcutta on = <une /;8:. Three years later the bank recei%ed
its charter and was re>designed as the Bank of Bengal )= <anuary /;80*.
A uni4ue institution, it was the first Eoint>stock bank of British !ndia
sponsored by the "o%ernment of Bengal. The Bank of Bombay )/7
April /;18* and the Bank of .adras )/ <uly /;1B* followed the Bank of
Bengal. These three banks remained at the ape? of modern banking in
!ndia till their amalgamation as the !mperial Bank of !ndia on =C
<anuary /0=/.
Primarily Anglo>!ndian creations, the three presidency banks
came into e?istence either as a result of the compulsions of imperial
finance or by the felt needs of local Furopean commerce and were not
imposed from outside in an arbitrary manner to modernize !ndiaAs
economy. Their e%olution was, howe%er, shaped by ideas culled from
similar de%elopments in Furope and Fngland, and was influenced by
changes occurring in the structure of both the local trading en%ironment
and those in the relations of the !ndian economy to the economy of
Furope and the global economic framework.
Bn- o1 Ben2. H.O.
3
NPA analysis
E#!4."#5men!
The three banks were go%erned by royal charters, which were The
establishment of the Bank of Bengal marked the ad%ent of limited
liability, Eoint>stock banking in !ndia. o was the associated
inno%ation in banking, %iz. the decision to allow the Bank of Bengal
to issue notes, which would be accepted for payment of public
re%enues within a restricted geographical area. This right of note
issue was %ery %aluable not only for the Bank of Bengal but also its
two siblings, the Banks of Bombay and .adras. !t meant an
accretion to the capital of the banks, a capital on which the
proprietors did not ha%e to pay any interest. The concept of deposit
banking was also an inno%ation because the practice of accepting
money for safekeeping )and in some cases, e%en in%estment on
behalf of the clients* by the indigenous bankers had not spread as a
general habit in most parts of !ndia. But, for a long time, and
especially upto the time that the three presidency banks had a right
of note issue, bank notes and go%ernment balances made up the bulk
of the in%estible resources of the banks.re%ised from time to time.
Fach charter pro%ided for a share capital, four>fifth of which were
pri%ately subscribed and the rest owned by the pro%incial
go%ernment. The members of the board of directors, which managed
the affairs of each bank, were mostly proprietary directors
representing the large Furopean managing agency houses in !ndia.
The rest were go%ernment nominees, in%ariably ci%il ser%ants, one of
whom was elected as the president of the board
6
NPA analysis
G7o/8 &5o!o2785 o1 Cen!7. Bo7d 91621:
B/#"ne##
The business of the banks was initially confined to discounting
of bills of e?change or other negotiable pri%ate securities, keeping cash
accounts and recei%ing deposits and issuing and circulating cash notes.
+oans were restricted to #s. @ne lakh and the period of accommodation
confined to three months only. The security for such loans was public
securities, commonly called 2ompanyAs Paper, bullion, treasure, plate,
Eewels, or goods Anot of a perishable natureA and no interest could be
charged beyond a rate of twel%e per cent. +oans against goods like
opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and
silk goods were also granted but such finance by way of cash credits
gained momentum only from the third decade of the nineteenth century.
All commodities, including tea, sugar and Eute, which began to be
financed later, were either pledged or hypothecated to the bank. (emand
promissory notes were signed by the borrower in fa%our of the
guarantor, which was in turn endorsed to the bank. +ending against
shares of the banks or on the mortgage of houses, land or other real
property was, howe%er, forbidden.
1;
NPA analysis
!ndians were the principal borrowers against deposit of
2ompanyAs paper, while the business of discounts on pri%ate as well as
salary bills was almost the e?clusi%e monopoly of indi%iduals Furopeans
and their partnership firms. But the main function of the three banks, as
far as the go%ernment was concerned, was to help the latter raise loans
from time to time and also pro%ide a degree of stability to the prices of
go%ernment securities
O.d Bn- o1 Ben2.
M<o7 c5n2e "n !5e cond"!"on#
A maEor change in the conditions of operation of the Banks of
Bengal, Bombay and .adras occurred after /;:8. With the passing of
the Paper 2urrency Act of /;:/, the right of note issue of the presidency
banks was abolished and the "o%ernment of !ndia assumed from /
.arch /;:= the sole power of issuing paper currency within British
!ndia. The task of management and circulation of the new currency
notes was conferred on the presidency banks and the "o%ernment
undertook to transfer the Treasury balances to the banks at places where
the banks would open branches. None of the three banks had till then
any branches )e?cept the sole attempt and that too a short>li%ed one by
the Bank of Bengal at .irzapore in /;B0* although the charters had
gi%en them such authority. But as soon as the three presidency bands
were assured of the free use of go%ernment Treasury balances at places
where they would open branches, they embarked on branch e?pansion at
11
NPA analysis
a rapid pace. By /;C:, the branches, agencies and sub agencies of the
three presidency banks co%ered most of the maEor parts and many of the
inland trade centres in !ndia. While the Bank of Bengal had eighteen
branches including its head office, seasonal branches and sub agencies,
the Banks of Bombay and .adras had fifteen each.
Bn- o1 Md7# No!e (!ed 13,1 1o7 R#.1;
&7e#"denc= Bn-# Ac!
The presidency Banks Act, which came into operation on / .ay
/;C:, brought the three presidency banks under a common statute with
similar restrictions on business. The proprietary connection of the
"o%ernment was, howe%er, terminated, though the banks continued to
hold charge of the public debt offices in the three presidency towns, and
the custody of a part of the go%ernment balances. The Act also stipulated
the creation of #eser%e Treasuries at 2alcutta, Bombay and .adras into
which sums abo%e the specified minimum balances promised to the
presidency banks at only their head offices were to be lodged. The
"o%ernment could lend to the presidency banks from such #eser%e
Treasuries but the latter could look upon them more as a fa%our than as a
right.
12
NPA analysis
Bn- o1 Md7#
The decision of the "o%ernment to keep the surplus balances in
#eser%e Treasuries outside the normal control of the presidency banks
and the connected decision not to guarantee minimum go%ernment
balances at new places where branches were to be opened effecti%ely
checked the growth of new branches after /;C:. The pace of e?pansion
witnessed in the pre%ious decade fell sharply although, in the case of the
Bank of .adras, it continued on a modest scale as the profits of that
bank were mainly deri%ed from trade dispersed among a number of port
towns and inland centers of the presidency.
!ndia witnessed rapid commercialization in the last 4uarter of the
nineteenth century as its railway network e?panded to co%er all the
maEor regions of the country. New irrigation networks in .adras,
PunEab and ind accelerated the process of con%ersion of subsistence
crops into cash crops, a portion of which found its way into the foreign
markets. Tea and coffee plantations transformed large areas of the
eastern Terais, the hills of Assam and the Nilgiris into regions of estate
agriculture par e?cellence. All these resulted in the e?pansion of !ndiaAs
international trade more than si?>fold. The three presidency banks were
both beneficiaries and promoters of this commercialisation process as
1%
NPA analysis
they became in%ol%ed in the financing of practically e%ery trading,
manufacturing and mining acti%ity in the sub>continent. While the
Banks of Bengal and Bombay were engaged in the financing of large
modern manufacturing industries, the Bank of .adras went into the
financing of large modern manufacturing industries, the Bank of .adras
went into the financing of small>scale industries in a way which had no
parallel elsewhere. But the three banks were rigorously e?cluded from
any business in%ol%ing foreign e?change. Not only was such business
considered risky for these banks, which held go%ernment deposits, it
was also feared that these banks enEoying go%ernment patronage would
offer unfair competition to the e?change banks which had by then
arri%ed in !ndia. This e?clusion continued till the creation of the #eser%e
Bank of !ndia in /0B7.
Bn- o1 Bom4=
&7e#"denc= Bn-# o1 Ben2.
1*
NPA analysis
The presidency Banks of Bengal, Bombay and .adras with their
C8 branches were merged in /0=/ to form the !mperial Bank of !ndia.
The triad had been transformed into a monolith and a giant among
!ndian commercial banks had emerged. The new bank took on the triple
role of a commercial bank, a bankerAs bank and a banker to the
go%ernment.
But this creation was preceded by years of deliberations on the
need for a Atate Bank of !ndiaA. What e%entually emerged was a Ahalf>
way houseA combining the functions of a commercial bank and a 4uasi>
central bank.
The establishment of the #eser%e Bank of !ndia as the central
bank of the country in /0B7 ended the 4uasi>central banking role of the
!mperial Bank. The latter ceased to be bankers to the "o%ernment of
!ndia and instead became agent of the #eser%e Bank for the transaction
of go%ernment business at centres at which the central bank was not
established. But it continued to maintain currency chests and small coin
depots and operate the remittance facilities scheme for other banks and
the public on terms stipulated by the #eser%e Bank. !t also acted as a
bankersA bank by holding their surplus cash and granting them ad%ances
against authorised securities. The management of the bank clearing
houses also continued with it at many places where the #eser%e Bank
did not ha%e offices. The bank was also the biggest tenderer at the
Treasury bill auctions conducted by the #eser%e Bank on behalf of the
"o%ernment.
1+
NPA analysis
The establishment of the #eser%e Bank
simultaneously saw important amendments being made to the
constitution of the !mperial Bank con%erting it into a purely commercial
bank. The earlier restrictions on its business were remo%ed and the bank
was permitted to undertake foreign e?change business and e?ecutor and
trustee business for the first time.
Im8e7". Bn- o1 Ind" S!!e Bn- o1 Ind"
When !ndia attained freedom, the !mperial
Bank had a capital base )including reser%es* of #s.//.;7 crores,
deposits and ad%ances of #s.=C7./1 crores and #s.C=.01 crores
respecti%ely and a network of /C= branches and more than =88 sub
offices e?tending all o%er the country. !n /07/, when the ,irst ,i%e Gear
Plan was launched, the de%elopment of rural !ndia was gi%en the highest
priority. The 2ommercial Banks of the country including the !mperial
Bank of !ndia had till then confined their operations to the urban sector
and were not e4uipped to respond to the emergent needs of economic
regeneration of the rural areas. !n order, therefore, to ser%e the economy
in general and the rural sector in particular, the All !ndia #ural 2redit
ur%ey 2ommittee recommended the creation of a state>partnered and
state>sponsored Bank by taking o%er the !mperial Bank of !ndia, and
integrating with it, the former state>owned or state>associate Banks. An
act was accordingly passed in Parliament in .ay /077 and the tate
Bank of !ndia was constituted on / <uly /077. .ore than a 4uarter of the
resources of the !ndian Banking system thus passed under the direct
control of the tate. +ater, the tate Bank of !ndia )ubsidiary Banks*
Act was passed in /070, enabling the tate Bank of !ndia to take o%er
eight former tate>associated banks as its subsidiaries. The tate Bank
1,
NPA analysis
of !ndia was thus born with a new sense of social purpose aided by the
1;8 offices comprising branches, sub offices and three +ocal $ead
@ffices inherited from the !mperial Bank.

The concept of Banking as mere repositories of
the communityAs sa%ings and lenders to creditworthy parties was soon to
gi%e way to the concept of purposeful Banking sub ser%ing the growing
and di%ersified financial needs of planned economic de%elopment. The
tate Bank of !ndia was destined to act as the pacesetter in this respect
and lead the !ndian banking system into the e?citing field of national
de%elopment.
C5n2e# in B! has reflected changes in the
entire economy as indicated below
10
NPA analysis
Ye7 C5n2e# 4= SBI Re1.ec!"n2 c5n2e# "n econom=
/077 B7nc5 E>8n#"on /078sH ,ocus on rural - semi>urban areas
,ocus on !ndustry along with the growth of
public sector institutions in !ndia
/0C8sH "reen re%olution in !ndian economy
Farliest application of entrepreneurial
de%elopment methodology
/0:8 Sm.. #c.e
"nd/#!7"e# & #m..
4/#"ne##
/0C8 En!7e87ene/7".
de?e.o8men!
Agriculture
/0;8
Overseas Expansion
/0;8sH !nternational e?pansion
N#! 6 important role
B! as the flagship bank of !ndia creating a
presence in the world
.obilising funds including special schemes 6
#!Bs, !.(s
/008 Tec5no.o2=
T7n#1o7m!"on
Co78o7!e 1"nnc"n2
/008sH (eregulation- liberalisation
ignificant capital raised from market
,ocus on enlarged role of pri%ate sector 6
!nfrastructure, core areas
=88= Foc/# on Re!".
Bn-"n2
=888H Technology transforming banking
Fmphasis on the ser%ices sector.
,urtherH #etail Banking, BP# )Business Process
#e>engineering* - Technology to ,uel ,uture
"rowth
=881 F/..
Com8/!e7"#!"on
ATM# &
7e#!7/c!/7"n2
=887 Co7e Bn-"n2 &
B&R
13
NPA analysis
2.2 ("11e7en! (e87!men!# o1 SBI
!nspection - .anagement Audit (ept
,oreign (epartment
2entral Accounts @ffice
Agency Banking - #econciliation (ept
#upee Tra%elers 2he4ues (ept
!nter @ffice Accounts
"o%t Accounts (ept
(rafts #econciliation (ept
2omputer 2entre
ecurity ,orms @ffice
2redit Audit (epartment
2entral #ecruitment Board
2entral tationery (epartment
2.29": He.8."ne
16
NPA analysis
2ustomers of the Bank can meet senior e?ecuti%es
of the Bank on /7th of e%ery month )between B.88 p.m. and 7.88 p.m.*
without any prior appointment and discuss issues relating to their
accountsIbanking transactions. !n case /7th of month is a holidayJ
customer can meet on the ne?t working day. !n case, e?cessi%e delay in
resol%ing their problems is e?perienced, customers can send e>mail to
the +ocal $ead @ffice, under whose control the branch functions.
2.% SBI COLLEGES AN( INSTITUTES$
B! %ery much belie%es in de%elopment of
personnel they ha%e, for that reason they fre4uently send their
employees on training and de%elopment programmes. They ha%e
their own institutes, which promotes education among their
employees.
/. S!!e Bn- S!11 Co..e2e, $yderabad.
=. S!!e Bn- Acdem=, "urgaon.
B. S!!e Bn- In#!"!/!e o1 In1o7m!"on
Comm/n"c!"on Mn2emen!, $yderabad.
1. S!!e Bn- In#!"!/!e o1 R/7. (e?e.o8men!, $yderabad.
2.* S&REA( OF BRANCHES ACROSS THE @ORL($
2;
NPA analysis
1. A/#!7." /7. So/!5 A17"c
outh Africa, <ohannesburg
=. B5m# 2APF T@WN
Nassau @ffshore Branch
/:. Ne8. 9Nepal B! Bank +td*
B. B57"n 2orporate @ffice,
Bahrain @ffshore Banking Knit Bhairahawa Branch,
Biratnagar Branch,
1. Bn2.de#5 Birtamod #ural Branch,
(haka Branch BirgunE Branch,
(urbar .arg .ain Branch,
7. Be.2"/m New #oad Branch,
Antwerp Branch #ampur #ural Branch,
ishuwa #ural Branch,
:. B5/!n (haran F?tension 2ounter,
Bank of Bhutan Fmbassy of !ndia F?tension,
Pokhara F?tension 2ounter,
C. Cnd
Toronto Branch /C. R/##"
Dancou%er Branch .oscow
urrey Branch 2ommercial Bank of .oscow
3. F7nce /;. S"n28o7e
Paris Branch ingapore @ffshore Branch
0. Ge7mn= /0. S7" Ln-
,rankfurt Branch 2olombo Branch
/8. Hon2-on2 =8. U)
$ongkong Branch @ffice of the ". for KL
.ain Branch, +ondon
//. A8n outhhall Branch
Tokyo Branch "olders "reen Branch
@saka Branch
=/. USA
/=. M.d"?e# B! >@ffice of the 2ountry $ead
.ale Branch NeB Yo7- B7nc5
B! )2alifornia* 2orporate @ffice
/B. MUSCAT BRANCH9OMAN: +os Angeles Agency
.K2AT B! )2alifornia* (own Town

/1. M/7"!"/# B! )2alifornia* Artesia Br
tate Bank !nternational +td., an <ose Branch
<oint Denture @ffshore Bank 2hicago Branch
21
NPA analysis
2.+ ROLE OF SBI$
#epresents the 2entral Bank )#B!* at locations where it
has no offices
Preferred %ehicle of "o%ernment of !ndia for raising
funds abroad.
"roup commands /I1
th

of .arket hare in !ndia
2., BAN)ING SUBSI(IARIES
2.,9": ASSOCIATE BAN)S$
/. tate Bank of Bikaner and <aipur )BB<*
=. tate Bank of $yderabad )B$*
B. tate Bank of !ndore )B!r*
1. tate Bank of .ysore )B.*
7. tate Bank of Patiala )BP*
:. tate Bank of aurashtra )B*
C. tate Bank of Tra%ancore )BT*
BB< www.sbbEbank.com
B$ www.sbhyd.com
B!# www.indorebank.org
B. www.mysorebank.com
BP www.sbp.co.in
B www.sbsbank.com
BT www.statebankoftra%ancore.com
The se%en Associated Banks ha%e a combined
network of 170: branches in !ndia which are fully computerized and
/8C8 AT.s networked with B! AT.s, pro%iding %alue added ser%ices
to clientele. 2risil has rated B! as MAAA5 and ,itch as M!nd AAA5 for
22
NPA analysis
their domestic worthiness to issue Bonds. B! is the only !ndian Bank to
feature in Top /88 Banks ranked in terms Tier / capital and also among
the top =8 banks in Asia in the annual sur%ey by M The Banker5.
The Associated Banks had a market share of
C.CB9 in deposits and C.:89 in ad%ance as on B/
st
.arch =887.
Performance highlights of Associate Banks )Abs* are as follows
/. !ncremental credit deposit ratio of CC9.
=. !mplementation of 2ore Banking olution, completed in C/0
branches. B. 7B8 new AT.s added by Abs, taking the total to /:10
AT.s.
T4.e 1$ &e71o7mnce o1 !5e #e?en A##oc"!ed Bn-#
&7!"c/.7# 9R#. In c7o7e#:
(eposits /,B0,B7;.88
+oans ;1,1:B.88
@perating Profit 1,=:0.C;
Net Profit /,BC/.B7
No. of Branches 1::7
2.0 NON'BAN)ING SUBSI(IARIES$
/. B! 2apital .arkets +td
=. B! ,unds .anagement P%t +td
B. B! (,$! +td
1. B! ,actors - 2ommercial er%ices P%t +td
2.09": SBI C8"!. M7-e!# L!d 9SBICA&:
2%
NPA analysis
B!2AP forged ahead in issue management,
proEect ad%isory and structured finance, sales - distribution. !t focused
on infrastructure proEect ad%isory and syndication mandates, particularly
in the energy sector which is reckoned as the critical growth dri%er in the
growth of the economy. The bank had recorded an impro%ed financial
performance during the year with gross income amounting to #s./C7.8:
crore as against #s./1=.C7 crore in the pre%ious year.
2.09"": SBI (FHI L!d 9SBI (FHI:
B! (,$!, a primary dealer )P(*, undertakes
trading in go%ernment and non>go%ernment securities, in the debt
market. B! "ilts +td has merged with (iscount and ,inance $ouse of
!ndia )(,$!* +td, during the year. And the combined entity is proposed
to be renamed as B! (,$! +td. The combined entity has completed the
bidding commitments and achie%ed the success ratio as per the
undertakings gi%en indi%idually to #B! for the financial year. Total
econdary market turno%er of the bank was #s./;,000 crore which
amounts to a market share of ;.C09 among all the Primary (ealers. The
bank has posted a loss of #s.01.;8 crore due to hardening of interest
rates and conse4uential marked to market depreciation.

2.09""": SBI C7d# & &=men!# Se7?"ce# &?!. L!d.
9SBICS&L:
2*
NPA analysis
Darious Mhop and Win5 offers, shopping
discounts and retail promotions were made at leading malls and markets
to dri%e card spends and /#2e. T5e Bn- .#o ./nc5ed CSBI In#!n!
C7dD 9"##/ed B"!5"n % 5o/7#: 1o7 c/#!ome7# Bo7-"n2 B"!5 !o8
co78o7!e "n !5e co/n!7=. (/7"n2 !5e =e7 ,.%, .c neB c7d# 5?e
4een "##/ed !-"n2 !5e !o!. n/m4e7 o1 o/!#!nd"n2 C7d# !o 1,.23
.c # on %1.;%.2;;+. T5e 227e2!e 7e?en/e 2ene7!ed 4= !5e
Com8n= d/7"n2 !5e =e7 B# R#.%00.6, c7o7e. T5e com8n=
m"n!"ned 87o1"!4"."!= o1 "!# o8e7!"on# nd c5"e?ed 87e'!>
87o1"! o1 R#.,;.%1 c7o7e d/7"n2 !5e =e7.
2.09"?: SBI Fc!o7# nd Comme7c". Se7?"ce# &?! L!d 9SBI
FACTORS:
B! ,A2T@# pro%ides book debt financing on
recourse as also without recourse basis. Product %ariants introduced like
Without #ecourse ,actoring, Purchase Bill ,actoring and ,actoring of
Ksance Bills under +2, etc., ha%e been well recei%ed by the clients. The
B! ,A2T@# has launched N F?port ,actoring&, a new product during
the year. !t had recorded a growth of :79 )year on year * in total income
and ended the year with a PAT of #s.:./= crore as against #s./.7; crore
of last year.
2.3 AOINT VENTURES$
2.39": SBI L"1e In#/7nce Com8n= L!d 9SBI LIFE:
B! +!,F undertakes the business of life
insurance and annuity in relation to all or any kinds of assurance. The
year =881>87 was the B
rd
full year of operations for the 2ompany. As at
2+
NPA analysis
end>.arch =887. !t emerged as the 7
th
top pri%ate insurer in terms of
number of li%es co%ered with a market share. !t recei%ed a premium
income of #s.:8/./8 crore for the year =881>87 as against the premium
receipt of #s.==7 crore during the last financial year, recording a /::9
premium growth B! +!,F le%eraged the strength of its parent bank and
its group. B! and its Associate Banks became the 2orporate Agents of
B! +!,F. B! +!,F is now selling its insurance products through =,188
branches of B! "roup. Bancassurance channel has contributed :=9 of
the total business as on B/
st
.arch =887.
SBI nd "!# ##oc"!ed 4n-#
=nd largest domestic factoring company
<D with "F to aggressi%ely le%erage e?isting
B! customer banking relationships
B! and Associate Banks are key selling
agents
@ne of the largest Bank sponsored .utual
,und ociety "eneral Asset .anagement
collaboration
!n%estment Banking and yndication
Biggest primary dealer of "o%ernment of
!ndia securities
Promoted Eointly with !B!, !2F2AP Bank,
$(,2, $(,2 Bank, among others
SBI Capital Markets
SBI DFHI
ARCIL
SBI Factors &
Coercial
2,
NPA analysis
Fstablished Eointly with $(,2, (un and
Bradstreet, and Trans Knion !nternational
2.6
ORGANISATIONAL STRUCTURE COR&ORATE ORGANISATIONAL STRUCTURE COR&ORATE
MANAGEMENT HIERARCHY OF SBI$
Cre!it In"oration Bureau
#I$ Lt!%
20
CHAIRMAN
(.(-22@

(.(-22@

(.( )!-.A*
(.( )!-.A*
2D@
2D@
(.(-2(@
(.(-2(@
BUSINESS
GROU&S
.(-"F
)2 B*
.(-"F
)2 B*
.(-"F
)NB*
.(-"F
)NB*
(.(-"F
)!B*
(.(-"F
)!B*
(.(-"F
)A-*

(.(-"F
)A-*

(.(-2,@
(.()!T*

(.()!T*

NPA analysis
23
NPA analysis
ORGANISATIONAL STRUCTURE OF LHO ORGANISATIONAL STRUCTURE OF LHO
26
NPA analysis
C5"e1 Gene7. Mn2e7
C5"e1 Gene7. Mn2e7

A".
)Public #elations -
2ommunity er%ices Banking*
A".
)Public #elations -
2ommunity er%ices Banking*
(".
2ircle 2redit - ,inancial @fficer
(".
2ircle 2redit - ,inancial @fficer
(".
2ircle (e%elopment @fficer
(".
2ircle (e%elopment @fficer
"eneral .anager > /
"eneral .anager > /
"eneral .anager > =
"eneral .anager > =
(".
)Digilance*

(".
)+aw* O
A".
BP# !mplementation
A".
BP# !mplementation
%;
NPA analysis
C5"e1 Gene7. Mn2e7
C5"e1 Gene7. Mn2e7
"eneral .anager > /
"eneral .anager > /
"eneral .anager > =
"eneral .anager > =
(". ).odules*
(irect Branches
(". ).odules*
(irect Branches
$ead )(".*
Personal Banking
/. #etail Assets
=. .ass Affluent
B. 2ustomer
er%ice
1. .arketing
2omm.
$ead )(".*
.F egment
/. .anufacturing
=. er%ices
B. 2onsultancy
er%ices 2ell>
.anufacturing
and er%ices
2omponents
$ead P )A".*
"o%ernment
Business
$ead )A".*
Personal
Banking
$ead )A".*
.F
$ead P
Agri.
/. ##B, +ead Bank and #egulatory
,unctions
=. Technical pecialists
B. Business Planning
1. !nstitutional .arketing
)2o>@perati%es, 2orporates, "o%t.
Bodies*
P Position will support both ".s where%er re4uired.
2. )!B*
2. )P - $#*
2. )"B*
NPA .anagement
Q Added ,unction
#ehabilitation 2ell
2. )!B*
2. )"B*
2. )P - $#*
upport ,unctions
22,@, 2(@, BP#, Digilance,
P# - 2ommunity er%ices
NPA .anagement
Q Added ,unction
#ehabilitation 2ell
A". )Agri.*
if contributes
=89 or more
Agri. business
%1
NPA analysis
(E&UTY GENERAL MANAGER (E&UTY GENERAL MANAGER
CHIEF GENERAL MANAGER
%2
NPA analysis
(e8/!= Gene7. Mn2e7
9Mod/.e:
ecurity @fficer
).odule*
2hief .anager
Personnel - $#(
2hief .anager
"en. BankingI Budgeting -
Per..on. Ftc.
.anager
(isc. Pro. 2ell
.anager
@fficial +anguages
Asst. .anager
)+aw*
.anager .!
)(irect Branches*
2hief .anager
Ad%ances, #ehab. 2um NPA
.gt. 2ell
2hief .anager >@ffice
Administration
2. Banking
@perations
.anager
Ad%. 2ell
.anager
NPA ."T.I#F2.
2F++
A". )#etail Asset 2P2*
.edical
@fficer
Premis
es
@fficer
A".s )#egion* All branches headed by A".s
.." !!! > Ronal @ffice
2omputer 2entre
2hief .anager
+ead Bank 2ell )in a few .odules*
.." !!! > !nteroffice
#econciliation 6
"o%ernment Accounts dept
A". )F 2redit
2ell*
$ead, .ortgage ales
2redit Processing 2ell
)Temporary*
A". > @perations
%%
A##"#!n! Gene7. Mn2e7
9Re2"on:E B7nc5
A##"#!n! Gene7. Mn2e7
9Re2"on:E B7nc5
2hief
.anager
Agri.
2hief
.anager
Agri.
2hief .anager
22 - .ass
Affl.
2hief .anager
22 - .ass
Affl.
2hief
.anager
"eneral
Bkg.
2hief
.anager
"eneral
Bkg.
.anager
Personnel
-
$#(
.anager
Personnel
-
$#(
.anager
NPA .gt.
2um
#eco%ery
.anager
NPA .gt.
2um
#eco%ery
(y. .anager
!@# I"A(I
$ouse LeepingI
!B!TI
undry (ep.I
uspense etc.
(y. .anager
!@# I"A(I
$ouse LeepingI
!B!TI
undry (ep.I
uspense etc.
(y. .anager > Premises I
,i?ed Assets I
2ollation of all
#eturns )Both Ad%ances
and (eposits*
I+ead Bk.
I@ther .isc. .atters
(y. .anager > Premises I
,i?ed Assets I
2ollation of all
#eturns )Both Ad%ances
and (eposits*
I+ead Bk.
I@ther .isc. .atters
(y. .anager
,rauds I
2omplaintsI
!nsp. - Audit 2ell
(y. .anager
,rauds I
2omplaintsI
!nsp. - Audit 2ell
.anager
ales
).F*
.anager
ales
).F*
O > in the non>lead
districts of the Bank
(istrict
2o>ordinator
O

(istrict
2o>ordinator
O

(y. .anager
Performance
.onitoring
2ell
Agl pl.
Agl pl.
upport
@fficers
upport
@fficers
ales
force
).F*
ales
force
).F*
.tkg -
#ec.
Teams
.tkg -
#ec.
Teams
NPA analysis
ASSISTANT GENERAL MANAGER 9REGION:E BRANCH
%*
NPA analysis
2.1; SBI 9GO)UL ROA( BRANCH: &ROFILE
9SBIRIB:
B! "okul #oad Branch was established in the
"okul #oad of $ubli in year /0C7 , Although the Branch was opened
with the intention of gi%ing assistance to industries, due to declay it has
been catering to needs of agriculturist by ad%ancing to farmers as per
their needs. $owe%er B! "okul #oad Branch has continued and it has
widened its customer base. This Branch is fully computerized . !t has a
special department known as Bank .aster system to 2ore Banking
system which facilitate on line banking.
The Branch has made a profit of #s.;;.;; lac as
against #s.7C.88 lac pre%ious year, recording B/.;; lac growth o%er the
pre%ious year. Total numbers of employees at this Branch is =8 and the
Bank is said to ha%e made an e?cellent performance and has been
appreciated by the enior F?ecuti%es of the Bank. The e?cellent
customer ser%ice and the Branch ambience ha%e attracted the customer
to the Branch. Branch has disbursed around B888 AT. cards this year
and has added 78 more customers to the list of !nternet Banking
customers. @%erheads at this Branch are under total control.
(e8o#"!#$
(eposits grew by /08.:=9 during =881>87,
recording o%erall positi%e %ariance of ;0.1Bcrore. Bulk deposit of #s. 01
crore was mobilized from ABB ltd, with the support of their regional
A"..
%+
NPA analysis
Ad?nce#$
Ad%ances grew by B:.8;9 during =881>87
recording o%erall positi%e %ariance of #s. /8./7 crore. All the segments
under ad%ances are showing positi%e %ariances focused efforts in
marketing or booking new ad%ances by all the staff has resulted in
sustained growth in all the segments.
2.1;9": E11"c"enc= 87me!e7#$
T4.e 2$ E11"c"enc= 87me!e7# o1 SBIRIB
S.
no
&7!"c/.7# %1E;%E;* &7o<ec!e
d
%1E;%E;+
%1E;%E;+
/ A%erage business per employee /CB08 =7:07 =:BC7
= Net profit per employee B=B BC= 71/
B "## )9* /.; /.1B =.87
1 F?pense ratio )9* 1:.7B 71.; B7.1
7 Transaction cost )9* /.:C /.:C 8.70
: A%erage yield on ad%ances )9* 7.1 ;.0 0.B:
C A%erage cost of deposit )9* 7.8: B.0C 1.//
; A%erage interest spread )9* ):>C* 8.B1 1.0B 7.=7
0 NPA I Total ad%ances )9* 7.8: =.8= /.C
/8 @ther income I Total income :.C= =:.8/ /0.=0
%,
NPA analysis
2.11 CENTRAL BOAR( OF (IRECTORS OF SBI$
9A# on 2;
!5
M='2;;+:
CHAIRMAN$
MANAGING
(IRECTORS$
(IRECTORS$
hri Arun Lumar Purwar
hri L..Ashok Lini
hri T..Bhattacharya
hri.L.P.<hunEhunwala
(r. !.".Patel
hri.P.#.Lhanna
hri.uman Lumar Bery
hri. AEay.".Piramal
hri Ananta.2.Lalita
hri Arun ingh
hri #aEi% Pandey
hri. Piyush "oyal
mt. hyamala "opinath


%0
NPA analysis
CHA&TER '%
Mc)"nne=F# 0S FRAME@OR)
The C> model is better known as .cL!NFG&
C>, this is because the two persons who had de%eloped this model, Tom
Peters - #obert Waterman, ha%e been consultants at .cLinsey and 2o
at that time. They published their C> model in their article 3tructure is
Not @rganization3)/0;8* - in their books 3The Art of <apanese
.anagement3)/0;/* - 3!n search of F?cellence3)/0;=*. The C>
framework of .cLinsey is a %alue based management model that
describes how one can holistically and effecti%ely organize a company.
Together these factors determine the way in which a corporation
operates.
The model starts on the premise that an
organization is not Eust tructure, but consists of se%en elements

%3
NPA analysis
%.1 SHARE( VALUE$
The interconnecting center of .cLinney&s model
is hared Dalues. What does the organization stands for and what it
belie%es in. 2entral beliefs and attitudes. hared %alues means that the
employees share the same guiding %alues. Dalues are things that you
would stri%e for if they were demonstrably not profitable. Dalues act as
an organization conscience, pro%iding guidance in times of crises.
!dentifying corporate %alues is the first essential step in defining the
organization role in the larger community in which it functions.
@rganizations main %alues are stated in its Dision
- .ission statements. o, it is the responsibility of e%ery employee of
the organizations to share their %alues. F%ery employee of the
organization can gi%e their best for the achie%ement of those %alues. A
role of the %ision statement is to impart to the organization. What the
organization stands for and what it belie%es in. the organization not only
formulate and constantly reiterate %alues and beliefs but also adhere to
them if they are to shape people beha%ior in a lasting way.
%6
NPA analysis
%.19": M"##"on o1 S!!e Bn- o1 Ind"$
CTo retain the Bank&s position as the premier
Ind"n 1"nnc". #e7?"ce# group, with world class #!nd7d# and
significant 2.o4. 4/#"ne##, committed to e>ce..ence in c/#!ome7,
#57e5o.de7 and em8.o=ee #!"#1c!"on, and to play a leading role in
the e?panding and di%ersifying financial ser%ices sector, while
continuing emphasis on its de%elopment Banking role.D
%.19"": V"#"on o1 S!!e Bn- o1 Ind"$
Premier !ndian ,inancial er%ices "roup with global
perspecti%e, world class standards of efficiency and
professionalism are the core !nstitutional %alues.
#etain its position in the country as a pioneer in (e%elopment
banking.
.a?imize shareholder %alue through high sustained earnings
per share.
An institution with a culture of mutual care and commitment
and continuous learning opportunities.
%.19""": Se7?"ce# o11e7ed 4= S!!e Bn- o1 Ind"$
/* B! offers ingle Window er%ices > All transactions at a single
point AT.s
=* =;88Q AT.s and countrywide network in ;0; centres
B* 2ustomers ha%e access o%er B=,888 P@ through debit>cum>AT.
card
*;
NPA analysis
1* Tie>up with $(,2 Bank, KT! Bank and !ndian Bank for !
2ollegeI$ostel ,ee Payment5 through AT.s.
7* Topping up of .obile phones of both @range and Airtel
transactions.
:* @pening of !nternet Banking accounts through AT.s for
cardholders.
C* !ssue of monthlyI4uarterly season tickets for suburban trains of
2entral #ailway at 2T .umbai.
;* To boost fee income
Dalue Added er%ices e?tended
Payment of utility bills,
Trade ,inance olution>F?im Bills
2all 2entre er%ices>as a ser%ice helpline
!nternet banking 6 www.onlinesbi.com
F>bill payments
The tate Bank of !ndia belie%es that the
fundamental capacities any indi%idual would possess to be able to
participate in the larger economy are in the areas of health, education,
and to pro%ide basic financial ser%ices. Within these broad areas infant
health, education, and micro financial ser%ices define the areas in which
the tate bank of !ndia focuses.
%.2 STRATEGY$
trategy defines key actions and capabilities
along the maEor dimensions of marketing product and ser%ices
de%elopment, sales and channel distribution, business system and
processes, and management of alliances and partnerships. trategic
thinking in%ol%es the understanding of basic economics of business,
*1
NPA analysis
identifying ones sources of competiti%e ad%antage, and allocating
resources to ensure that ones distincti%e capabilities remain strong.
trategy&s most important contribution is
searching for, and redefining, conte?t. trategic thinking also creates a
readiness to e?ploit unforeseen opportunities.
%.29": O4<ec!"?e# o1 S!!e Bn- o1 Ind"$
!ncreasing competition in #etail Banking.
Trading profit under pressure.
Training and redeployment of human resources.
#educing NPAs.
%.29"": SBI S!7!e2= !o !c-.e 87o4.em#$
+e%erage unparalleled network and multi>product platform.
+e%erage "roup strength and brand loyalty.
Fnhance technology platform > multi deli%ery channels, %irtual
merger.
,ocus on #etail, infrastructure and growth oriented industries.
#e>in%ent agricultural lending .odel.
Process re>engineering to enhance efficiency.
+ow cost funding, #e>pricing of liabilities.
F?pand fee income sources.
Prudent risk management practices stemming from historical
e?tensi%e e?perience.
#eorientation of organization and training of human resources >
sales focusedJ customer focusedJ cross>sellingJ reco%ery of NPAs.
Kse of recent regulatory changes in tackling NPAs>@T, 2(#,
A#2!+, ,oreclosure +aw.
*2
NPA analysis
@%erseas e?pansion.
%.% STRUCTURE$
@rganizations will find that changes to processes
and style ine%itability re4uire changes to their structure. To be
responsi%e and results oriented an organization needs to mo%e to a
network structure. Network structure supports a responsi%e and result
oriented organization. The way the organizations units relate to each
other, centralized, functional di%isions )top down* decentralized )the
trend in larger organization*, matri?, network, holding, etc. @rganization
structure defines the authority, responsibility and relationship in the
organization. The organization structure mentioned below where we can
obser%e that the (epartmenation is done on the basis of standard
function of the management. The structure of tate bank of !ndia Bank
is as followsH
Fach department is controlled and guided by the
head of the department. All departments ha%e separate manager to
control acti%ity. The structure shows how the company is able to
manage its staff and also in%ol%es e%eryone in the decision making
process.
*%
NPA analysis
%.%9": Gene7. S57e5o.de7 In1o7m!"on
Number of shareholders as on B/.8B.=887 was 7.=7 lakhs. The
shareholding pattern was as underH
S57e5o.de7 &e7cen!2e !o To!.
EG/"!=
#eser%e Bank of !ndia 70.CB
Non>residents ),!!s, @2Bs, N#!s* /0.;B
Banks, ,!s including insurance companies :.=B
.utual fundsIKT! 7.=C
(omestic companiesIpri%ate corporate bodiesItrusts =.71
#esident indi%iduals :.18
F"2/7e 1$ S57e5o.de7 o1 S!!e Bn- o1 Ind" 4n-
60%
20%
6%
5%
3%
6%
Reserve Bank of India
Non-residents (FIIs, OCBs, NRIs)
Banks, FIs inc!din" ins!rance co#$anies
%!t!a f!nds&'(I
)o#estic co#$anies&$rivate cor$orate *odies&tr!sts
Resident individ!as
**
NPA analysis
%.* S)ILLS$
kills refer to distincti%e capabilities of personnel
or of the organization as a whole. A skill is that for which the staff to
de%elop appropriate new skills, for which it re4uires a learning
en%ironment. !f the staff managers are to ac4uire the skills, then there
needs to be an appropriate learning en%ironment. @ne thatH
!s dri%en by desire to realize the %ision.
$as a sharing culture with mutual support.
Pro%ides space and time for learning. Preferably closely linked to
specific tasks and obEecti%es )Eust in time learning*.
Allows risk
Tolerates failure, pro%ided it is part of the learning process.
$as %isible recognition for success that is built on new learning.
Where skills and e?perience cannot be resourced
or de%eloped internally within the re4uired timescales then e?ternal
companies will need to be retained. !n short skills refer to the fact that
employees ha%e the skills needed to carry out the company&s strategy.
Training and de%elopment ensuring people know how to do their Eobs
and stay up to date the latest techni4ues. #obert Larz has identified three
essential managerial skills. They are as followsH
%.*9": Tec5n"c. S-"..#$
*+
NPA analysis
Technical skills encompass the ability to apply specialized knowledge
or e?pertise. !t in%ol%es working with tools and specific techni4ues. ,or
e?ample, mechanics works with tools and their super%isors should ha%e
the ability to teach how to use these tools.
%.*9"": H/mn S-"..#$
$uman skills is the ability to work with people, it is cooperati%e effort,
it is team work, it is the creation of an en%ironment in which people feel
secure and free to e?press there opinions.
%.*9""": Conce8!/. S-"..#$
!t is the ability to see the big picture, to recognize the significant
elements in a situation and to understand the relationship among the
elements. (ifferent organization re4uires different skills. The skill set
differs from one organization to organization. But when it comes to
Banking the skill set differs from that other type of organization the
skills possessed by different employees are depending on their grades.
The following are the grades of tate Bank of !ndia employees.
2hairman
.anaging (irector
(irector.
.anagers
@fficers
2lerks
%.+ SYSTEMS$
The systems refers the procedure, processes and
routine that characterize how important works has to be done like
financial systems, hiring, promotion and performance appraisal systems,
information systems. ystems re4uire capabilities in both information
*,
NPA analysis
technology and in organizational process methods and controls. The
capabilities are re4uired inH
%.+9": Recen! In"!"!"?e# do8!ed 4= SBI
%.+9":9: Tec5no.o2=
Kni%ersal computerization of all branches of B! "roup
2entralized database system
ingle Window er%ices at branches
!ncreased AT. co%erage through tie ups with other banks
Dalue Added er%ices e?tended to aid multi>distribution channels
2entralization of international operations
%.+9"": 94: B/#"ne## &7oce## Re'en2"nee7"n2
2reation of separate BKs to focus marketing efforts
Personal Banking
Agriculture
mall and .edium Fnterprises
"o%ernment business
2entralized credit management
New credit deli%ery model aimed at .id>
2orporate segment lending
tressed Asset .anagement "roup set up to
address issue of sticky assets
,ocus on ProEect ,inance BK
*0
NPA analysis
%., STYLE$
tyle refers to the employees shared and common
way of thinking and beha%ing > unwritten norms of beha%ior and
thought. The managerial approach is more proEects focused than process
focused. The management is likely mi?ture of self>management for
customer facing acti%ities and task management for organizational
acti%ities. ,or e?H if the staff is to treat customers as indi%iduals, then
they will need to be managed as indi%iduals, this suggests a self>
management style.
%.,9": Mode.# 1o7 .ede7#5"8$
haring leadership is key to the white stag
philosophy of leadership because o%ertly promotes the distribution of
the function of the leader among the group. 2ompetiti%e styles of
leadership are less and less responsi%e to comple? society today.
Participati%e of cooperati%e styles of interaction are the keys to our
future. An indi%idual&s style in interacting with others is an outward sign
of the substance within. With e?perience, they can really tell a lot about
*3
NPA analysis
people&s capabilities by looking at them, but it is better to watch them in
action.
Se.ec!"n2 Lede7#5"8 #!=.e$
There are se%eral forces affecting the type of
leadership style a%ailable to the leader.
Fo7ce# on Lede7$
These can include leaders knowledge, skills,
attitude, e?perience, background, %alues, personal goals, group goals,
confidence in members, con%ictions about styles and his choice of style,
pressures from outside groups, time, resources, personality, sensiti%ity,
weight of responsibility.
Fo7ce# on !em$
These include the combination of personality in
the group, %alues, e?pectations, willingness, and ability to make
decisions, indi%idual needs, team needs, interest, and competition,
confidence, resources, workload, spirit, a communication and fatigue.
Fo7ce# "n #"!/!"on$
These include time, restraints of organization,
en%ironment, size or duration of Eob, conflict of goals, emergencies,
hazards, desirability of the Eob, Eustice, legality, remo%e or lack of
alternati%es.
*6
NPA analysis
%.,9"": Lede7#5"8 S!=.e# "n S!!e Bn- o1 Ind"$
!t has been obser%ed in tate Bank of !ndia that
the beha%ior of superior towards the subordinates is pleasant. They
moti%ate fresher who are working under them. The superior tells the
subordinates what he has to do. The obEecti%e of the work is clearly
defined to them. @therwise the superior talks to the subordinate, ask the
difficulties that the subordinate is facing, and tries to sol%e his problems.
!t is also been obser%ed that in the organization
that while speaking to their subordinates, superiors will be %ery friendly
and affectionate to the subordinates. The superior in the tate bank of
!ndia gi%es e4ual importance to obEecti%es of the company as well as
relationship with the subordinates )e?ecuti%e style*. uperiors who act
as leaders conduct meeting, discussions, presentations etc on regular
basis and take the suggestions and ideas gi%en by subordinates, the
leaders take the final decisions only. This style of leadership is called
Participati%e style of leadership.
%.0 STAFF$
taff means that the company has hired able
people, trains them well and assigned them to the right Eobs. election,
+;
NPA analysis
training, reward and recognition, retention, moti%ation and assignment
to appropriate work are all key issues. o, it means how an organization
effecti%ely recruits, trained their people and assigned them the right Eob.
Total numbers of employees at this Branch are =8 and the Bank is said
to ha%e made an e?cellent performance and has been appreciated by the
2hief F?ecuti%es of the Bank.
%.09: &eo8.e
Training
+ateral #ecruitment
pecialist recruitment for Agriculture ector
#edeployment for 2ross>elling
%.094: Rec7/"!men! &7oce## o1 S!!e Bn- o1 Ind"$
tate bank of !ndia follows both !nternal and F?ternal
#ecruitment. !f the suitable candidates are a%ailable internally, through
circulars a notification is sent to the employees. !f candidates are not
a%ailable internally, e?ternal recruitment is followed. ources used for
F?ternal #ecruitment are mainly through 2ampus #ecruitment,
2onsultancies, etc.
The recruitment has been streamlined and uniform recruitment
policy and process implemented.
2ompetency profiling tools are being used to strengthen the
campus recruitment process and match the profiles of the
employees to the need of the organization.
+1
NPA analysis
tate Bank of !ndia also undertakes lateral recruitment to bring
new skillsJ competencies and e?perience interest the organization
and meets the re4uirements of the rapidly growing business.
A si?>sigma initiati%e has been undertaken for the literal
recruitment process to impro%e capabilities in this area.
The rapidly changing business en%ironment and the challenges it
posses to organization and businesses make it imperati%e to
continuously to enhance the knowledge and skill sets across the
organization. tate Bank of !ndia belie%es that building a learning
organization is critical for being competiti%e in product and
ser%ices and meeting customer&s e?pectations.
pecial programs on functional training and leadership
de%elopment to build knowledge as well as management ability is
conducted at dedicated training facility. tate Bank of !ndia also
draws from the best a%ailable training programs and facility, both
international and domestic, to meet its training and de%elopment
needs and built globally benchmarks skills and capabilities.
tate Bank of !ndia belie%es in defining clear performance
parameters for employees and empowering them to achie%e their
goals. This has helped to create a culture of high performance
across the organization.

+2
NPA analysis
CHA&TER'*
&RO(UCTE SERVICE &ROFILE
*.1 &RO(UCTS OFFERE( AT SBIRIB
/. Personal Banking
a. (eposit chemes
i. 2urrent account
ii. a%ing Bank AIc
iii. a%ings Plus AIc
i%. All Term (eposits
%. #e>in%estment Plans
%i. #ecurring (eposit AIc
b. Personal ,inancing
i. $ousing +oans
ii. 2ar loans
iii. Fducation loans
i%. Personal loans
%. .ortgage +oans
%i. Pensioner loans
+%
NPA analysis
%ii. +oans against shares, Bonds and (ebentures
%iii. +oans against #B! relief bonds
i?. ,esti%al loans
?. .edi Plus scheme
?i. Teachers Plus scheme
?ii. ainik Plus scheme
?iii. <ustice Plus cheme
=. er%ices
a. +ocker facility
b. "ift 2he4ues
c. PP,
d. 09 relief bonds
e. PK retiring employee scheme
f. +oans on (emat AIc
B. N#! Banking
1. "o%ernment ponsored chemes
a. P.#G )Prime .inisters #ozgar GoEna*
b. 2T corporation assistance program
c. Backward 2lass and .inority 2orporation
d. Bangalore city 2orporation
7. ! ,inancing
a. tree hakti Plan
b. F4uity fund schemes
c. B22
d. .F credit plus
e. +iberalised 2redit loan scheme
f. "eneral purpose term loans to !
g. Fntrepreneur scheme
:. B, ,inancing
+*
NPA analysis
a. #etail trade finance
b. Professionals, self employed people etc.,
c. (octor Plus scheme
d. Paryatan Plus scheme
*.2 SERVICES OF STATE BAN) OF IN(IA$
*.29": Tec5no.o2= Com8/!e7"H!"on$ All Branches of tate Bank
"roup are fully computerized.
*.29"": ATM#
i* To!. ATM# o1 S!!e Bn- G7o/8 6 7=/C all networked
>largest network in the country
ii* C7d 4#e o1 !5e G7o/8 6 more than /8 mn 6 largest in the
country )debit Qcredit cards*
iii* C/#!ome7# 5?e cce## o%er B=,888 P@ through debit>
cum>AT. card.
*.29""": In!e7ne! Bn-"n2$

This on>line channel enables customers to access
their account information and initiate transactions at any time, on
boundary less basis. ===7 Branches, co%ering 777 centres, are e?tending
!NB ser%ice to their customers. All functionalities other than 2ash and
2learing ha%e been e?tended to indi%idual retail customers.
*.29"?: Co78o7!e Bn-"n2$
++
NPA analysis
A separate !nternet Banking .odule for
2orporate customers has been initiated by B! and is a%ailable at /B87
Branches. Bulk upload of data for 2orporate, !nter>branch funds transfer
for #etail customers, online payment of 2ustoms duty and "o%t. ta?,
Flectronic Bill Payment, . Alerts, F>Poll, !!T "ATF ,ee 2ollection,
and #ailway Ticket Booking are the new features deployed.
*.29?: Co7e Bn-"n2 So./!"on$

The Bank is mo%ing towards a centralized
database with 2ore Baking solution, with capability for on>line, real>
time transaction processing and /80B branches of tate Bank at ;:
centres ha%e been brought under 2ore Banking ystem.
*.29?": SEFT$
B! has launched the pecial Flectronic ,und
Transfer )F,T* cheme of #B!, to facilitate efficient and e?peditious
!nter>bank transfer of funds. =1/ Branches of our Bank in %arious +$@
2entres are participating in the scheme.
*.29?"": @AN$
The Bank has set up a Wide Area Network,
known as B! connect, which pro%ides connecti%ity to 1;/0
BranchesIoffices of B "roup across B;7 cities. This network pro%ides
across the board benefits by pro%iding nationwide connecti%ity for its
business applications.
*.29?""": Go?!. B/#"ne##H
+,
NPA analysis
oftware has been de%eloped and rolled out at
CC;7 fully 2omputerized Branches. Flectronic generation of all reports
for reporting, settlement and reconciliation of "o%t. funds is a%ailable.
*.% (ETAILS OF (E&OSIT SCHEMES$
tate Bank of !ndia accepts deposits of %arious
kinds from the general public - from %arious trading - non>trading
institutions. ome of the maEor deposits schemes are briefly mentioned
in the following Para. There is also some more small deposit scheme in
the Bank which resembles one or other deposit scheme discussed below,
but only different names are gi%en for the purpose for easy recognition
- for attracting the customers.
The each scheme offers a facility of nomination to
each indi%idual depositor which is optional to them. @nly one person
can be chosen as nominee by the depositor. There is also a safety
measure to the depositors of some nature offered by #B! in the form of
depository insurance scheme up to #s. /, 88,888. $ence Bank deposits
enEoy a risk free in%estment option - hence attract more in%estors.
Some o1 !5e m<o7 de8o#"!# #c5eme#
1.o!ed 4= S!!e Bn- o1 Ind" 7e e>8."ned # 4e.oB$
*.%9": S?"n2# cco/n!$
+0
NPA analysis
a%ings bank AIc is a deposit - operation AIc
maintained mainly for the purpose of sa%ings, where limited
withdrawals are allowed. The some amount of withdrawals can be made
during the year by way of withdrawal form or che4ues. The minimum
balance fi?ed by tate bank of !ndia for opening an B AIc isH
#.788 without che4ue book facility
#s. /888 with che4ue book facility
,or pensioners minimum balance re4uired is
#./88. alaried people largely operate this AIc. The !nterest rates
followed on this AIc are B.79. !nterest is paid half yearly )<an - <uly*
on monthly product basis on minimum balance in held the AIc between
/8
th
- last working day of the month. :8 che4ue lea%es are issued freely
in a calendar year. After that #s. / is charged on each lea%e. The B
AIc must always show credit balance no o%er drawings is allowed.
*.%9"": C/77en! AEc$
2urrent AIc is an operati%e AIc where there is no
restriction on withdraws - receipts. $ence it is also called as running
AIc. Business people, contractors - professionals mainly open this
AIc. The minimum balance re4uired for opening the current AIc isH
#ural region > #. /888
Krban > #. B888
.etro cities > #. 7888
No interest is allowed on current AIcJ instead
Bank will charge incidental charges depending upon %olume of
+3
NPA analysis
transaction - a%erage credit balance held in the AIc. Bank will charge
#.= per leaf on che4ue book issued to the AIc holders, No free lea%es
are issued.Branches ha%e discretionary powers to allow T@(
)Temporary o%er (raft* at the re4uest of the customer )normally /8
days*. ,or this bank will charge the @.( interest on the o%er drawn
amount. The more the deposit amount held by the bank more it is
profitable since cost of funds on this deposits are lower compared to
other accounts.
*.%9""": Rec/77"n2 de8o#"! AEc$
!t is a time deposit AIc that is opened larges by
indi%iduals who ha%e monthly fi?ed income mainly for the purpose of
sa%ings. This AIc is opened for a minimum period of : months - the
ma?imum period of /=8 months. ,i?ed amount of remittance on
monthly basis is fi?ed. !nterest on #.( AIc is paid as applicable to term
deposit on 4uarterly compounding basis. No operation is allowed on
#.( AIc installment can be remitted on any day between /
st
last day of
the month. Penal charges are charged at the rate of /879 pm for late
remittance of deposit amount. There is no minimum amount fi?ed for
#.( AIc at the time of e?igencies a depositor can a%ail a demand
loanI@.( up to C7>;89 of the balance held with accrued interest, for
which banks will charges =9 of e?tra in abo%e what it will allow on
deposits.
*.%9"?: Te7m de8o#"! AEc$
!t is deposit account mainly by the small cautions
in%estors with a %iew to earn a fi?ed income on monthly basis. The
in%estors deposit the fi?ed amount for a fi?ed period. The minimum
duration is C days - the ma?imum duration of deposit is /8 years.
+6
NPA analysis
!nterest is paid at a contracted rate on monthlyI4uarterlyIannually basis
as desired by the customer.
No operation is allowed on this account, AT the
time of e?igencies a depositor can a%ail a demand loan up to C7>;89 of
the amount deposited in the AIc. No minimum amount is fi?ed for this
deposit account.
*.%9?: Re'"n?e#!men! de8o#"!$
!t is a time deposit account, which is
accepted for a minimum period of : months - up to /=8months.
.inimum deposit accepted is #. /88 interests are allowed same as
applicable to time deposit and are allowed on 4uarterly compounding
basis. .aturity proceeds will be paid on or after the maturity date.
ince interest is compounded on 4uarterly
basis re>interested into deposit aIc without withdrawal it is called as
re>in%estment deposit. This deposit aIc is beneficial to those in%estors
who wish to sa%e present earning after a future fi?ed date. +oanIo%er
draft is allowed at C7>;89 of the amount deposited plus accrued
interest.

,;
NPA analysis
CHA&TER'+
FINANCIAL ANALYSIS
+.1 INCOME
With nearly =88 years of history the Bank is
showing a good income trend all o%er the years. !ncome registered a
growth of =1.::9 in =887 and stood at #s. ;,0C,0:,:;=. Table below
shows the income for past Byears.
T4.e %$ Income 17om 2;;%!o 2;;+
Ye7#
Income o1 SBIRIB 9R#:
=88B
:,70,;:,=B:
=881
C,=:,7:,70:
=887
;,0C,0:,:;=
,1
NPA analysis
Net profit of SBI gokul road branch
5+00362
,,,,-,6
2005 2006
0
2000000
.000000
6000000
,000000
/0000000
/ 2
Years
0eries/
0eries2
F"2/7e 2$ Ne! &7o1"! o1 !5e S!!e Bn- o1 Ind" 9Go-/. Rod B7nc5:
+.2 &ROFIT$
The di%ision is continuously making good
profits since its incorporation. But Profits ha%e increased by B/.;;
lakhs and stood at #s ;;.;; lakhs during =88:. Table below shows
profits made by the Bank during past B years.
T4.e *$ &7o1"!# 17om 2;;+ !o 2;;,
Ye7 &7o1"!#9 R# "n c7o7e#:
=887 7C.88
=88: ;;.;;
+.% FINANCIAL RATIOS
+.%9": L"G/"d"!= R!"o#
,2
NPA analysis
These ratios indicate the ability of a firm to meet
short>term obligations. The prominent li4uidity ratios areH
+.%9":9: C/77en! R!"o$

This ratio is calculated by di%iding current assets
by current liabilities. !t is an indicator of short>term sol%ency of a firm.
This ratio of the Bank is showing a cyclical trend all o%er the years and
also is far abo%e standards of =H /. The current ratio for =887 is /C.:=.
+.%9":94: I/"c- R!"oH
This ratio is calculated by di%iding 4uick assets
)i.e., current assets 6 in%entories* by current liabilities. This ratio is also
showing a cyclical trend all o%er the years and is far abo%e standards
/H/. The 4uick ratio for =887 is /C.:=.
+.%9":9c: C#5 R!"oH
This ratio is calculated by di%iding cash and cash
e4ui%alents by current liabilities. The standard for the ratio is 8.7H/. This
ratio is showing a decreasing trend o%er the years. The cash ratio for
=887 is /.
+.%9"": Le?e72e R!"o#
,%
NPA analysis
These ratios help in Eudging long>term financial
position of the firm. These ratios indicate the mi? of funds pro%ided by
owners and lenders. The maEor le%erage ratios areH
+.%9"":9: (e4!'EG/"!= R!"oH

This ratio is calculated by di%iding long>term
debt by net worth. !t indicates the relati%e capital structure of a
firm. This ratio for Bank is showing an increasing trend from =88B
the ratio for =887 is =8.009.
+.%9"":94: (e4!'!o'A##e!# R!"oH
This ratio e?presses debt as a percentage of
total assets. This ratio of the Bank was showing an increasing trend
but it has declined in the last = years. The ratio for =887 stood up
at B.1;9
+.%9"":9c: In!e7e#! Co?e72e R!"oH
This ratio is calculated by di%iding operating
income by interest charges paid. This ratio indicates interest>ser%icing
ability of a firm. This ratio of the Bank shows a cyclical trend. The ratio
for =887 stood at =.80.
+.%9""": T/7no?e7 R!"o#
,*
NPA analysis
Turno%er ratios are used to e%aluate the efficiency
with which the firm manages and utilizes its assets. These ratios indicate
the speed with which the assets are con%erted or turned o%er interest
sales. !mportant turno%er ratios areH
+.%9""":9: F">ed A##e!# T/7no?e7H
This ratio indicates the efficiency of utilization of
fi?ed assets. !t is calculated by di%iding sales by fi?ed assets. This ratio
of the Bank is showing an increasing trend o%er the B years. This ratio
stood at /.8:9during =887.
+.%9"?: &7o1"!4"."!= R!"o#
These ratios measure operating efficiency of a
Bank. .aEor profitability ratios areH
+.%9"?:9: O8e7!"n2 M72"n H
This ratio is calculated by di%iding operating
profit )FB!T* sales. The operating margin for the Bank is showing a
decreasing sign throughout the years. This ratio stood at =C.CC9 during
=887.
+.%9"?:94: Ne! &7o1"! M72"nH
,+
NPA analysis
This ratio is calculated by di%iding Net profit
)PAT* sales. This ratio is showing a cyclical trend o%er the years. !t
stood at B./89 during =887.
+.%9"?:9c: Re!/7n on C8"!. Em8.o=ed 9ROCE:H
This ratio is calculated by di%iding Net Profit by
2apital Fmployed or Net assets. This ratio is also showing a cyclical
trend o%er the years. This ratio for =887 is 1.:79.
+.%9"?:9d: Re!/7n on EG/"!=H
This ratio is a measure of profitability of e4uity
funds in%ested in the firm. !t is regarded as a %ery important measure
because it reflects the producti%ity of the ownership capital employed in
the firm. !t is calculated by di%iding net profit by net worth. This ratio
for the bank is showing a cyclical trend o%er the years. #@F during
=887 was 0.:19
,,
NPA analysis
T4.e +$ O?e7.. )e= R!"o# 1o7 S!!e Bn- o1 Ind" 9Go-/. Rod B7nc5:
17om 2;;% !o 2;;+
SL &ARTICULARS 2;;% 2;;* 2;;+

LIIUI(TY RATIOS
/ 2urrent #atio /7.=1 /1.71 /C.:=
= 'uick #atio /7.=1 /1.71 /C.:=.
B +i4uid Assets #atio /.8= /.:/ /
LEVERAGE RATIOS
/ (ebt> F4uity #atio /:.=19 /;.:79 =8.009
= (ebt to Assets #atio =.7:9 =.=79 B.1;9
B !nterest 2o%erage #atio /.0= /.00 =.80
TURNOVER RATIOS
/ ,i?ed Assets Turno%er 8.;7 8.00 /.8:
&ROFITABILITY
RATIOS
/ @perating .argin #atio =;.0;9 B=.=/9 =C.CC9
= Net Profit .argin #atio =.009 1.7=9 B.8/9
B #eturn on 2apital Fmployed 1.8=9 7.=/9 1.:79
1 #eturn on F4uity 0.7:9 /8.7=9 0.:19
,0
NPA analysis
+.* FINANCIAL RATIOS OF SBI 9COR&ORATE:$
T4.e ,$ F"nnc". R!"o#
B! B! "roup
!ndicators 8B>81 81>87 =88B>81 81>87
#eturn on A%erage Assets )9* 8.01 8.00 /.87 8.07
#eturn of F4uity )9* /;./0 /;./8 =8./: /:.C0
F?penses to !ncome )9* 10./; 1C.;B 1:.8C 1;.C=
)@perating F?penses to Total
Net
!ncome *
Farnings Per hare ) #s.* :0.01 ;/.C0 /87.80 /8B.;=
2apital Ade4uacy #atio ) 9 * /B.7B /=.17 /1.1B /B.8C
Tier ! ;.B1 ;.81 0.70 0./B
Tier !! 7./0 1.1/ 1.;1 B.01
Net NPAs to Net Ad%ances B.1; =.:7 =.CB =.=B
The @perating Profit of the Bank for =881>87
stood at R# 1;66;.%, 2r. as compared to R#. 6++%.*, 2r. in =88B>81,
recording a growth of 1+.;*J. $owe%er, if the profit on sale of
in%estment is e?cluded operating profit for =881>87 would be R#.
621+.;, crore as against #s. :1;8.88 crore in =88B>81 i.e. a growth of
*2.21J. The Bank has posted a Net Profit of R# *%;*.+2C7. ,or =881>
87 as compared to #s.B:;/.88 2r in =88B>81, registering a growth of
/:.019. The growth in profit in =881>87 has been achie%ed due to
increase in both Net !nterest !ncome and containment of operating
e?penses at a moderate le%el of ;.0C9 as against /:.18 9 in pre%ious
year. The performance indicators tables are as followsH
/. 2apital Ade4uacy #atio H
,3
NPA analysis
,1,/
.16-
,13.
51/-
,10.
.1./
0
2
.
6
,
/0
/2
/.
2003 200. 2005
Capital Adequacy Ratio
(eir II
(eir I
/315
/3153
/21.5
,igure no H1 2apital Ade4uacy #atio
The 2apital ade4uacy ratio of the bank is /=.179 as on B/.8B.=887 as
against /B.7B9 of pre%ious year. The ratio, arri%ed at on the basis of
guidelinesI directi%es issued by the #B!, comprisesH Tier ! capital is
;.819 and Tier !! capital 1.1/9
2. Re!/7n on A##e!# nd EG/"!=$
,6
NPA analysis
Return on Assets and Equity
01+5
01,
01,5
01-
01-5
/
2003 200. 2005
Ro2---3--Ro4
01,6
01-.
01--
/,105
/,1/-
/,1/
,igure no H7 #eturn on Assets and F4uity
The return on assets and e4uity ratio of the bank is 8.009 as on
B/.8B.=887 as against 8.019 of pre%ious year. The net increase of
8.879.
0;
NPA analysis
%. (e8o#"!# nd Ad?nce#$
Deposits and Adances
0
50000
/00000
/50000
200000
250000
300000
350000
.00000
200. 2005
!
R
s
"

C
r
o
r
e

#
)e$osit
2dvances
,igure no H: (eposits and Ad%ances
,rom the abo%e graph it could be obser%ed that the total deposits
balance as on B/.8B.=887 was #s.78:/87.=C cr which shows an
increment of #s.C8:C/.01 cr compared to the pre%ious year. @ut of this
increment the a%ings (eposit is maEor amount.
01
NPA analysis
*. B/#"ne## 8e7 Em8.o=ee$
/-0++
2/056
2.30,
0
5000
/0000
/5000
20000
25000
! Rs"$$$#
2003 200. 2005
Business per E%ployee
0eries/
,igure no HC Business per Fmployee
Bank had total staff strength of =877/7 as on the B/
st
.arch, =887. @f
this, =0.B=9 were officers, 17.:79 clerical staff and the remaining
=7.8B9 were sub>staff. !t is obser%ed that business per employee as on
B/.B.=887 is =1B8;, an increment of B=7= as compared to pre%ious year.
+. &7o1"! 8e7 Em8.o=ee$
02
NPA analysis
0
50
/00
/50
200
250
2003 200. 2005
&rofit per E%ployee
0eries/
/.+1,
/+616
/
20+15
,igure no H; Profit per Fmployee
0%
NPA analysis
,.Ne! &7o1"! o1 SBI nd SBI G7o/8 $
Net &rofit of SBI and State Bank 'roup
3/05
36,/
.305
./--
553/
5.6.
0
/000
2000
3000
.000
5000
6000
2002-03 2003-0. 200.-05
!
R
s
"
i
n

C
r
o
r
e
s
#
0BI
0B5
,igure noH0 Net Profit of B! and B! "roup
The Net profit of B! for =881>87 stood at #s. 1B87 crore as compared
to #s.B:;/ crore in =88B>81, recording a growth of /7.819. The growth
in profit has been achie%ed due to increase in Net !nterest !ncome and
containment of operating e?penses at a moderate le%el of ;.0C9 as
against /:.189 pre%ious year.

0*
NPA analysis
CHA&TER',
S@OT ANALYSIS
W@T analysis is a tool for auditing an
organization and its en%ironment. !t is the first stage of planning and
helps marketers to focus on key issues. W@T analysis is an effecti%e
way of analyzing the organization potential by identifying your strengths
- Weakness, - to e?amine the opportunities and threats, which may
affect the organization. 2arrying out an analysis using the W@T tool
will be enough to re%eal changes, which can be implemented easily, -
gain results.
STRENGTHS$
Technology is key strength, all branches will be fully networked,
and that makes bank a financial powerhouse.
The tate Bank of !ndia has the backing of a globally respected
brand, 1,B;= AT.s in !ndia, which is the largest AT. network
in the country. B! AT. card holder now has access to C,888
AT.s
tate Bank !ndia is one of the largest issuers of AT.>cum>(ebit
cards in the country with the card base touching C.CC million in
eptember =881.
tate Bank of !ndia stands one among the top bank in !ndia and is
ranked 1
#!
in the banks.
The tate Bank of !ndia is ha%ing well e?perienced, trained, most
dedicated and committed staff, which is %ery much necessary for
the banks.
tate Bank of !ndia pro%ides end>to>end banking solutions under
one roof. !t also pro%ides AAA )Anywhere Anytime Anyhow*
banking solution
0+
NPA analysis
@EA)NESSES$
!t takes into account the current financial position and do not
analyze the past financial records to a large e?tent for the sanction
of the loan.
This system is applicable to most of the segments like
Agriculture, 2-!, !, and B,. Which is its drawbackS Because
one single system could not be applicable to all the sectors. Fg.
,or B, more weightage has to be gi%en to the collaterals than
the !s.
Tedious procedures ha%e to be followed before ad%ancing loans
causing incon%enience to customers.
O&&ORTUNITIES$
The weightage
s can be reallocated to make the system better
The bank can optimize the growth opportunities arising out of
retail banking and small and medium enterprises.
"lobal aspirations of !ndian consumers and growing integration
with N#!s
!t can attract new customers through new schemes and lessening
the deposit amount on account opening.
0,
NPA analysis
THREATS$
!ncrease in NPAs
!f appraiser could not e%aluate !ndustry scenario properly
!f B!&s customer could not reco%er debts, they may go
bad. o, more emphasis has to be gi%en on ratios like
(ebtors Turno%er ratio, 2redit 2ollection Period etc.,
while appraising the proEect.
Bank is facing competition from its other Pri%ate Banks and e%en
the ,oreign Banks
2hanging economic policies of "o%t will ha%e impact on interest
rates and reser%e ratio maintained with # B !.
"lobalization has gi%en raise to many more complications such as
migration of human resource pool, resistance to change in
different Accounting tandards by its employees and maintenance
of accounts under different Accounting tandards.

00
NPA analysis
(ESIGN OF THE STU(Y
S!!emen! o1 &7o4.em
MAnalytical study on MAnalysis of Non Performing Assets )NPA*&
carried at tate Bank of !ndia "okul #oad, $ubli.
@bEecti%es of the studyH
Primary @bEecti%esH
The primary obEecti%es of the study is to understand the
whole gamut of Non Performing Assets.
econdary obEecti%esH
To analyze the total Non Perfoming Assets accounts and making
sector wise analysis.
To analyze the 4uantum of Non Performing Assets in %arious for
the last three years and to indentify the reasons for the same.
To identify and analyze amount locked at %arious assets
classified.
To find whether (#T is effecti%e.
03
NPA analysis
Sco8e o1 !5e S!/d=$
cope of the study co%ers the NPA analysis of the tate Bank of
!ndia "okul #oad, $ubli branch.
ector wise distribution of NPAs.
Re#e7c5 Me!5odo.o2=$
.ethodology adopted in%ol%ed an in depth inter%iew of
the persons connected with #eco%ery and NPA management at the
Branch le%el. Personal inter%iews were held with all the officers who
were sampling NPA manpower.
L"m"!!"on# o1 !5e S!/d=$
The study could be conducted to the e?tent the information is
pro%ided.
ome of the information was of confidential and was not
di%ulged for the study.
The study is limited only was NPAs analysis as time is the main
constraint.
The method of collection of data of NPAs and allotting asset
classification may be uni4ue to B!.
06
NPA analysis
CHA&TER'0
NON &ERFORMING ASSETS ANALYSIS
0.1 INTRO(UCTION$
The concept of Non Performing Assets )NPAs*
was introduced for the first time in the Narasimham 2ommittee report
that was tabled in Parliament on (ecember /C
th
/00/. The 2ommittee
studied the pre%ailing financial system, identified its shortcomings and
weaknesses and made %arious recommendations in order to make more
stable. @ne of the recommendations was with regard to non>performing
assets, their indentification, disclosure and the e?tent of pro%isioning for
the same. The need was felt because the pre%alent accounting and
disclosure practices did not always reflect the true state of affairs of
banks and financial institutions. The policy of income recognition
should be obEecti%e and based on record of reco%ery rather than on any
subEecti%e considerations. +ikewise, the classification of assets of Banks
has to be done on the basis of obEecti%e criteria which would ensure a
uniform and consistent application of the norms. Also, the pro%isioning
should be made on the basis of the classification of assets based on the
period for which the asset has remained non>performing and the
a%ailability of security and the realizable %alue thereof. N7#"m5m
Comm"!!ee #eport highlightsH
2apital ade4uacy to be increased from ;9 to /89.
Assets #econstruction 2ompanies to be set up to issue
bonds which would form part of Tier !! capital.
3;
NPA analysis
!ntroduction of income recognition norms of 08 days in
a phased manner. Pro%ision to be made for standard asset and the
period for sub standard asset to be reduced to / T years.
Banks should adopt strategic risk management
techni4ues lie %alue>at>risk on respect of balance sheet
items.
Actions to be undertaken on reducing e?penditure
through %alue at risk in respect of balance sheet items.
The maEor parameters for the Banks that seek to become
international players could be return on e4uity, return on assets
and employees, producti%ity measured not in terms of business
%olume but net profit.
!n%estment decisions should be taken by 2ommittee at
%arious le%els within the policy framed by the Bank.
Accurate and timely information for strategic decisions
identify and pro%ide profitable products to customers.
= or B larger Banks with !nternational orientation, ;>/8
National Banks and large numbers of +ocal Bank proposed.
.inimum shareholding of "o%t should be brought down
to BB9.
Training systems to address newer areas like product
de%elopment, marketing skills, modern credit management skills
and new internal audit skills.
Need for network of regional data warehouse and credit
information bureau.
Transfer of priority sector portfolio between high le%el
and lower le%el.
ingle integrated system of regulation and super%ision
co%ering Banks, ,!s and NB,2s.
31
NPA analysis
0.2 MEANING OF THE N&A
An asset is classified as Non>Performing Asset
)NPAs* when it ceases to generate income for the bank. As from B/
st
.arch =88:, a non performing Asset )NPA* shall be an ad%ance where
/.!nterest and I or instalment of principal remain No%erdue& for period of
more than 08 days in respect of a Term +oan.
=. The Account remains N out of order& for a period of more than 08
days, in respect of an @%erdraftI 2ash credit )@(I22*.
B. The bill remains No%erdue& for a period of more than 08 days in the
case of bills purchased and discounted.
1. Any amount to be recei%ed remain No%erdue& for a period of more
than 08 days in respect of other accounts.
7. A loan granted for short duration crops will be treated as NPA, if the
instalment of principal or interest thereon remains o%erdue for two crop
seasons and a loan granted for long duration crops will be treated as
NPA, if instalment of principal or interest thereon remains o%erdue for
one crop season.
:. An account would be classified as NPA only if the interest charged
during any 4uarter is not ser%iced fully within 08 days from the end of
the 4uarter.
.2(i) STANDARD MEANING
A tandard Asset is one which does not disclose
any problem and which does not carry more than normal risks attached
to the business. uch an asset is not an NPA.
32
NPA analysis
0.29"": IN(IAN ECONOMY AN( NON &ERFORMING
ASSETS$
@ne would be surprised to know that the Banks
and ,inancial !nstitutions in !ndia hold Non>Performing Assets worth
#s. /, /8,888 crores. Bankers ha%e realized that unless the le%el of
NPAs is reduced drastically, they will find it difficult to sur%i%e. The
core banking business is of mobilizing the deposits and utilizing it for
lending to industry. +ending business is generally encouraged because it
has the effect of funds being transferred from the system to producti%e
purposes which results into economic growth.
0.29""": KOUT OF OR(ERK STATUS$
An account should be treated as Aout of orderA if
the outstanding balance remains continuously in e?cess of the
sanctioned limitIdrawing power. !n cases where outstanding balance in
the principal operating account is less than the sanctioned limitIdrawing
power, but there are no credits continuously for si? months as on the
date of Bank&s Balance heet or credits are not enough to co%er the
interest debited during the same period, such accounts should be treated
as Nout of order&.
0.29"?: LOVER(UEF$
Any amount due to the bank under any credit
facility is Lo?e7d/eF if it is not paid on the due date fi?ed by the bank.
3%
NPA analysis
0.% INCOME RECOGNITION$
0.%9": INCOME RECOGNITION M &OLICY
The policy of income recognition has to be
obEecti%e and based on the record of reco%ery. !nternationally income
from non>performing assets )NPA* is not recognized on accrual basis
but is booked as income only when it is actually recei%ed. Therefore,
interest should not be charged and taken to income account on NPAs till
the accounts become standard assets e?cept where partial reco%ery of
interest is permissible as e?plained below. @%erdue interest in respect of
bills purchasedIdiscounted which are identified as NPAs should not be
taken to "ncome cco/n! /n.e## "! "# 7e."Hed.
$owe%er, interest on ad%ances against term deposits, N2s, !DPs,
LDPs and +ife !nsurance policies may be taken to income
account on the due date, if the outstandings are co%ered by
realizable %alue of securities.
,ees and commissions earned by the Banks as a result of re>
negotiations or rescheduling of outstanding debts should be
recognized on an accrual basis o%er the period of time co%ered by
the re>negotiated or rescheduled e?tension of credit.
!f "o%ernment guaranteed ad%ances become NPA, the interest on
such ad%ances should not be taken to income account unless the
interest has been realized.
3*
NPA analysis
0.%9II: REVERSAL OF INCOME$
!f any ad%ance, including bills purchased and
discounted, becomes NPA as at the close of any year, interest accrued
and credited to income account in the corresponding pre%ious year,
should be pro%ided for if the same is not realized. This will apply to
"o%ernment guaranteed accounts also.
0.%9III: A&&RO&RIATION OF RECOVERY IN N&A#
!nterest realized on NPAs may be taken to income
account pro%ided the credits in the accounts towards interest are not out
of freshI additional credit facilities sanctioned to the borrower
concerned. #B! guidelines state that, in the absence of a clear
agreement between the Bank and the borrower for the purpose of
appropriation of reco%eries in NPAs )i.e. towards principal or interest
due*, Banks should adopt an accounting principle and e?ercise the right
of appropriation of reco%eries in a uniform and consistent manner. The
Principal Accounting Policy of the Bank in this regard, is that interest
income on non>performing assets is recognized on realization basis, as
per #B! guidelines. ince the #B! has not issued specific guidelines in
the matter of appropriation of reco%ery and has left it to the indi%idual
banks, banks are re4uired to work out a prudent methodology for
appropriation of reco%eries.
3+
NPA analysis
0.* ASSET CLASSIFICATION$
0.*9": ASSET CLASSIFICATION TO BE BORRO@ER'
@ISE
Treatment of accounts under !#A2 norms should
be borrower>wise and not facility wise, i.e., different facilities granted to
a borrower cannot ha%e different asset classification. !n other words, if
a borrower enEoys se%eral facilities and one of them becomes non>
performing, all the other facilities too should be classified as NPAs. All
borrower accounts, irrespecti%e of their out standings are re4uired to be
classified as tandard Assets or Non>Performing Assets )NPAs*. NPAs
are re4uired to be classified further into the following three categories
based on the period for which the asset has remained non>performing
and the reliability of the duesH
a* tandard Assets
b* ub>standard Assets
c* (oubtful Assets
d* +oss Assets
0.*9":9: S!nd7d A##e!#
These are assets which are performing and do not
disclose any weaknesses and do not carry more than normal business
risk.
3,
NPA analysis
0.*9":94: S/4'#!nd7d A##e!#
Farlier, a sub>standard asset was one,
which was classified as NPA for a period
not e?ceeding two years. With effect
from B/
st
.arch =88/, a sub>standard
asset is one, which has remained N&A 1o7
8e7"od .e## !5n o7 eG/. !o 13
mon!5#. uch an asset will ha%e well
defined credit weaknesses that Eeopardise
the li4uidation of the debt and are
characterised by the distinct possibility
that the Bank will sustain some loss, if
deficiencies are not corrected.
0.*9":9c: (o/4!1/. A##e!#
Farlier, a doubtful asset was one, which
remained NPA for a period e?ceeding
two years. With effect from B/
st
.arch
=88/, an asset is to be classified as
doubtful, if it has remained N&A 1o7
8e7"od e>ceed"n2 13 mon!5#. A loan
classified as doubtful has all the
weaknesses inherent in assets that were
classified as sub>standard, with the added
characteristic that the weaknesses make
30
NPA analysis
collection or li4uidation in full, 6 on the
basis of currently known facts, conditions
and %alues 6 highly 4uestionable and
improbable.
0.*9":9d: Lo## A##e!#
A loss asset is one where loss has been
identified by the Bank or internal or
e?ternal auditors or the #B! inspection
but the amount has not been written off
wholly. !n other words, such an asset is
considered uncollectible and of such little
%alue that its continuance as a bankable
asset is not warranted although there may
be some sal%age or reco%ery %alue.
0.*9"": &OTENTIAL NON &ERFORMING ASSETS
Accounts delin4uent for two 4uarters or more as
at the end of any 4uarter during a financial year and in which cases, the
missed payments )interest andIor principal* are unlikely to be realized
before the end of the relati%e financial year. Accounts e?hibiting early
warning signals of potential credit risks. These will include transaction
related signals like persistent irregularity in accounts, defaults in
repayment obligations, de%ol%ement of +2 liabilitiesIin%ocation of
guarantees, operating losses, etc., and acti%ity related physical signals
like reEection of products, some of the machines lying idle, number of
shiftsIworkers decreasing, etc.
Accounts ad%ersely commented upon, from the
33
NPA analysis
standpoint of their 4uality, in the Branch&s !nspection - Audit #eport
and 2redit Audit #eport, by #B! !nspectorsItatutory Auditors. These
audit reports form an essential source of information for recognition and
management of NPAs. !n addition to the identification of NPAs through
the said system of 4uarterly classification of accounts, Branches should
also identify potentially non>performing loan accounts. Potential NPAs
would be accounts which throw up negati%e signals indicati%e of the
ad%ances turning into NPAs
0.+ EARLY @ARNING SIGNALS$
0.+9": FINANCIAL$
Persistent !rregularity in Account
(efaults in > #epayment @bligations
> Periodic !nterest
(e%ol%ement of +2 liabilitiesI!n%ocation of "uarantees
+ower credit summations in the account.
ales transactions not routed %ia 2ash 2redit account
36
NPA analysis
(eclining current ratio
@perating lossesInet losses
Frosion of TNW
@pening of accounts with other banks
0.+9"": O&ERATIONAL & &HYSICAL$
+ow acti%ity le%els > !n plant
!n Bank account
(isorderly di%ersificationIfre4uent changes in plans
@%erdue recei%ables
#eturn of outward bills unpaidIdishonored che4ues
+ow in%entory mo%ement
Non>payment of wagesIpower bills
,re4uent labour troubles
(eclining profitability
+oss of criticalIimportant customers
,re4uent return of finished goods
0.+9""": LOSS OF MAR)ET CRE(IT$
2ourt cases against the unit
!nability to raise supplies on usual credit terms
0.+9"?: ATTITU(INAL CHANGES$
A%oids contact with the Bank
6;
NPA analysis
NonI delayed submission of data and financials
,udging of financial statements )e.g. change in
accounting practices,
'ualifying remarks by the auditors etc.*
(issension amongst partnersIpromoters
0.+9?: OTHERS$
Ad%erse changes in go%ernment policies
Fmergence of new competitionItechnology
0., &ROBLEM LOAN REVIE@ AN( ACTION &LAN$
The e?ercise of undertaking periodic and on>
going identification of all NPAs and potential NPAs has been prescribed
to facilitate initiation of appropriate pre%enti%eIcorrecti%e steps in a
timely manner in respect of each identified problem loan account. As
such, once the problem loans 6 e?isting and potential NPAs > are
identified as detailed, Branches must take steps to analyze the problems
based on facts and circumstances of each case.
A detailed re%iew, as described in below, should
be carried out for this, and from such a Branch le%el re%iew, an
appropriate action plan for the concerned loan accounts should be
61
NPA analysis
de%eloped by the Branches. The findings from the re%iew and the
proposed action should be recorded in a #e%iew #eport, the format of
which is gi%en in Anne?ure>NPA>/. The report should be
submitted by the Branches to the controllers for the appro%al of the
proposed action plan.
0.,9": BRANCH LEVEL REVIE@ AN( RE&ORTING$
!mmediately following the
identification of an NPA and
potential NPA i.e., the problem loan,
Branches should conduct a re%iew of
the account to analyse the problems
and to structure an appropriate
remedial action with a %iew to
upgrading the loan asset to
performing status, reco%ering the
dues or pre%enting the asset from
becoming a non>performing loan.
,or the purpose of the re%iew, Branches should
carry out the following tasks in addition to other re4uired measures.
(iagnose reasons for the deterioration in asset 4ualityJ put the
unit under close monitoring.
Derify ade4uacy of cash accruals.
#e%alidate the assumptions made at the time of credit sanction,
particularly in regard to assessment of credit risk.
62
NPA analysis
,ormally bring to the notice of borrowerIguarantor)s* the
deterioration in asset 4uality, and call upon them to
regulariseIremedy the same.
Derify completeness and correctness of documentation, including
re%i%al position, creationIregistration of charges, insurance co%er
and rectify deficiencies, if any.
F%aluate the collateral for li4uidity, marketability and %alueJ
attempt to impro%e the Bank&s collateral position.
!dentify and study primary and secondary sources of repayment
and e%aluate their ade4uacyH the opportunity will be used to detect
any assets of the promoterIguarantors which ha%e not been taken
into account while compiling opinion reports in the initial stage.
@btain realistic and time bound commitment from the
borrowerIguarantor)s* to initiate suitable steps to arrest the
deterioration in the loan 4uality.
(etermine the correcti%e course of
action re4uired to upgradeIreco%er
the loan, after a dialogue with the
borrower
0.0 IM&LEMENTATION OF ACTION &LAN &
&ROGRESS RE&ORT$
Branches should implement the action plan in line
with the directions recei%ed from the controllers and submit to the
6%
NPA analysis
controller&s periodic reports on the progress made in this regard. The
format of the Progress #eport is gi%en in Anne?ure>NPA>=.
BKs in the 2orporate Banking "roup should
bring all large %alue problem loans under the re%iewIreport procedure
detailed abo%e. The BKs should submit the #e%iew #eports on these
problem loans to the "roup F?ecuti%e, 2orporate Banking "roup,
followed by indi%idual Progress #eports e%ery month. The Progress
#eports should be submitted by branches at monthly inter%als for all
large %alue problem loan accounts. $owe%er in respect of suit filed
accounts and ad%ances earlier compromised and awaiting payment, the
Progress #eports need be submitted only at 4uarterly inter%als.
In!ivi!ual progress reports on Revie& '( )erio!icit(
#a$* #'$+
Problem loans with ,B limits I
outstandings of #s./ crore -
abo%e in 2ommercial Network
"eneral .anager
)2B*
'uarterly .onthly
Problem loans with ,B limitsI
outstandings of #s./ crore -
abo%e in #etail Network
"eneral .anager
)(-PB*
'uarterly .onthly
Problem loans with ,B limitsI
outstandings of #s.7 crore -
abo%e in both the Networks.
2ircle 2redit
2ommittee
'uarterly 'uarterly
N1o7 #/"! 1".ed cco/n!# nd d?nce# e7."e7 com87om"#ed.
O1o7 .. o!5e7 cco/n!#.
0.3 TIME NORMSH
To ensure that decisions in the management of
NPAs are arri%ed at without delay, the re%iew and reporting process
should be completed as per the time norms stipulated belowH
6*
NPA analysis
The Branch le%el re%iew of indi%idual large %alue problem loans
and submission of related #e%iew #eports should be carried out
by the branches within two months of identification of the
account.
Within one month thereafter, the controllers should, as applicable,
con%ey either their appro%al for the action plan, or arrange for a
reference to the sanctioning authority. The ultimate obEecti%e of
the process is that within six months after identification of a large
%alue problem loan, a sanctionedI appro%ed plan of correcti%e
action is put in place for implementation.
0.6 &ROVISIONING NORMS$
6+
NPA analysis
The primary responsibility for making ade4uate
pro%isions for any diminution in the %alue of loan assets, in%estment or
other assets is that of the Bank management and the statutory auditors.
The assessment made by the inspecting officer of the #B! is furnished to
the Bank to assist the Bank management and the statutory auditors in
taking a decision in regard to making ade4uate and necessary pro%isions
in terms of prudential guidelines. !n conformity with the prudential
norms, pro%isions should be made on the non>performing assets on the
basis of classification of assets into prescribed categories as prescribed
by #B! guidelines.. Taking into account the time lag between an
accounts becoming doubtful of reco%ery, its recognition as such, the
realization of the security and the erosion o%er time in the %alue of
security charged to the Bank, pro%ision should be made against sub>
standard assets, doubtful assets and loss assets as belowH )While
arri%ing at the pro%ision, balances in )i* !nterest Not 2ollected Account
)ii* !nterest uspense Account if any and )iii* Knrealized !nterest of the
Pre%ious Gear, should be deducted from the outstandings in the
borrowal account, and pro%ision as per the percentages indicated below*
0.69": LOSS ASSETS$
/88 percent of the outstanding should be
pro%ided for.
0.69"": (OUBTFUL ASSETS
6,
NPA analysis
/88 percent of the unsecured portion, i.e., /88 9
of the e?tent to which the ad%ance is not co%ered by the realizable %alue
of the security to which the bank has a %alid recourse and the realizable
%alue is estimated on a realistic basis. Net worth of borrowerIguarantor
should not be taken for arri%ing at secured portion !n regard to the
secured portionJ pro%ision should be made on the following basis, at the
rates ranging from =8 percent to 78 percent of the secured portion
depending upon the period for which the asset has remained doubtfulH
&e7"od 1o7 B5"c5 !5e d?nce 5#
4een con#"de7ed # do/4!1/.
&7o?"#"on 7eG/"7emen! 9J:
Kp to one year =8
@ne to three years B8
.ore than three years 78
As per RBI 2/"de."ne#, in case of
N&A with balance of #s + c7o7e and
4o?e,
tock audit at annual inter%als by an e?ternal agency appointed as
per the guidelines appro%ed by the Board, would be mandatory.
2ollaterals such as immo%able properties charged in fa%our of the
bank should be got %alued once in B years by %aluers appointed as
per the guidelines appro%ed by the Board of (irectors.
60
NPA analysis
0.69""": SUB'STAN(AR( ASSETS
A general pro%ision of /8 percent on
total outstanding should be made
without making any allowance for
(!2"2IF2"2 guarantee co%er and
securities a%ailable.
0.1; &REREIUISITES TO CONTROLLING N&A $
/. "o%ernance H
!ndependent o%ersight board with clear mandate.
(efined and transparent procedures
!mpro%ed reporting standards
=. "reater focus on restructuring H
The 4uality and speed of asset resolution is key
Taking ownership of NPAs and proacti%e management
Working with debtors to impro%e cash>flow of assets
underlying NPAs.
B. "reater powers and institutional capabilities H
,or e?ample, power to seperate bad management from the
debtor and to li4uidate debtors, which cannot be
e?peditiously restructured
Training, knowledge transfer
1. !ncenti%es and disciplines for Banks H
Fnhanced accountability of Banks and Bank managers
Fnsure banks put in place risk analysis and credit
management systems
Kltimate burden not transferable to A.2s
7. "reater protection of creditor rights H
63
NPA analysis
2redible li4uidation procedures and efficient secured
transaction processes
Triggers and incenti%es for insol%ency
trong and 2redible regulators, free from political pressure
0.11 LEGAL &ROCEE(INGS FOR RECOVERY OF
(UES$
0.119": LEGAL NOTICESH
Notices calling back the entire dues, failing
which legal action will be taken, can be sent by the Branch .anager on
behalf of the Bank up to #s.=7888I>, as per the standard format laid
down by the Bank. ,or amounts e?ceeding #s.=7888, the assistance of
the Bank&s +aw @fficer through the 2ontrolling Authority may be
sought, if need be, before ser%ing a legal notice.
0.12 (EBT RECOVERY TRIBUNALS$
The committee on ,inancial ystem )2,*
headed by hri .. Narasimham had recommended the setting up of
special tribunals for speedy realization of dues of credit institutions.
2onse4uently, the #eco%ery of (ebts (ue to Banks and ,inancial
66
NPA analysis
institutions Acts, /0BB was enacted on =C.8;./00B to pro%ide for the
establishment of Tribunals for F?peditious adEudication and reco%ery of
debts )#s /8 lacs and abo%e* due to the Banks and the ,inancial
!nstitutions and for matters connected there with or incidental thereto.
o as per the pro%isions of the Act, (ebts #eco%ery Tribunals )(#Ts*
and one (ebts #eco%ery Appellate Tribunal )(#AT* all o%er the
country were established. ubse4uently /= more (#Ts and more
(#ATs were established. The ,inance .inister has announced the
proposed establishment of a further C new (#Ts. (#Ts ha%e been
working for more than 7 years under the stay order granted by the $on
Nsupreme court.
HIGHLIGHTS OF THE ACT$
The act for e?peditious reco%ery of debts due to Banks and ,!s.
!t is en%isaged to make endea%ors for disposal of cases within :
months.
The act does not apply to state le%el ,inancial !nstitutions.
The act does not repeal any e?isting +aw.
Act pro%ides for establishment of (#T and (#AT ) Appellate
Tribunal*
,irst appeal of the orders passed by (#T will be before (#AT
and appeal of the orders passed by (#AT will be before high
court.
2ases can be field only by banks and financial institutions.
2ases in%ol%ing dues of #s /8 lacs and abo%e only will be
decided by (#T at present.
At least C79 of the debt due as determined by the (#T has to be
deposited with (#AT by the defendant while making an appeal.
1;;
NPA analysis
All cases pending before any court with suit claim of #s /8 lacs
and abo%e shall stand transferred to (#T on or from the
appointed date of the Tribunal.
The act has o%er riding effect.
The act applies to whole of !ndia e?cept <-L state.
NThe #eco%ery of (ebts due to Banks and
,inancial !nstitutions Act,/00B& pro%ides for the establishment of (ebt
#eco%ery Tribunals )(#Ts* at different centres to e?pedite adEudication
and reco%ery of debts due to the Banks and ,inancial !nstitutions. The
Act will not apply where amount of debt due to any bank or financial
institution or to a consortium of Banks or ,inancial !nstitutions is less
than #s./8 lacs or such other amount, being not less than #s./ lacs, as
the 2entral "o%ernment may, by notification, specify.
The (#T shall deal with the matter e?peditiously
and endea%our to dispose of the application finally within si? months
from the date of receipt of application. All reco%ery suits or other
proceedings of the nature and 4uantum co%ered by the Act pending
before any court immediately before the date of establishment of the
Tribunal shall be transferred to the Tribunal on the date of
establishment. Branches must take re4uired steps to e?peditiously file all
eligible cases with (#Ts and monitor progress thereof in accordance
with the laid down instructions. ,or instructions on monitoring of suit
filed cases, please refer to paragraph 0 abo%e. (#T cells, to strengthen
follow>up of (#T cases, ha%e been set up at +ocal $ead @ffices.
Branches should take the assistance of these cells, where re4uired, in
filing the cases and in achie%ing speedy resolution thereof.
0.1% STE&S TA)EN BY THE BAN) TO RE(UCE
N&A# $
1;1
NPA analysis
Fnhance technology platform > multi deli%ery channels, %irtual
merger.
#eduction of Total NPAs by =9.
Bank is planning to go for securitisation of huge transaction
accounts.
+ow cost funding, #e>pricing of liabilities.
!nterestensi%e follow up with Ado%catesI 2i%il courtsI (#Ts for
speedy disposal of cases.
@fficials from %arious offices %isit borrowersI branches for
discussionsI re%iew of NPAs.
,ocus on #etail, infrastructure and growth oriented industries
+iberal policy adopted for compromise in account with balances
below 78,888 and those that are more than /8 years old.
#isk management systems put in place.
+oan re%iew department for monitoring assets.
Borrowers being called to the corporate office to meet the Top
management for speedy decisions on compromises.
.
CHA&TER'3
(ATA ANALYSIS AN( INTER&RETATION OF
THE STU(Y$
The data collected from the Bank is analyzed
here. 2omparison is made for the last year few years. ,or the sake of
clear understanding all the assets are arranged in tabular form.
1;2
NPA analysis
3.1 SUBSTAN(AR( ASSETS$
T4.e 0$ Se2men!"#e C.##"1"c!"on o1 A##e!# o1 L#! 2 Ye7#
2;;* 2;;+ 2;;, To!.9R#:
SSI =1;;: NA 2*33,
SBF /C:1/0 ==;1=: NA *;*3*+
&ER C;:= ==CC178 223+%12
To!.9R#: 2;61,, 2+;+30, NA 201+;*%
1;%
NPA analysis
0
/000000
2000000
3000000
.000000
5000000
6000000
+000000
00I 0BF
2003 200. 2005
F"2/7e 1;$ S/4#!nd7d A##e!#
INTER&RETATION$
The figures and table show e%en more
satisfactory results. $ere find that only two sectors are grown that are
! - B,. There is a small rate of decrease in the B, sector in the
year =887. But when compared with the =88B it is in the positi%e. There
has been positi%e growth in ! sector in =887 while comparing with the
year =88B. !n mall cale !ndustry ector /C.719 growth is there and in
mall Business ,inance ector 71.:C9 is there.
3.2 (OUBTFUL ASSETS
T4.e 3$ (o/4!1/. A##e!# o1 L#! % Ye7#
2;;% 2;;* To!.9R#:
SSI /8880: 8 1;;;6,
SBF 7/1;8 8 +1*3;
&ER B;01/0: C;0.8: %36*63+
To!.9R#: *;*+002 036 *;*,+,1
1;*
NPA analysis
F"2/7e 11$ (o/4!1/. A##e!#
INTER&RETATION$
The figures and table show that doubtful assets
are found in only in mall cale !ndustry ector, mall Business
,inance ector - PF# sectors. There has been o%erall decrease in the all
sectors. The figures re%eal a satisfactory picture. But in the year =88B
only in PF# sector has the highest growth of (oubtful Assets. !n the
year =887 no sector has (oubtful Assets.
3.% LOSS ASSETS$
T4.e 6$ Lo## A##e!# o1 L#! % Ye7#
2;;% 2;;* 2;;+ To!.9R#:
SSI NA =/B/8B7 =/CB71 NA
SBF /=B=/0 =0/07B B/7;B/ 0%1;;%
0
500000
/000000
/500000
2000000
2500000
3000000
3500000
.000000
00I 0BF 64R
2003 200.
1;+
NPA analysis
&ER NA =17;;8C 7BB/;: NA
To!.9R#: NA *33106* 1;,,%01 NA
0
500000
/000000
/500000
2000000
2500000
00I 0BF 64R
200. 2005
F"2/7e 12$ Lo## A##e!#
INTER&RETATION$
The figures and table shows that +oss assets are
there in mall cale !ndustry ector - mall Business ,inance ector,
PF#. !n the year =881 all three sectors had some +oss assets. But in the
year =887 it is found that the +oss assets ha%e increase in some sector
and decreased in some other sector.
3.* OVER ALL &ERFORMANCE$
T4.e 1;$ O?e7 A.. &e71o7mnce
&7!"c/.7# 2;;% 2;;* 2;;+ TOTAL9R#:
S/4#!nd7d
A##e!# 7;0;017 ;87C1CB ;17C;08 22*1*%;3
1;,
NPA analysis
(o/4!1/. A##e!# 1817CC= C;0 8 *;*,+,1
Lo## A##e!# NA 1;;/C01 /8::BC= NA
TOTAL9R#: NA 126*;;+0 6+2*2,2 NA
0
/000000
2000000
3000000
.000000
5000000
6000000
+000000
,000000
-000000
200. 2005
0!*standard 2ssets )o!*tf! 2ssets 7oss 2ssets
F"2/7e 1%$ O?e7 A.. &e71o7mnce o1 A.. Sec!o7#
INTER&RETATION$
!n abo%e table and figures show that ub tandard
Assets are more dominant in the past three years - (oubtful Assets are
declined, +oss assets ha%e decreased in the last year. "rowth of the ub
tandard Assets from =88B to =887 is 1B.719.
3.+ SECTOR @ISE ANALYSIS$
3.+9": SMALL SCALE IN(USTRIES$
1;0
NPA analysis
T4.e 11$ Sm.. Sc.e Ind/#!7"e#
($$) ($$* ($$+ ,otal
S/4#!nd7d A##e!# 200.+.- 2.,,6 22,.26 +-(*.$/
Doubtful Assets /000-6 0 23330 .$$$-/
0oss Assets 0 0 0 /$(*($(
,otal (.$/1*1 )/-+22$ (+2+-1+ 1)21/$)
0
500000
/000000
/500000
2000000
2500000
2003 200. 2005
F"2/7e 1*$ Sm.. Sc.e Ind/#!7"e#
INTER&RETATION$
!n the mall cale !ndustry figure shows decrease
in the categories of the Non Performing Assets. There has been a
decrease in the total amount locked in this sector.
3.+9"": SMALL BUSINESS FINANCES$
1;3
NPA analysis
T4.e 12$ Sm.. B/#"ne## F"nnce#
($$) ($$* ($$+ ,otal
S/4#!nd7d A##e!# 3,-./-6 6.-.+.2 6/0/265 ./*-$($)
Doubtful Assets 5/.,0 0 0 +.*1$
0oss Assets /232/- 2-/-53 3/5,3/ 2).$$)
,otal *$2$1-1 /211/-- /*.-.$. .2(2(/1/
0
/000000
2000000
3000000
.000000
5000000
6000000
+000000
2003 200. 2005
F"2/7e 1+$ Sm.. B/#"ne## F"nnce#
INTER&RETATION$
The abo%e graph shows that in the mall
business firms Non Performing Assets ha%e decreased in the last two
years. The rate has decreased to C=.7=9 in the year =887.
3.+9""": &ERSONAL BAN)ING SECTOR$
T4.e 1%$ &e7#on. Bn-"n2 Sec!o7
($$) ($$* ($$+ ,otal
1;6
NPA analysis
S/4#!nd7d A##e!# N2 N2 N2 NA
Doubtful Assets 3,-./-6 +,- 0 )1-*-1+
0oss Assets N2 2.5,,0+ 533/3,6 NA
,otal NA NA NA
INTER&RETATION$
The figures can not be showed because of non
a%iability of information. The abo%e table shows that in the Personal
banking sector Non Performing Assets ha%e increased in the last two
year in loss Assets.
3., COMBINE( &ICTURE OF ALL THE THREE
SECTOR ANALYSIS$
11;
NPA analysis
33%
6+%
0#a scae Ind!stries 0#a B!siness Finances
F"2/7e 1,$ A.. Sec!o7 An.=#"#
INTER&RETATION$
!n the abo%e graph shows that Personal banking
sector dominated with :C9 of co%erage. And B, sector dominated
with BB9 in the last three years.

111
NPA analysis
3.0 RECOVERIES$
T4.e 1*$ Reco?e7"e# O1 T5e L#! % Ye7#
2;;%
RECOVERIES
@7"!e
O11
U8
27d!"on To!.
S/4#!nd7d A##e!# =8/7:/C 8
BB7C;78.0
= +%0%*,3
(o/4!1/. A##e!# :C;0= 8 7707==.1 ,20*1+
To!.# 2;3%+1; ;
%610%0%.%
2 ,;;;33%
2;;*
RECOVERIES
@7"!e
O11
U8
27d!"on To!.
S/4#!nd7d A##e!# C8888 8 //770;B 122+63%
(o/4!1/. A##e!# C:; 8 0,3
Lo## A##e!# /88888 ; 1;;;;;
To!.# 10;0,3 0 11++63% 1%2,0+1
2;;+
RECOVERIES
@7"!e
O11
U827d!"o
n To!.
S/4#!nd7d A##e!# =B1=17 8 08;B7.B; %2+;3;
Lo## A##e!# /8B;7B.B; 8 1;%3+%
To!.# %%3;63.%3 ; 6;3%+.%3 *236%*
112
NPA analysis
0
/000000
2000000
3000000
.000000
5000000
6000000
+000000
Recoveries
2003 200. 2005
F"2/7e 10$ Reco?e7"e#
INTER&RETATION$
The abo%e chart shows that in the year =88B
reco%eries are more and in the year =881 reco%eries are %ery less. !n the
last year =887 reco%eries are higher than that of =881. #eco%eries ha%e
decreased B0.=79 in the year =887.
11%
NPA analysis
3.3 NON &ERFORMING ASSETS MOVEMENTS
The table shows the mo%ement of Non
Performing Assets throughout the year. $ence the data of three pre%ious
years has been analyzed for finding out the mo%ements of Non
Performing Assets.
T4.e 1+$ Non &e71o7m"n2 A##e!# Mo?emen!# 9In Lc-#:
2;;%';* 2;;*';+
Non &e71o7m"n2 A##e!# # on 87e?"o/# =e7 2;21% 1+662
)Q* transferred from other branches 0 0
)Q* fresh Non Performing Assets added during the
period /=7/: /3+3/
)>* transferred to other branches 0 0
)>* reduction due to reco%eries 7=01 78:C
)>* reduction due to up gradation B0/C //B:8
)>* reduction due to write off C7=: B010
Ne! Non &e71o7m"n2 A##e!# # on c/77en! =e7 1+662 6%*0
INTER&RETATION$
The mo%ement of Non Performing Assets tables
shows that there is decrease in Non Performing Assets from #s /700=
lacs in the year =88B>81 to #s 0B1Clacs during the year =881>87.
11*
NPA analysis
3.6 NON &ERFORMING ASSETS$
T4.e 1,$ L#! % Ye7# Non &e71o7m"n2 A##e!#
2;;% 2;;* 2;;+
Non Performing
Assets )in lacs* =8B.B; /70.0= 0B.1C
Non 6erfor#in" 2ssets
0
50
/00
/50
200
250
2003 200. 2005
F"2/7e 13$ Non &e71o7m"n2 A##e!#
INTER&RETATION$
!n this ,igure shows that Non Performing Assets
are decreasing year after year. Then this study states that the
performance of the tate Bank of !ndia )"okul Branch* is good in
reducing Non Performing Assets.
11+
NPA analysis
3.1; NET NON &ERFORMING ASSETS$
T4.e 10$ Ne! Non &e71o7m"n2 A##e!#
2;;% 2;;* 2;;+
Non Performing
Assets in 9
:.//9 B.;B9 B.B19
INTER&RETATION$
,rom the abo%e table shows that Net NPA to
Total Assets has been decreasing o%er the years and this indicates that
the Bank is continuously trying to reduce its NPAs position. !t is
calculated with the total ad%ances of the year.

11,
NPA analysis
CHA&TER'6
FIN(INGS
!n this report an effort is made to understand the
process of Non Performing Assets analysis at tate Bank of !ndia
)"okul #oad Branch*. The study indicates that loan re%iew process
in%ol%es both 4ualitati%e and 4uantitati%e analysis. $owe%er, the degree
and importance of this %aries across different trategic Business Knits
)BKs* depending on the form of the organization, amount of e?posure,
client&s pre%ious e?perience with the Bank, past track record etc.
,ollowing are #ome 1"nd"n2#
The result about the repayment by the customer was trickyJ it
means repayment differs according to the type of the loan. There
is a good track of the %ehicle loans etc. @n the other side the
repayment is a%erage in the case of shopkeepers, mall cale
!ndustry etc.
Business failures, customer unwillingness to repay were the
maEority of the responses which made the customer not to repay.
About =/9 of the respondents re%ealed that "o%t policies were
also reasons for account becoming Non Performing Assets.
Branches feel that (#T is not effecti%e in its functioning. The
a%erage time taken by (#T is around si? months to a year and
e%en more than a year in some cases.
.ost of the respondents agreed that their reco%ery team is more
effecti%e than any other mode of reco%ery. ome officers fa%our
reco%ery through outside agencies.
110
NPA analysis
,re4uency of %isit to customers place by the officers of the
Branch is once in a month.
The repayment of the most of the corporate customers is good.
)i.e. the repayments made after follow up*
FIN(INGS FROM THE OFFICE (ATA ANLYSIS$
The gross Non Performing Assets of the Bank at end of the march
=887 is #s 0B.1Clacs. The net degrease in the aggregate gross Non
Performing Assets le%el o%er that of .arch =88B is to tune of
#s /80.0/lacs.
The Bank percentage of the net Non Performing Assets to total
ad%ances has comedown to :.//9 as on march =88B to B.B19 as
on march =887.
The performance of reco%ery of the +oss assets in the last B years
is 4uite satisfactory.
Branch has been effecti%e in making reco%ery. !t is nearer to the
target in all the past four years.
(#Ts are looking into bigger companies with liability of #s./8
lacs and abo%e. But a large sum is reco%erable from smaller
companies with a liability of less than #s./8 lacs which are now
outside the pur%iew of the (#Ts.
(#T is not so effecti%e. Branch refers only some cases to (#T
out of the total Non Performing Assets and the a%erage time taken
by (#T to gi%e a decree is about : months to a year and in some
cases it is abo%e one year.
The causes for the Non Performing Assets are many. But
according to the respondents the main reasons were
113
NPA analysis
2orruption
<udicial system flaws
Non e?istent fear of penalties
!nefficient credit appraisal systems
+ack of technology, methodology and data
support for scientific credit appraisal
2ustomer&s unwillingness.
Business failure. Ftc

116
NPA analysis
CHA&TER'1;
RECOMMEN(ATIONS
!n order to keep up the tempo in reco%ery. Branch office can draw the
following action plans to achie%e this stupendous taskH
The maEor thrust should be gi%en on #eco%ery of hardcore Non
Performing Assets by way of compromise settlement. Branch has
already taken steps for arranging more reco%ery meetsI reco%ery
camps which will accelerate cash reco%ery. #esponse from the
Branch as well as of the borrowers to reco%ery camps has been
considerably encouraging during the pre%ious year. Branch office
has shown e?cellent performance under cash reco%ery mainly due
to intensi%e reco%ery camps.
A study of the Non Performing Assets position of the Branch
office during the last = to B years indicates that the main cause for
increasing trend in the le%el is fresh accretions to Non Performing
Assets which has more than neutralized the reco%ery. Therefore
further increase in Non Performing Assets could be checked if the
fresh inflow to Non Performing Assets is contained. !n this
connection Branch has to make another category for close follow
up. As a result of intensi%e follow up, Branch could restrict the
inflow to a certain e?tent during the second half year.
12;
NPA analysis
!t is important that Bank reco%ery tribunals should be presided
o%er by Eudges with sufficient knowledge of Banking and
,inancial matters. !n reality, this may not happen.
The Bank needs an integral organisation restructuring to face the
internal factors affecting the increase in Non Performing Assets
le%el, use of information technology for better credit
administration.
etting up credit in%estigation and information agency. Timely
report of the borrowers& acti%ities should be prepared and
updated. This report should be prepared by well 4ualified
personnel. The report should incorporate all the possibilities of an
account becoming sticky. !f there arises some sighs of default,
rigorous follow up should be made. .onthly schedule for the
Branch .anager in consultation with their reco%ery team.
.anagement of the Non Performing Assets is a gigantic problem
calling for multi>dimensional strategy. Bank has to display
professionalism and scientific temperament in appraisalJ
monitoring and super%ision of loan accounts, ystems o%erload
and fragmented nature of super%isory functions in the Public
sector Bank really hamper the reco%ery efforts.
C@e do no! 1e7 !o ne2o!"!e, 4/! Be do no! ne2o!"!e o/! o1
1e7D #o goes a wise saying. Banks appear to be forced to
negotiate with willful defaulters more out of fear of non>
reco%ery. The argument in fa%or, of these negotiated settlements
is that the present discounted %alue of future )uncertain* cash
flows may be less than what is e?pected to be recei%ed under such
settlements. T5"# m= 4e 2ood m!5em!"c# 4/! ?e7= 4d
4n-"n2. !n the long run, banks will find to their dismay that the
Mone line settlement 4ueue5 lengthening e%ery year. $owe%er one
121
NPA analysis
time settlements are perfectly fair practices, with regard to honest
borrowers whose units are no longer %iable. The Branch may
definitely pursue in such cases as result from (#T are far from
satisfactory.
CHA&TER'11
BIBLIOGRA&HY
BOO)S REFERRE(
/. Prasanna 2handra, Financial Management, )Fdition 7
th
, :
th
reprint*,Tata .c"raw $ill
=. (ebasish BenerEee, /00=, !isis o" #an$ing Secto!%
Recommen&ation o" Na!simham ommittee, Dol B7, No./8,
pg/8.
B. <ose L.", .ar /, =88=, Non 'e!"o!ming Assets
Management, Dol 18, Pg /=>/:.
1. Nair Balachandran L.L, No% /7, /000, #an$s an& Non
'e!"o!ming Assets, Dol B;, Pg /1>/:.
7. Gardi Prabhu, Banker&s "uide, .ar =881, Non>Performing
Ad%ances.
:.
@EB SITES
www.sbionline.com
www.google.com
!nternal circulars of B!
MAGPINES AN( AOURNALS
2irculars of the Branch.
122
NPA analysis
Annual #eports of tate Bank of !ndia )"okul #oad
Branch*.

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INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH,HUBLI.

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH,HUBLI.

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH,HUBLI.

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH,HUBLI.

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH,HUBLI.

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH,HUBLI.

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH,HUBLI.

INSTITUTE OF BUSINESS MANAGEMENT & RESEARCH,HUBLI.

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