Vinay Full Final Project

K.L.E.
COLLEGE OF ENGINEERING AND TECHNOLOGY, BELGAUM

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This project has been undertaken in State Bank of India, which highlights the detail study of
Non-performing assets management.
The objective of this project is to get the good knowledge about banking and NPA management.
This project is divided into 2 parts:
Part A deals with history of bank
Part B deals with introduction to NPA, RBI guidelines
Part A gives detail information about banking industry, objectives which helps to know about
the bank in detail.
Part B helps to know about the introduction to NPA, what and how the NPA is ascertained.

1. To identify the nature of the problem in NPAs.

2. To minimize the amount of provision required for NPA.

3. To study the amount of NPA under different segments over the years.

4. To analyze the reasons associated with the underperformance of all the sectors.

SBI is the leading bank among all nationalized banks having largest banking network in the
country. Since this branch comprises of Personal, Retail and Commercial banking under one
roof, there is a wider scope for the study NPA management in the main branch, which consists
variety of advances in all the fields. There are many chances of advances getting NPA in many
shapes. In this project, an attempt is made to understand the process and nature of NPA
management methods in SBI, RBI guidelines and NPA trend in SBI.
EXECUTIVE SUMMARY
Objectives of the study
SCOPE OF STUDY

K.L.E.COLLEGE OF ENGINEERING AND TECHNOLOGY, BELGAUM
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Sources of Data collection:
1. Primary Data: The project report of this kind will really need first hand information which
will be collected by referring some Bank Statements and collected through the interaction with
Senior Managers and Bank Staffs
2. Secondary Data: Some Banking booklets and Banking prospectus have been used as a
reference for the study and companys websites.

Shortage of time:
Time is very short for research, so that is very difficult can get the knowledge about
everything.
Information not sufficiently available:
The source of data collection is secondary so the information available is not sufficient.
No direct source of information available:
The information is collected from indirect sources so in some information data is not
available.
Secondary data:
Information is not reliable because of secondary data

METHODOLOGY
Limitations of the study

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Human being is always in need of money for his survival either for his personal use or for
business purpose, so, it is always not possible for him to arrange money from his own sources.
On that time, he seeks to borrow from banks, co-operative society, pawn broker etc, among all
these sources he prefers to borrow from banks as the consideration of availability of funds,
terms and conditions.

The word bank is derived from the word baneus or banque from the French language which
is known as bench as banking in the earlier days was done by sitting on the bench. The history
of banking can be traced to Europe from the middle ages. Earlier banking was limited to the
exchange of money.

According to some others the name bank is derived from the German word bank which means
a joint stock fund or common funds sources from the public to finance the media. On account
of the multi various activities of the modern banks it has been found very difficult to define
exactly the word bank. However various attempts have been made to define the term banking,
bank and essential characteristics of bankers.

Banking activities were sufficiently important in Babylonia in the second millennium B.C. that
written standards of practice were considered necessary. These standards were part of the Code
of Hammurabi the earliest known formal laws. Obviously, these primitive banking transactions
were very different in many ways to their modern-day counterparts. Deposits were not of
money but of cattle, grain or other crops and eventually precious metals. Nevertheless, some of
the basic concepts underlying todays banking system were present in these ancient
arrangements, however. A wide range of deposits was accepted, loans were made, and
borrowers paid interest to lenders.

A BRIEF HISTORY OF BANKING

INDUSTRY PROFILE

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Similar banking type arrangements could also be found in ancient Egypt. These arrangements
stemmed from the requirement that grain harvests be stored in centralized state warehouses.
Depositors could use written orders for the withdrawal of a certain quantity of grain as a means
of payment. This system worked so well that it continued to exist even after private banks
dealing in coinage and precious metals were established

The modern-day banking activities can be traced to the practices in the Medieval Italian cities of
Florence, Venice and Genoa. The Italian bankers made loans to princes, to finance wars and
their lavish lifestyles, and to merchants engaged in international trade. In fact, these early
banks tended to be set up by trading families as a part of their more general business
activities. The Bardi and Peruzzi families were dominant in Florence in the 14th century and
established branches in other parts of Europe to facilitate their trading activities, both these
banks extended substantial loans to Edward III of England to finance the 100 years war against
France. But Edward defaulted, and the banks failed.

The primary functions of the banker are to accept the deposits from the persons who have
surplus money and lending the same to the needy persons. The deposits are accepted at the
lower rate of interest and lended at the higher rate of interest. Difference in interest rate would
be the case of profit or expenses for the banks.
Day to day with the emergence of the new banks and due to the severe competition the banks
were not able to earn the profits and maintain their profit margin with their primary functions of
accepting the deposits and lending the loans.
In order to keep the profit percentage high the banks started giving the auxiliary or subsidiary
services to its customers besides the basic functions of deposits and lending.
These subsidiary services such as remitting the money from one place to another, offering the
facility of safe deposit lockers, accepting the articles for safe custody, exchange of currency etc.
For providing such services the banks were charging nominal fees from the customers and the
customers were happy to pay the fees and utilize such services as both the creation and the risk
of such transactions were passed on to the bankers.
CHARACTERSTICS AND IMPORTANCE OF BANKING

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The development of modern banking in India started with the banking activities which were
undertaken by the English agency houses at Calcutta and Bombay which combined banking
with trading. The earliest bank on the western line was established at madras at 1683, the first
joint stock bank was the bank of Hindustan established at Calcutta in 1770, the bank was wound
up in 1872. The other joint stock bank established at that time were the bank of Bengal (1806),
bank of Bombay (1840), the bank were called presidency bank.
Besides the normal commercial functions they were also performing certain central banking
finance in their respective region. All these banks were amalgamated in 1921. It was taken over
by the government and was renamed as state bank of India.
In 1899 ouch commercial bank was established it was the first pure Indian joint stock bank it
was followed by the Punjab national bank (1894), the peoples bank (1901) and so on.
Growth of the banks was very slow during the first half of the 20th century as the Indian
commercial banking system had to pass through a series of financial aims; and the banking was
mainly vested in the hands of the money lenders. It is only after the independence the Indian
commercial banking system has made the rapid progress. Today the Indian banking system is
one of the developed commercial banking systems in the world.
Without a sound and effective banking system in India it cannot have a healthy economy. The
banking system of India should not only be hassle free but it should be able to meet new
challenges posed by the technology and any other external and internal factors.
For the past three decades India's banking system has several outstanding achievements to its
credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or
cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners
of the country. This is one of the main reasons of India's growth process.
The government's regular policy for Indian bank since 1969 has paid rich dividends with the
nationalization of the 14 major private banks in India.

HISTORY OF BANKING IN INDIA

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The first bank in India, though conservative, was established in 1786. From 1786 till today, the
journey of Indian Banking System can be segregated into three distinct phases. They are as
mentioned below:
Early phase from 1786 to 1969 of Indian Banks
Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.
New phase of Indian Banking System started with the advent of Indian Financial & Banking
sector reforms after 1991.

PHASE1
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and
Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay
(1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These
three banks were amalgamated in 1920 and Imperial Bank of India was established which
started as private shareholders banks, mostly European Shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National
Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of
India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore
were set up. Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced periodic failures
between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the
functioning and activities of commercial banks, the Government of India came up with The
Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per
amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive
powers for the supervision of banking in India as the Central banking authority.
During those days public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal department
was comparatively safer. Moreover, funds were largely given to traders.
Phase2
Government took major steps in this Indian Banking Sector Reform after independence. In
1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale

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especially in rural and semi-urban areas. It formed State Bank of India to act as the principal
agent of RBI and to handle banking transactions of the State and State governments all over the
country.
Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th July,
1969, major process of nationalization was carried out. It was the effort of the then Prime
Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were
nationalized.
Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with
seven more banks. This step brought 80% of the banking segment in India under Government
ownership.

The following are the steps taken by the Government of India to Regulate Banking Institutions
in the Country:
1949: Enactment of Banking Regulation Act.
1955: Nationalization of State Bank of India.
1959: Nationalization of SBI subsidiaries.
1961: Insurance cover extended to deposits.
1969: Nationalization of 14 major banks.
1971: Creation of credit guarantee corporation.
1975: Creation of regional rural banks.
1980: Nationalization of seven banks with deposits over 200 crores.
Phase3
This phase has introduced many more products and facilities in the banking sector in its reforms
measure. In 1991, under the chairmanship of M Narasimhan, a committee was set up by his
name which worked for the liberalisation of banking practices. The country is flooded with
foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to
customers. Phone banking and net banking is introduced. The entire system became more
convenient and swift. Time is given more importance than money.
The financial system of India has shown a great deal of resilience. It is sheltered from any crisis
triggered by any external macroeconomics shock as other East Asian Countries suffered. This is
all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is

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not yet fully convertible, and banks and their customers have limited foreign exchange
exposure.

NATIONALIZATION OF BANKS:
On July 19th 1969, 14 major Indian commercial banks having aggregate deposits of not less
than 50 crores were taken over by the government of India through an ordinance caused,
Banking Companies Acquisition of 1969
The 14 Major Commercial Banks Are
Bank of India
1. The Central Bank of India
2. The Punjab National Bank
3. Bank of Baroda
4. United Commercial Bank
5. Canara Bank
6. United Bank of India
7. Dena Bank
8. State Bank of India
9. Allahabad Bank
10. Syndicate Bank
11. Bank of Maharashtra
12. Indian bank
13. Indian Overseas Bank
On 15th April 1980 the government has nationalized 6 more banks having the deposits of 200
crores or more
They are-
1. Andhra Bank
2. Corporation Bank
3. New Bank of India
4. Oriental Bank of Commerce
5. Punjab and Sindh Bank
6. Vijaya Bank

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The nationalization of commercial banks constitutes an important landmark in the banking
history of the company as a result more than 90% of the banking came under the direct control
of the government. The broad objectives of the nationalization of banks were framed to avoid
the following crises.
1) Ownership and control in few hands-
The Indian commercial banks were controlled by a very small number of shareholders. Those
who are able to determine the pattern of association and investment of bank finance according
to their interest of convenience. As the ownership and control was in the few hands it lead to the
concentration of power and disparity of income in a country. This was against the principle of
Indian constitution which demanded deduction of disparities in income and wealth.
2) Failure to mobilize the resources-
Commercial banks have failed to mobilize the resources of the community. Especially in the
rural sector, small towns and lower income groups. Moreover the banks have shifted the savings
of some states and directed those to the other states. Thus, they are responsible for the lopsided
development.
3) Resources utilized by the director-
The savings of the general public were used by the director to promote their personal interest as
to provide loans to those business connections in which the directors were interested. That
means the funds of the commercial banks were not utilized for the promotion of the agriculture
and the industrial sector.
4) Discrimination against the small business units-
The commercial banks failed to provide assistance to small scale units. Such a policy of the
bank went against the policy of government for the encouragement of small scale units.
5) Indifference to the needs of agriculture-
Agriculture was completely ignored by the commercial banks. This is the main reason for the
failure of the planning in the agriculture sector and consequently for the failure of general
planning.
6) Misuse of funds-
The funds of the commercial banks were not used for holding the essential goods instead they
were used for speculation purposes i.e. the banks were giving the loans for the anti social
elements who were able to get the funds for the large project through the exploitation of

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shortage of essential goods. The rise in the price level was due to the activities of the anti social
elements that had the support of the banks for their activities.
Progress of the nationalized banks-
The major achievement of the nationalized banks was in the field of branch expansion, deposit
mobilization, funds for the small scale industries and agriculture, expansion of credit for the
development purpose and certain other neglected sectors.
Branch Expansion-
Branch expansion gained much importance after commercialization of major commercial banks.
The number of branches have gone up 834 in June 1969 to 6528 at the end of the march 1992
that is the number of branches have increased by more than 500% during the last two decades.
As a result of opening the new branches the average population served per bank office was
around 65000 in 1969 has come down to 11,000 in 1992 i.e. 8 offices to 1,00,000 population
indicating greater availability of banking facilities to the public at large. Undoubtedly the
growth has been rapid but it is not been sufficient when compared to the average population
served per bank office in developed countries which varies between 2000 and 3000 so, Indian
banks have still a long way to go in terms of their average and extension of banking facilities.
Deposit Mobilization-
There has been rise in the rate of deposits mobilization during the last 2 decades. The aggregate
deposits of the commercial banks have gone up from 4636 crores in 1969 to 2, 02,179 crores in
1993.The annual rate of the growth of the deposits has varied from the high of 23% during
1993/94 to a low of 15.3% in 1990/91. Along with this the share of rural deposit to the total
deposits developed from 3% in 1969 to above 15% presently indicating the share of rural
population.
Expansion of Credit-
Along with the deposits the flow of the total credit has also reorder the market rise. Bank credit
has gone up from rs.3599 crores in June 1969 to rs.1, 55,550 crores in July 1993.i.e. up by about
44 times. Since, one of the important objectives of bank nationalization was channelized the
flow of credit to the priority sectors and the banks have made the considerable progress in this
direction. In June 1969 the priority sectors including agriculture, small scale industries and
small retail trade accounted for only 14% of the commercial bank credit. This proportion has
gone up to 37% In June 1992bbalong with the fast expansion o the branch network.

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Expansion of activities-
There has been the dimensional expansion in activities, the banks also took up externally new
activities which in the earlier period were considered as foreign beyond the scope of the Indian
banking. The new business areas includes leasing, neutral fund etc.
Since the nationalization of the commercial banks has given up their traditional aim of
maximizing profit and they have come to recognize the major instrument of development effort.
The nationalization of banks introduced the lead bank scheme under this scheme all the districts
of the country are allotted to some banks or the other. The main functions of the lead bankers
were:
To survey for the resources and potential for the banking development in the district.
To survey the number of commercial and industrial units and other establishments which
do not have bank accounts, i.e. who are primarily dependent on the money lenders.
To examine the facilities for marketing the agriculture produce and industrial production
storage and ware housing space and the linking of the credit with the marketing in this
districts.
To survey the facilities for storing of the fertilizers and other agriculture imports and
repairing and servicing of the various equipments used.
To security and trained staff offering the advice to small borrowers and farmers, and for
inspection of the end use of the loan.
To assist other primary lending agencies.
It has also introduced the differential interest rate scheme under which the public sector banks
are giving loan at the concessional rate of interest to the weaker sections of the society, who
have no tangible security to offer but who can improve the economic condition through the
financial assistance from the bank.
Factors That Influence the Choice of Banks-
Recognition-
The recognition of a bank institute counts a lot for the customer, the customer in general does
not want to take risk in case of service of an organization. He feels secured with a recognized
institution.

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Reputation-
A long customer to a particular bank helps tend to influence the new customer. While choosing
financial institution and in the matter of money, reputation matters a lot.
Working hours-
The working hours, convenient to the customers is one of the factors influencing the level of
satisfaction of the customers in the banking industry. The flexible hours of working in the
afternoons help the office going customers to a large extent. Otherwise they have to wait in their
office hours to finish off the work in the banks. This proves to be very helpful in times of
emergency.
Locker facility-
The customers owing lockers at bank are provided with the facility to operate their lockers on
their own. This involves certain procedure for confirmation. Every time a person approaches a
bank for operating the lockers it involves some time it should be seen that a customer is not
have been waiting for the long time.
Computerization-
Even though the concept of computer is a new concept to the Indian banking system advances
in technology are allowing delivery of banking products and services conveniently and
effectively than ever before thus creating the new base of competition. At the same time banks
are facing increasing competition from non banking financial corporations. Rapid access to the
critical information and the ability to act quickly and effectively will distinguish successful
banks in the future.
Computerization in commercial banks has indeed traveled a long way it is growing by leaps and
bounds. Starting with the reconciliation of inter branch terms action and providing, whole MIS
reports on the selective basis, computerization was confined to the bank head offices alone for
quite some time. In the second phase, computers came to the branches in the term of the branch
office computerization, mainly as an aid to housekeeping, viz., balancing of books, day end
consolidation and accounting of transactions. Some banks went a step further to introduce,
customers module along with bank office computerization. To take care of posting and updating
of customers accounts at the end of the day through batch processing.

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Computers made things easy and in a satisfying manner both for the bank and for the customers,
even in the rural areas banks are utilizing the service of the computers, but the transition is in
the first phase in this areas.
ATMs-
ATMs are the future banking. ATMs can be connected either on line or off line, ATM service
can be supported to both the local and inter branch. It supports both online inter face and ATM
network.
In an online ATM interface, the interface to ATM is provided and supports anytime banking
with a wide range of functions like cash with drawl and deposits, transfer, inquiry, statement
request and message to bank.
Tele banking-
It provides round the clock service to its customers. Request for cheque books, demand drafts,
and renewal of deposits can be captured. The customers can check on the last few transactions
that have taken place online account.
Internet banking-
Internet is another service delivery channel. It allows the user to access the account information
over a secure line, request cheque books and stop payment and even transfer of funds between
the accounts. In coming years it plans to allow ordering a DD, information of ATM cards and so
on.
Credit cards-
It is provided for the credit worthy customers. Users are provided with a card, on producing of
which, their signature is accepted on bills in shops and establishments participating in the
scheme. The banks thereby guarantee to meet the bill and recover from the card holder through
a single account presented periodically. In some, users also are required to pay a regard
subscription for the use of services as well. An extension of scheme allows the repayment of
large sums over a period at interest.

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The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called the
Bank of Bengal) was established. In 1921, the Bank of Bengal and two other Presidency banks
(Bank of Madras and Bank of Bombay) were amalgamated to form the Imperial Bank of India.
In 1955, the controlling interest in the Imperial Bank of India was acquired by the Reserve Bank
of India and the State Bank of India (SBI) came into existence by an act of Parliament as
successor to the Imperial Bank of India. Today, State Bank of India (SBI) has spread its arms
around the world and has a network of branches spanning all time zones. SBI's International
Banking Group delivers the full range of cross-border finance solutions through its four wings -
the Domestic division, the Foreign Offices division, the Foreign Department and the
International Services division.
The SBI was formed in 1955, through nationalization of imperial banks in India. The imperial
bank of India has been formed by the amalgamation of three existing presidency banks. With
the nationalization of imperial bank in India, all its assets and liabilities were transferred to the
state bank of India.
It was converted into SBI on 1/07/1955 on the recommendations of the committee for All India
Rural Credit Survey, headed by Shri. A.D. Gorwala (the committee recommended the
establishment of one strong, integrated, state sponsored, state partnered commercial banking
institution). At that time SBI had three circles, Bombay, Calcutta and Madras besides a central
office at Bombay, SBI was the first bank to set up as the public sector.

The SBI has, over the years, richly verified its status as flagship of Indian banking; the bank has
pioneered innovative measures and contributed significantly to the growth of the Indian
economy. It has been taking new initiatives with the changing economic environment and is
poised to establish itself in the new millennium as a premier Indian financial services group
with a global perspective and world class standards of efficiency.

COMPANY PROFILE
STATE BANK OF INDIA
THE NATION BANKS WITH US

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The SBIs powerful corporate banking formation deploys multiple channels to deliver
integrated solutions for all financial challenges faced by the corporate universe. The Corporate
Banking Group and the National Banking Group are the primary delivery channels for corporate
banking products. The Corporate Banking Group consists of dedicated Strategic Business Units
that cater exclusively to specific client groups or specialize in particular product clusters.
Foremost among these specialized groups are the Corporate Accounts Group (CAG), focusing
on the prime corporate and institutional clients of the countrys biggest business centers. The
others are the Project Finance unit and the Leasing unit. The National Banking Group also
delivers the entire spectrum of corporate banking products to other corporate clients, on a
nationwide platform.
State Bank of India is the premium commercial bank of the country and among its strengths, the
following would merit attention.
The largest commercial bank in the country with branches spread all over India, besides having
presents in all the time zones of the world covering several countries.
As the largest financial institution In India, SBI is well positioned to capture growth in Indias
dynamic banking market and is seen as a macroeconomic proxy for the Indian economy.
SBI is an excellent brand name that is synonymous with trust and security. SBI is the only bank
in India to be ranked among the top 100 banks in the world and also among the top 20 banks in
Asia in the annual survey by The Banker.
The bank has developed an excellent in-house staff training infrastructure including a College,
an Academy an Institute for Rural Development and an institute for Information Management
and Communication Technology. Efforts are continuously made to improve the motivation and
morale of the banks employees through on-going training and on-site initiatives.
Separate business units viz. Agri-Business Unit, Government Business Unit, P-segment
business unit and SME Business unit created for focused attention to respective segments.

MISSION, VISION AND VALUES OF STATE BANK OF INDIA:
VISION-
My SBI: First in customer satisfaction.

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MISSION-
We will be prompt and proactive with our customers, we will speak the language of young
India, we will create products and services that help our customers achieve their goals, we will
go beyond the call of duty to make our customers feel valued, we will be in service even in the
remotest part of our country, we will offer excellence in services to those abroad as much as we
do those in India, we will imbide state of art technology to drive excellence.
VALUES-
We will always be honest, transparent and ethical. We will respect our customers and fellow
associates we will be knowledge driven. We will learn and we will share our learning. We will
never take the easy way out. We will do everything we can to contribute to the community we
work in. we will nurture pride in India.

DEPOSIT LOANS CARDS DIFFERENT
CREDIT CARDS
Savings Account Home Loans Consumer Cards SBI International
cards
Life Plus Senior Citizens
Savings Account
Loan Against Property Credit Card SBI Gold cards
Fixed Deposits Personal Loans Travel Card SBI Gold Master
cards
Security Deposits Car Loan Debit Cards Your City Your
Cards

Recurring Deposits Loans against
Securities
Commercial Cards
Tax-Saver Fixed
Deposit
Two Wheeler Corporate Cards Partnership Cards
Salary Account Pre-approved Loans Prepaid Card
Advantage Woman
Savings Account
Retail Asset Purchase Card SBI Employee
Cards
Rural Savings Account Farmer Finance Distribution Cards
People's Savings
Account
Business Installment
Loans
Business Card SBI Advantage
Cards

DIFFERENT PRODUCTS

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ORGANIZATION-
The organization of the SBI can be discussed under the following heads:
1) Capital-
The SBI has an authorized capital of Rs.20 crores which has been divided into 20 lakhs shares
of Rs. 100 each. The shares are held by the reserve bank, insurance companies and the general
public.
2) Management-
The management of SBI is under the control of a central board of directors consisting of 20
members, the breakup of a central board is given below:
A chairman and vice president are to be appointed by the central government in
consultation with reserve bank.
Two managing directors are to be appointed by the central board with the approval of
central government.
Six directors are to be elected by the private shareholders.
Eight directors are to be appointed by the central government I consultation with the
reserve bank to represent territorial and economic interests. No less than two of them
should have special knowledge in the working of co-operative institutions and of the
rural economy.
One of the directors to be appointed by the central government.
One director is to be appointed by the reserve bank.
3) Subsidiary banks-
The state bank of India has the following six Associate Banks (ABs) with controlling interest
ranging from 75% to 100%.
1. State Bank of Bikaner and Jaipur (SBBJ)
2. State Bank of Hyderabad (SBH)
3. State Bank of Indore (SBIr)
4. State Bank of Mysore (SBM)
5. State Bank of Patiala (SBP)
6. State Bank of Travancore (SBT)

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The 6 associated banks have a combined network of 4502 branches in India which are fully
computerized and 2410 ATMs networked with SBI ATMs, providing value added services to
clientele.
The combined net profit of these banks Rs 91.66 crores. Deposits and advances grew by 7%,
respectively, during the year. The combined Net NPA ratio of all associated banks was at 1.72%
as on 31st March 2010.The highlights of performance of the six ABs for the year 2010-11 are as
follows:
(Rs in crores) for the year 2010-11
Deposits 8041.16
Loans 6319.14
Investments 2857.90
Total Assets 10534.13
Return on Assets 0.86%
No. of Branches 4502

The state bank of India has been established to operate on the normal commercial
principle.
With the only difference that, unlike other commercial banks in country, it takes into
consideration and responds progressively to the small scale industries particularly in the
rural areas of the country.
To act in accordance with the broad economic principle of the government.
To encourage and mobilize the savings by operating branches in the rural and semi-
urban and to promote rural credit.
To extend financial help for the establishment of licensed warehouse and co-operative
marketing societies.
To provide financial help to small scale and cottage industries.
To provide remittance facilities to banking institutions.

Objectives of SBI

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1) Central Banking functions-
The SBI acts as an agent of the reserve bank in all these places where the latter does not have its
branches. As an agent of the reserve bank, the State Bank performs the following functions:
It acts as the government bank i.e. it collects money and makes payments on behalf of
the government and manages public debt.
It acts as the bankers bank. It receives deposits from and gives loan to the commercial
banks. It also acts as a clearing house for the commercial banks, rediscounts the bills of
exchange of the commercial banks and provides remittance facilities to the commercial
banks.
2) Ordinary banking functions-
The SBI performs all kind of commercial banking functions.
It receives deposits from the public
It gives loans and advances against eligible securities including goods, bills of exchange,
promissory notes, fully paid share of companies, immovable property or documents of
title, debenture etc.
3) Other functions-
The SBI also performs the following other functions
It buys and sells gold and silver
It acts as agent of co operative banks
It under rights issues of stocks, shares, debenture and other securities in which it is
authorized to invest.
It draws bill of exchange and grants letter of credit payable out of India.

The business operations of SBI can be broadly classified into the key income generating areas
such as National Banking, International Banking, Corporate Banking, & Treasury operations.

Areas of Operations-

FUNCTIONS

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Strategy:
Strategy State Bank of India is to strengthening the overall agricultural sector in the district and
to provide financial support for the rural development. For this purpose bank is raising funds
through share capital, deposits and from NABARD through Apex bank and lending money
through agricultural credit co operative societies.

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Structure:
Organization Structure

Click to edit Master title style
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Second level
Third level
Fourth level
Fifth level
-
CHAIRMAN
CORPORATE
CENTRE
DMD&CCO
DMD&CCO
DMD(I&MA)
DMD(I&MA)
CVO
CVO
DMD&CDO
DMD&CDO
BUSINESS
GROUPS
MD&GE(CB)
MD&GE(CB)
MD&GE(NB)
MD&GE(NB)
DMD&GE(IB)
DMD&GE(IB)
DMD&GE(A&S)
DMD&GE(A&S)
DMD&CFO
DMD(IT)
DMD(IT)
Chief Economic Advisor
Chief Economic Advisor

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System
System in the 7-S framework refers to all the rules regulation and procedure both formal &
informal that complements the organization structure. It includes planning and control system,
capital budgeting system, recruitment training & development system, and performance
evolution system.
Planning & Control System in State Bank Of India
This is very important function, which is done by top management. It prepares plan every
year by considering the potentiality, infrastructure facility and past performance. It is a master
plan which consisting plan of all departments. While dreaming plan top management considers
bank as a whole unit. Thus plan is the standard course of action prescribed for one year. The
actual performance can be compared with this plan and reviewed by the Board of directors, MD
to take decision on any investment/ expansion plan.

Page 23

Recruitment and Selection System
The administration & staff department in State Bank of India undertakes the recruitment &
selection process. It follows the government obligation for the purpose of recruitment. The
board of director & MD will be in the selection committee when recruitment & selection
become necessary. Recruitment process in State Bank of India is purely on merit basis. Written
test and personal interview is been carried out to select the candidates. Bank recruits for SDC
post with a minimum qualification of degree or equivalent course from a recognized institute.
Seniority and eligibility is the bases of promotion in the State Bank of India

Performance Evaluation System
The immediate superiors evaluate the performance of the employees. In State Bank Of India
respective Assistance general manager evaluate their subordinates. General Manager evaluates
Assistant General Manager. Which managing director should approve.
Style:

Leadership style in State Bank of India is of autocratic. It has top to bottom or top down system
style. All the major decisions are taken by the board of directors.

Staff:

Total number of staff in State Bank of India is 2, 00,229.

Bank has divided its staff into following categories:
1. Managing director
2. Deputy managing director
3. Touring auditors / Taluk control officer / Branch managers
4. Branch managers / bank inspectors
5. First division clerk
6. Second division clerk
7. Peon / gun man / drivers

Page 24

Skills:
In the Mc Kinsey 7-S framework, skill is one of the most crucial attribute or capabilities of an
organization. The term skill includes those characteristics, which most people use to describe a
company. In other words skill refers to dominant skills or distinctive competence of an
organization. Staffs of State Bank of India are highly qualified in accounting writing skills
which are very essential for providing banking services. Rural orientation is one of the essential
skills present with State Bank of India Belgaum.
Shared values:
The core or fundamental values that are widely share in the organization and serve as guidelines
that are important, these values have greater meaning because they focus attention and provide
broader since of purpose.
The values of State Bank of India are:
We will always be honest, transparent and ethical. We will respect our customers and fellow
associates we will be knowledge driven. We will learn and we will share our learning. We will
never take the easy way out. We will do everything we can to contribute to the community we
work in. we will nurture pride in India.

Sr. No. Name of Director
Sec. of SBI Act,
1955
1.
Shri O.P. Bhatt
Chairman
19(a)
2.
Shri R. Sridharan
Managing Director
19(b)
3. Dr. Ashok Jhunjhunwala Director 19(c)
4. Shri Dileep C. Choksi Director 19(c)
5. Shri S. Venkatachalam Director 19(c)
6. Shri D. Sundaram 19(c)
BOARD OF DIRECTORS

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Director
7. Shri. G. D. Nadaf
Officer Employee Director
19 (c, b)
8. Dr. (Mrs.) Vasantha Bharucha Director 19 (d)
9. Dr. Rajiv Kumar Director 19(d)
10 Shri Ashok Chawla Director 19(e)
11. Smt. Shyamala Gopinath Director 19(f)

Competitors and other players-
Top Performing Public Sector Banks-
1.AndhraBank
2.AllahabadBank
3.PunjabNationalBank
4. Dena Bank
5. Vijaya Bank
Top Performing Private Sector Banks-
1. HDFC Bank
2.ICICIBank
3.AXISBank
4.KotakMahindraBank
5. Centurion Bank of Punjab
Top Performing Foreign Banks-
1.Citibank
2.StandardChartered
3.HSBCBank
4.ABNAMROBank
5. American Express
Competitors

Page 26

STRENGTHS WEAKNESS
Brand name Minor hindrances
Market leader Hierarchical management
Wide distribution network Lags modernisation
Government owned
Diversified portfolio

OPPORTUNITIES THREATS
Merger of associate banks with SBI Advent of MNC banks
New branches and ATMs CRM
Expansion on foreign soil Private banks venturing into rural
Employee strike
Delay in technology up gradation

Awards and Recognition
SWOT ANALYSIS

Page 27

The Structure of Indian Banking:
The Indian banking industry has Reserve Bank of India as its Regulatory Authority. This
is a mix of the Public sector, Private sector, Co-operative banks and foreign banks. The private
sector banks are again split into old banks and new banks

Reserve Bank of
India
(Central Bank)
Scheduled banks
Scheduled
Commercial Banks
Public
Sector
Banks
Private
Sector
Banks

Banks
Foreign
Banks
Regional
Rural
Banks
Scheduled
Co-operative Banks
Nationalize
d
Banks
SBI & its
associates
Old Private
Sector
Banks
New
Private
Sector
Banks

Scheduled State
Co-operative
Banks
Scheduled
Urban
Co-operative
Banks

Page 28

Ratios 2010 2009 2008
Current Ratio 0.04 0.04 0.07
Quick Ratio 9.07 5.74 6.15
Return on Assets 1038.76 912.73 776.48
Total Assets Turnover Ratio 0.09 0.09 0.09
Return on Net Worth (%) 13.89 15.74 13.72
Dividend Payout Ratio 23.36 22.90 22.64
Return on Equity 14.84 15.07 17.82
Net NPA Ratio 1.72 1.79 1.78
Capital Adequacy Ratio 12.00 12.97 13.54
Cash Deposit Ratio 7.56 8.37 8.29

Learning Experience:
I got an opportunity to interact with the bank officials thoroughly and gained knowledge about
the topic as well as about the SBI. I had experienced a lot in the bank by working over there and
knowing about the banking operations. I got an experience to see the banking records and
interacted with the top management of the bank which has helped me in this project a lot. I want
to thank all the bank officials and top management of the bank in the branch.

Analysis of financial statement

Page 29

With a view to move towards internationally accepted norms for asset classification and
income recognition, RBI has been tightening the definition of NPAs in a phased manner.
Thus, from the norm of classifying only those assets as non-performing which are four quarters
past due, which was applicable until 1993, RBI moved to the norm of three quarters past due in
1994 and then to two quarters (90 days) past due in 1995. In 2001, RBI tightened this further by
removing the past due concept. As a result, NPAs are to be recognized 30 days earlier than
they were to be before 2001.
RBI has now advised banks to move to the 90 days norm for recognizing loans as non-
performing, with effect from March 31, 2004.
This tightening of norms, coupled with the year of economic recession, resulted in an increase
in the recognized stock of NPAs in the Indian financial system. The same time, the ratio of
gross NPAs in to gross advances has shown a declining trend.
The definition of NPAs is prescribed in the prudential norms on asset classification and
advances laid down by RBI. Accordingly, with the effects from March 31, 2004, an advance is
classified as NPA where in the case of:
I. Terms Loan the interest and/or installment of principal remain overdue for a period of more
than 90 days.
II. Overdraft/cash credit (OD/CC) the account remains out of order.
III. Bills purchased and discounted the bill remains overdue for a period of more than 90 days.
IV. Advance granted for agricultural purposes interest and/or installment of principal remain
overdue for two harvest seasons but for a period not exceeding two half year, and
V. Other accounts any amount to be received remains overdue for a period of more than 90
days.
An asset, which ceases to yield income for the bank, should be treated as NPA, and any income
from loan assets should not be booked as income until it is actually recovered. So, banks, which
charge interests to loan Accounts Park it in Interest Not Collected Account (INCA) until
recovery, and on recovery, reverse it from INCA and credit interest account.
NPA ratio: The net non-performing assets to loan (advances) ratios are used as a measure of the
overall quality of the banks. Net NPAs are calculated by reducing cumulative balance of
General Introduction

Page 30

provisions outstanding at a period end from gross NPAs. Higher ratio reflects rising bad quality
of loans.
NPA ratio = Net non-performing assets
Loans given

To begin with, it seems appropriate to define non performing advance, popularly called NPA.
Non Performing Advance is defined as an advance where payment of interest of repayment of
installment of principal (in case of term loans) or both remains unpaid for a period to two
quarters or more. An amount under any of the credit facilities is to be treated as past due
when it remains unpaid for 30 days beyond due date.
What is NPA Management?
A bank creates an asset by lending 50% to 90% of the project cost. The bank has major stroke
in an asset than the borrower, so it should be the responsibility of the bank to see and maintain
the health of the asset, while creating an asset the Bank wants that the asset should be
performing one from the beginning and remains so till its liquidation. But, sooner or later, it
becomes or tends to become NPA; unless managed properly; due to various reasons. Then it
becomes a problematic asset and needs intensive care.
Effective NPA management involves the following Aspects:
1. Understanding of NPA amount.
a. Understanding of NPA concept
b. Understanding of income recognition norms
c. Understanding of asset classification norms
d. Understanding of provisioning norms
e. Understanding of asset cycle.
2. Identification of NPAs;
a. Term loans
b. Agricultural advances
c. Cash credit and overdraft credit facilities.
d. Bills purchased and discounted
What is NPA?

Page 31

e. Other credit facilities.
3. Prevention of NPAs
a. Credit risk management
b. Credit marketing
c. Management of potential NPAs
d. Replacement of loans.
4. Proper NPA accounting system
a. Accounting system in NPA accounts]
b. Maintenance of NPA records.
5. Up-gradation of fresh NPAs
a. Recovery of critical amount
b. Replacement of NPA amount.
6. Liquidation of chronic NPAs
a. Cash recovery through
The bank staff
The government agencies
The private recovery agents
The legal bodies/methods
b. Settlement of claims with DICGC/ECGC
c. Compromise
d. Written off
7. Use of MIS and IT in NPA management.
8. Formulation of comprehensive NPA management policy/strategies.
9. Rating of NPA management

Page 32

Non-performing Assets came into the Indian Financial System consequent to the
introduction of prudential accounting norms. An era of taking profits (even unrealized) was
changed to providing for expected loss.
From the financial year 1991-1992, the new system of accounting came into existence.
More and more new reforms were introduced institution this year. New accounting system for
classification of loan and interest come into effect.
The financial institutions and banks adopted income recognition rule. Reserve Bank of
India also took keen interest in this direction and came out with specific guidelines.
As a result the method of Asset classification came into force, while introducing these
guidelines internationally accepted standards of Basis Committee recommendations were also
taken into considerations. As per the norms of these standards income was recognized only in
respect of standard/performing loans.

Reserve Bank of India (RBI) has issued guidelines on provisioning requirement with
respect to bank advances. In terms of these guidelines, bank advances are mainly. Classified
into:
1. Standard Assets: Such an asset is not a non-performing asset. In other words, it carries not
more than normal risk attached to the business.
2. Sub-Standard Assets: It is classified as non-performing assets for a period not exceeding 18
months.
3. Doubtful Assets: Assets that has remained NPA for a period exceeding 18 months is a
doubtful asset.
4. Loss Assets: Here loss is identified by the bank concerned or by internal auditors or by
external auditor or by Reserve Bank India (RBI) inspection. In terms of RBI guidelines, as and
when an asset become a NPA, such advance would be first classified as a sub-standard one for a
period that should not exceed 18 months and subsequently as doubtful assets. It should be not
MODERN CONCEPT

RBI GUIDELINES ON CLASSIFICATION OF BANK
ASSETS

Page 33

that the above classification is only for the purpose of computing the amount of provision that
should be made with respect to banks advance and certainly not for the purpose of presentation
of advance in the bank balance sheet.

1) Cash Credits/ Overdraft:
When an account is not of order for any 2 quarters out of 4 quarters of the years ending 31
st

March, the account will be treated as an NPA. Out of Order:-
Out standings exceeding the limit/drawing power for any two quarters (continuous or
otherwise)
Out standings are well within the Limit/drawing power, but
A. No credit in the account for the last 6 months.
B. Credits in the accounts are not sufficient to meet interest debits for any 2
quarters.
2) Term Loans:
If interest/installments of principal remain unpaid for any 2 quarters of the year ending 31
st

March the account will be NPA Past Due Grace period of 30 days is NOT to be reckoned in
your bank. Its means that quarters interest/Installments up to 31
st
December should be
recovered before 31
st
March, as otherwise account will be treated as NPA.
3) Agricultural Term Loans/Cash Credits.
If interest/installments of principal (after it has become due) has not been paid during the last
two seasons of harvest (covering two half years), the account will be NPA.
Past Due- Grace period of 30 days is not applicable in our bank to Agricultural Loans.
Date for reckoning interest/installment due is the date as stipulated in the sanction.
4) Bills purchased and discounted:
The bills purchased will become NPA if they remain overdue and unpaid for 2 quarters
as on 31
st
march.
Overdue Interest:
Overdue interest should not be charged and taken to income account in respect f overdue
bills unless it is realized.
Types of Loans Provided by SBI

Page 34

5) Other Accounts:
The account becomes NPA if the account remains unpaid for any 2 quarters or more as on 31
st

march.
7) Consortium advance:
Each member bank will classify the account in accordance with the conduct in its books
8) Government Guaranteed Advances:
Though, credit facilities backed by the government guarantee may became past due with income
not being booked, they need not be treated s NPAs. In some case it is observed that banks have
to file suits against the borrower after invoking the government guarantees with a view to
overcome the limitation period. In such circumstances, the branches may treat the advances
guaranteed by the government as NPAs only when the government concerned when invoked.

1. Internal checks and control:
Since high level of NPAs dampens the performance of the bank identification of potential
problem accounts and there close monitoring assumes importance.
The EWS enable a bank to identify the borrower accounts, which show signs of credit
deterioration and initiate remedial action. Many banks have evolved and adopted an elaborate
EWS, which allows them to identify potential distress signals and plan their options before
hand, accordingly. The major components/process of an EWS followed by banks in India as
brought out by study conducted by Reserve Bank of India at the instance of the Board of
financial supervision are as follows.
i) Designing Relationship Manager/credit Officer for Monitoring account
ii) Preparation of Know your Client profile
iii) Credit rating system
iv) Identification of watch-list/ special mention category accounts
v) Monitoring of early warning signals.
Procedures for Identification of NPA and
Resolution

Page 35

2. Management / resolution of NPAs:
Reeducation in the total gross and net NPAs in the India financial system indicates a
significant improvement in management of NPAs. This is also on account of various resolution
mechanism introduced in the recent past, which include the SARFESI act. One-time settlement
schemes, setting u of the CDR mechanism, strengthening of DRTs
3. Credit Information Bureau:
State Bank of India, HDFC Limited M/s Dun incorporated credit Information Bureau (India)
Limited (CIBIL) in Jan 2001 and Bradstreet Information services (India) Pvt. Information
between banks and FIs for curbing the growth of NPAs. The CIBIL is in the process of getting
operationalised.
4. Willful Defaulters:
RBI has revised guidelines in respect of detection of willful default and diversion and
siphoning of funds. As per these guidelines a willful default occurs when a borrower defaults in
meeting its obligations to the leader when it has capacity to honor the obligations or when funds
have been utilized for the purposes other than those for which finance was granted. RBI has
advised the lenders to initiate legal measures including criminal actions, wherever required, and
undertake a proactive approach in change in management, where appropriate.
5. Legal and Regulatory Regime:
A. Debt Recovery Tribunals
B. Lokadalats
C. Enactments of SARFAESI Act
D. Assets reconstruction companies
E. Institution of CDR Mechanism
F. Compromise settlement schemes
Underlying Reasons for NPAs:
An internal study conducted by RBI shows that in order of prominence, the following factor
contribute to NPAs,

Page 36

Internal Factors:
1. Diversion of funds for expansion/diversification/modernization taking up new projects,
helping/promoting associate concerns.
2. Time/cost overrun during the project implementation stage.
3. Business (product, marketing, etc) failure
4. Inefficiency in management.
5. Slackness in credit management and monitoring.
6. Inappropriate technology/ technical problems.
7. Lack of co-ordination among leaders.
External Factors:
1. Recession
2. Input / power shortage
3. Prince escalation
4. Exchange rate fluctuation
5. Accidents and natural calamities, etc
6. Changes in government policies in excise/import duties, pollution control orders.
The above mentioned cause were reaffirmed, some other were also Mentioned. A brief
discussion is provided below.
a) Liberalization of economy/removal of restrictions/reduction of tariffs:
A large number of NPA borrowers were unable to compete in a competitive market in which
lower prices and greater choice were available to consumers. Further borrower operating in
specific industries has suffered due to political, fiscal and social compulsions, compounding
pressures from liberalization.
b) Lax monitoring of credit and failure to recognize early warning signal:
It has been stated the approval of loan proposals is generally thorough many levels before
approval is granted. However, the monitoring of sometime complex credit files has not received
the attention it needed, which meant that early warning signals were not recognized and
standard assets slipped to NPA category without banks being able to take proactive measure to

Page 37

prevent this. Partly due to this reason, adverse trends in borrowers performance were not noted
and the position further deteriorated before action was taken.
c) Over optimistic promoters:
Promoters were often optimistic in Setting up large projects and in some cases were not fully
above board in their intentions. Screening procedures did not always highlight these issues.
Often projects where set up with the expectation that part of funding would be arrange from that
capital Market, which were booming at the time of project appraisal. When the capital market
subsequently crashed, the requisite funds could never be raised, promoters often lost interest
and lenders were left stranded with incomplete/unviable projects.
d) Directs Lending:
Governments police rather than commercial imperatives dictated loans to some segments.
e) Highly leveraged borrowers:
Some borrowers were undercapitalized and over burdened with debt to absorb the changing
economic situation in the country. Operating within a protected market resulted in low
appreciation of commercial/market risk.
f) Funding mismatch:
There are said to be many cases where loans granted for short term were used to fund long
term transaction.
g) High cost of funds:
Interest rates as high as 20% were not uncommon. Coupled with high leveraging and
falling demand, borrowers could not continue to service high cost debt.
h) Willful Defaulters: -
There are a number of borrowers who have strategically defaulted on their debt service
obligations realizing that the legal recourse available to creditors is slow in achieving results.

Page 38

Public sector banks performed creditably all through in respect of all parameters set for them.
But in the early Nineties the truth emerged that PSBs were suffering from acute capital
inadequacy and many of them were depicting negative profitability. This is because the
parameters set for their functioning were deficient and they did not project the paramount needs
for these corporate goals. Incorrect goals perception and identification led them to wrong
destination.
Pre-reform era witnessed PSBs functioning under the overall control and direction of the
Finance Ministry. Along with Reserve Bank of India (RBI) it decided/directed all aspects of the
working of the bank. Banks were not free to price their products in competition with each other.
They could not freely cater their funds in the best interest as they considered. It was thus a
directed banking and the role of bank management was executor.
Since the 70s, the SCBs of India function totally as captive capsule units cut off from
international banking and unable to participate in the structural transformations, the sweeping
changes, and the new type of leading products training and knowledge resources required to
compete with international industry had resulted in the accumulation of assets, which are termed
as non-unprecedented level 8.
Major policy decision was taking externally by the Finance Ministry/RBI. Though directors
were to be appointed based on their possession of specialized knowledge in banking and related
discipline, the environment of receiving decisions from a political background as distinguished
from a professional outfit, prevented the best talents coming to occupy the position as Directors
of PSBs and taking part an active role in the deliberations of the boards of these banks.
Audit and Inspections remained as functions under the control of the executive officers.
Which were not independent and were thus unable to correct the effects of serious flaws in
policies and directions of the higher us.
Effective recovery of defaulters and overdue of borrowers was hampered. But in India
Legal remedies were beset willful defaulters and the banks were left helpless. Effective
corporate management was a concept alien to the corporate houses then. In respect of Public
sector banks the boards were ineffective and the only/main shareholder was the government of
An Analysis of Factor
Contributing to NPAs

Page 39

India. Government exercised multiple role and concerns, and the instinct to act as a watchful
shareholder and increase the shareholders value of these corporate bodies (banks & financial.
Institution) was never felt/experienced by the government.
Credit management on the part of the leader to the borrower to secure their genuine and
bonfire interests was not based on pragmatically calculated anticipated cash flows of the
borrower concern, while recovery of installments of term Loan was not out of profit and surplus
generated but through recourses to the corpus of working capital of the borrower concerns. This
eventually led to the failure of the project financed leaving idle assets. Functional inefficiency
was also caused due to over-staffing, manual processing of over-expanded operations and
failure to computerize banks in India, when elsewhere throughout the world the system was to
switch over to computerization of operations.
Action Plan for the Operating Functionaries:
a) Analyze the NPAs and delineate them in sub-groups.
b) Do age-wise sub grouping
c) ABC analyses of advances.
d) Targets for recovery of various categories
e) Monthly reporting and monitoring in preview meetings.

a) Regular/timely contact with the borrowers should be maintained on one-to-one basis in
order that the loans/advances are monitored effectively.
b) The recovery work should be specifically entrusted to the identified loan officers/ clerks who
will have regular contacts with the borrowers particularly at the time, which is more suitable
for recovery, like pre and post-harvest period in case of agricultural advance.
c) The high value advance should be specifically monitored and in case of advance, which
displays signals of slipping to sub-standard category, intensive follow-up is necessary.
d) The repayment programmes should be fixed up realistically keeping in view the probability
of cash accruals taking place as per the projections.
PREVENTIVE MEASURES

Page 40

e) In case where units are facing genuine difficulty in adhering to the repayment schedule fixed
while sanctioning the loan, the loan can be rescheduled so that the advance does not turn out
of order or past due.
f) Borrower should be counseled to route the sales proceeds through the account, which will
ensure that the account does not turn out of order merely on account of interest application.
g) A written communication be sent to all borrowers advising them about the need to ensure
that there advance remain standard assets to enable the bank to consider favorably their
future request for financial assistance, if needs.

1. Regular meetings with the borrowers and interaction with them on their business prospects
and their position of their accounts should take place.
2. Periodical meetings with group of borrowers particularly those financed under government-
sponsored schemes and in rural areas should be held in which the need for prompt payments
of dues should be explained. It needs to be made clear to these borrowers that there will not
be any further debt relief scheme in future and that they will benefit in the long run by paying
the banks dues.
3. Recovery camps/recovery workshops can be organized in co-ordination with the government
authorities in rural areas or in respect of SBI advance under government sponsored schemes.
4. In case of suck units, viability studies need to be conducted promptly and quick dispensation
of rehabilitation packages is essential so that the advance to them can be upgraded.
5. Close monitoring of sick units, which are under nursing is important to ensure that they abide
by the stipulation made under the nursing program and thereby there borrowal account are
upgraded.
6. Target for recovery should be fixed for individual functionaries and their performance should
be closely is closely monitored.
7. Periodical inspection of the units financed and follow-up for recovery of the overdue amount
should be closely monitored.
REMEDIAL MEASURES

Page 41

8. For smaller advance, Lok Adalat is an effective avenue for on the spot settlement of bank
loan case and this mechanism should be used effectively.
9. As regards cases involving debt for over Rs.10 lakhs, the forum of Debt Recovery Tribunal
should be effectively used.
10. Periodical meetings should be held with the lawyers handling Banks cases to discuss
various issue connected with the ending loans case with a view to reducing the delays in
settlement of the cases.
11. Settling the cases out of court and entering into compromises, wherever considered
appropriate, may prove to be quicker and more effective than legal action. However, any
tendency to get undue advantage from the bank should be guarded against.
12. Realization of securities in cases of advances under litigation needs greater attention. It
should be our endeavor to obtain permission of the court for attachments and disposal of
securities charged to the bank before judgment. Where such permission is granted or where
suit is decreed in banks favors, the securities covered by the suit should promptly realize.
13. The portfolio of the loss assets has to be critically examined to weed out all such assets
where there is no hope of any recovery. In such cases, the ultimate step of writing off the
advance needs to be taken and any delay in the matter is of no benefit.
14. The services of Non-Government Organizations (NGOs) may also be utilized in area where
these are active, for counseling the small borrowers. These borrowers may be organized in-
group and financed, if considered appropriate and prudent, through the NGOs concerned.

The major tools for tackling assets, which have already turned into non-performing assets, are
the following: -
Recovery through legal action including the forum of debt recovery tribunals and lok
adalats.
Utilizing the machinery of state government for recovery of rural death.
Entering into comprises through negotiations.
TACKLING NPAs

Page 42

Rehabilitation packages for potentially viable sick units.
Rescheduling/ rephrasing of dues in case of irregular advances of viable units.
Recovery of overdue amount through persistent follow up and by counseling / educating
the borrowers.
FOCUSED STRATERGIES:
1. Constant follow up and periodically dialogue with the borrower to know the prospects of his
business and difficulties, if any, faced. Case to case review of NPAs and replacement of loan
to suit the revised income generation pattern so that he is able to repay dues of the bank has
per his cash generation capacity.
2. Branch recovery team consisting of 2/3 resourceful staff members/ Officials, should be
formed (if not so) at each critical branch. The team member should be exhorted to set up
recovery endeavors and produce quick tangible results.
3. Establishment of district Recovery Team at each District Headquarter with the help of
District headquarter with the help of district co-ordinates / lead bank officers/Nodal officers
of the concerned district to liaise with the local Government functionaries/Lok
Adalats/certificate Officers, etc. this team may co-ordinate the activities of the Branch
Recovery Team within the district.
4. Lawyer Meet may be organized at all district headquarters by the concerned Asst. general
Manager and AGM (Law) where other officials from local head office may also
participate. Suit field case of high value loan amount should be reviewed individually to
expedite the recovery process. Involvement of law officers in follow up recovery efforts
through debt recovery tribunals is necessary.
5. To ensure that Target of Recovery has been allotted to all the critical branches for reducing
NPAs/INC/AUC by their respective controlling authorities and the controllers concerned
monitor their performance. The Dy. General Manager should oversee the position on
monthly basis.
6. One time settlement (OTS) has been found to be another method whereby the bank would
finally recover its due depending upon the repayment capacity of the borrower from all
sources.

Page 43

7. To consider, in consultation with controllers, on selective basis in decreed cases, the need for
biding in banks name for sale of mortgaged properties (secured for our loans) in auction
with the permission of court for expediting the recovery process.
Asset Classification as tool kit to bring down the Branch NPAs to the bearest minimum:
Credit Appraisal and Advance Monitoring:
i. End use of funds should be monitored by effectively following up QIS statements, analyzing
them. Verify the financials submitted by the borrower and compare them with that of
assumption made at the time of previous sanction.
ii. Pre-sanction visit to the sites of collateral security should invariable be done by the
appraising officers before accepting them as collateral. The field staff branch manager,
division managers, should inspect this at yearly or half yearly intervals.
iii. Borrowers are willing to furnish any detail on their assets and liabilities and execute any
document before disbursement of loan. Obtain all relevant details and documents prior to
disbursing the loan/advance.
iv. Book fresh quality advances and market for such advance. At present we are financing to
those who have approached us. Approach good borrower and bring to our books. Marketing is
the need of hour.
v. Follow-up all account with one quarter interest dues and ensure that borrower meets interest
commitments.
vi. Cost escalation or delay in project implementation should be taken care of while sanctioning
loan itself. If there are any significant developments during implementation that has affected the
project please review sanction well before the commencement of production and installment
falls due.
vii. Strengthen pre-sanction and post-sanction inspection at all levels.
viii. Seasonal activities-monitor the recovery in the account and ensure recovery effort
coincides with the time of revenue inflow.

Page 44

i) A Sizable portion of NPA is in substandard category. It should be possible to upgrade
account in this segment.
ii) Ensure that substandard account does not slip down to doubtful and loss category.
iii) Efforts should be made to upgrade the account to standard categories NPAs affect our
balance sheet four ways:
We cannot book income
Capital adequacy ratio gets affected
NPAs require provisioning from post tax profits.
Affects image in international level.
iv) Once the amount becomes NPA verify weather documentation is in order. If not rectify it
first.
v) Rectify all irregularities in documentation as pointed out by branch inspectors.
vi) Regular counsel and educate defaulting borrower. Maintain regular contact with the
borrowers and monitor the asset. Keep the branch manager informed of the developments at
regular intervals.
vii) Do not permit excess drawing unless otherwise necessary for three unit to run. If the
situations warrants, renew/review the account record excess drawings, if any, permitted in the
account and insists for letters and document it.
viii) In case of sick units if satisfied about the problems of sickness strengthen the assets with
collaterals. This will help in making small provision against such advances. Chalk out a
rehabilitation programme in consultation with the controllers immediately failing which we may
not have any assets to fall back upon later. A quick action is needed. If give a chance, grab the
earliest to palm off the account from our books to any other financial agency.

Substandard Assets

Page 45

a. Experience in the previous years indicate that there has been steady slippage in the quality
of assets in the NPA categories from sub standard to doubtful assets and then to loss assets. One
reason could be that appropriate action as mentioned above is not taken in case of sub standard
assets. Secondly suit field accounts in various civil courts\ debts recovery tribunal is not
followed up in the manner required ad or are getting very little attention. These accounts
particularly suit field /decreed account required constant review at the operating level so that
appropriate steps like enforcing decree, facilitating compromises or write off if need be
initiated instead of holding such un-remunerative accounts on long term basis in your books as
NPAs.
b. Issues raised by advocates should be tackled to get the suits disposed of and executive the
decreased so obtained to reduced the NPAs.
c. Where branches have got backlog in settlement to DICGC claims such claims should
followed up rigorously. For this purpose dealing official at the branch should explore the
possibilities of getting the claim settled at an earliest in consideration with the DICGC Chennai
/ Mumbai.
d. Compromise as a strategy for reducing NPAs is receiving attention of branch functionaries.
Encourage compromise proposal selectively without giving wrong signals to the other good
borrowers. Branches should view such compromise proposals based on the net present value,
nature and value of value of assets presently available to us.

i) Write off Doubtful and loss assets was initiated by branches from the first quarter of the year
itself.
ii) High value doubtful and loss assets where DICGC has settled the claims and / or rejected the
such case should be first dealt with write-off proposals with additional information should be
submitted immediately where ever assets are not available.
Doubtful Assets
LOSS ASSETS

Page 46

iii) Identify all loss assets where full provision is available to write off. Where ever suits are
pending and prospect of recovery exists such account can be parked in advance under
collections accounts.
iv)Write off out standings where provision is short up to Rs 25000 may be sent immediately
without further loss of time.
v) Where ever compromises are / where entertained earlier and write-off the balance still exist
arrange to sent such write-off proposals and ensure that the account does not appear in balance
sheet of the bank.
INTEREST NOT COLLECTED ACCOUNT:-
i) Few branch operating functionaries are still not aware of the IRAC norms. Even though
account is classified as NPA interest is being applied blindly without thinking of consequence
of such application of interest. It inflates the INCA figures.
ii) Serious efforts in upgrading the assets from NPA category will results in reduction of INCA.
Pressurize induce the borrowers to bring down their outstanding levels compared to the
previous year. This will enable the bank to book income on partial recovery basis.
iii) Where fundamentals of the industry/unit/borrowers are sound rehabilitation of the unit may
be taken up on priority.
ADVANCE UNDER COLLECTION ACCOUNT:
i) The number of advance under collection account and out standings there in is the rise.
ii) Due to the policy decision taken to write-off loss assets irrespective of suit position may add
a few more account to advance under collection account.
iii) There will be very marginal recovery during the years.
iv) Review all accounts parked in advance under collection account on priority basis and efforts
should be made to recover full dues and remove such accounts from advance under collection
account.
v) Encourage compromise proposals.
vi) Regular view of the recovery prospects and removal of such accounts from advance under
collection account does not appear to be receiving of attention.
vii) This area needs a special attention of the operating staff.

Page 47

SARFESI the Security Interest Legislation
SARFESI provides for the enforcement of security interests in movable (tangible) or
intervention of court, by way of a simplistic, expeditious and a cost effective process.
Where any borrower makes any default in repayment of secured debt or nay installment thereof,
and his account in respect of such debt has been classified by the secured creditor as non-
performing asset, then, the secured creditor may call upon the borrower by way of a written
legal; notice to discharge in full, his liabilities within sixty days from the date of the notice
failing which the secured creditor would be entitled to exercise all or any of the rights set out
under SARFESI. The notice must contain details of debt and secured assets.
Any bank or public financial institution or any other institution or non-banking financial
company as specified by central government or international finance corporation or a
consortium there of, and his account in resects of such debt has been classified by the secured
creditor as non-performing assets, then the secured creditor may call upon the borrow by the
way of a written legal notice to discharge in full, his liabilities within 60 days from the date of
the notice failing which the secured creditor would be entitled to exercise all or any of the rights
set out under SARFESI.
The provision of SARFESI relating to security of interest can be invoked by any bank or
public financial institution under section 4A of the Companies Act, 1956 or any institution
specified by central government under sub clause (ii) of clause (h) of section 2 of recovery of
debt due to banks and financial institutions Act, 1993 or any other institution or non banking
financial company as specified by central government or international finance corporation or a
consortium thereof.

ENFORCEMENT OF SECURITY INTEREST
ACT 2002

Page 48

Generation of more NPAs is one of the biggest problems faced by bank. Loans and advances
given are becoming NPAs. Bank is facing problem in recovering the loans and advances. The
research should be identified, analyzed and possible solutions be suggested for solving the
important problem.

1. To identify the nature of the problem in NPAs.

2. To minimize the amount of provision required for NPA.

3. To study the amount of NPA under different segments over the years.

4. To analyze the reasons associated with the underperformance of all the sectors.

SBI is the leading bank among all nationalized banks having largest banking network in
the country. Since this branch comprises of Personal, Retail and Commercial banking under one
roof, there is a wider scope for the study NPA management in the main branch, which consists
variety of advances in all the fields. There are many chances of advances getting
NPA in many shapes. In this project, an attempt is made to understand the process and nature of
NPA management methods in SBI, RBI guidelines and NPA trend in SBI.

Sources of Data collection:
1. Primary Data: The project report of this kind will really need first hand information which
will be collected by referring some Bank Statements and collected through the interaction with
Senior Managers and Bank Staffs
2. Secondary Data: Some Banking booklets and Banking prospectus have been used as a
reference for the study and companys websites.
OBJECTIVES OF THE STUDY
SCOPE OF STUDY
METHODOLOGY
Statement of the problem

Page 49

Shortage of time:
Time is very short for research, so that is very difficult can get the knowledge about
everything.
Information not sufficiently available:
The source of data collection is secondary so the information available is not sufficient.
No direct source of information available:
The information is collected from indirect sources so in some information data is not
available.
Secondary data:
Information is not reliable because of secondary data

Limitations of the study

Page 50

Segment wise classification of assets as on 31/3/10 (Rs in crores)
Items assets SSI SBF C&I Personal loan TOTAL
Sub-standard asset 2663 168112 538465 1510251 2219491
D1 228440 7701 0 3312126 3548267
D2 1366102 478447 0 2370183 4214732
D3 262039 585362 0 1271600 2119001
Loss assets 0 0 99000 5794325 6784150
Total provisions 1859244 1239622 637465 14258485 18885641

Interpretations:
In the above chart Small Scale Industries total provision is the highest i.e. 1859244 crores
as compare to Small Banking Finance and Commercial &Industrial loan.

0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2000000
Sub-
standard
asset
D1 D2 D3 Loss assets Total
provision
SSI 2663 228440 1366102 262039 0 1859244
SBF 168112 7701 478447 585362 0 1239622
C&I 538465 0 0 0 99000 637465
Segment wise 2010
ANALYSIS AND FINDINGS

Page 51

In the chart if we compare the 3 segments with respect to Sub-standard assets Small Scale
Industries has the least portion i.e. 2663 crores as compare to Small Banking Finance and
Commercial &Industrial loan in the year 2010.

Interpretations:
From the above chart total provisions has increased a lot with respect to personal loan.

Among all the assets Loss assets of SBI is the highest NPA in respect to the total amount.

0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
Sub-
standard
asset
D1 D2 D3 Loss
assets
Total
provision
Personal loan 1510251 3312126 2370183 1271600 5794325 14258485
Total 2219491 3548267 4214732 2119001 6784150 18885641
Segment wise 2010

Page 52

Sector wise classification of assets as on 31/03/10 ( in crores)
Items assets
Priority Others Total
Sub-standard asset 799447 1420044 2219491
D1 1244915 2303352 3548267
D2 3257102 957630 4214732
D3 1145608 973393 2119001
Loss assets 4976477 1807673 6784150
Total provision 11423549 7462092 18885641

Interpretations:
In the above data the priority sector total provision is the highest i.e. 11423549.

Loss assets are the highest i.e. 4976477.

In others sector D1 has the highest proportion i.e. 2303352 as compare to other assets.
0
2000000
4000000
6000000
8000000
10000000
12000000
Sub-
standard
asset
D1 D2 D3 Loss
assets
Total
provision
Priority 799447 1244915 3257102 1145608 4976477 11423549
Others 1420044 2303352 957630 973393 1807673 7462092
Sector wise 2010

Page 53

Interpretations:
In the chart we can see that total provision has the highest amount i.e. Rs 18885641.

From the chart we can come to know that D3 has the least total by taking overall totals

0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
Sub-
standard
asset
D1 D2 D3 Loss
assets
Total
provision
Total 2219491 3548267 4214732 2119001 6784150 18885641
Total Column 2010

Page 54

Facility wise classification of assets as on 31/03/10 (Rs in crores)
Items assets
CC TL DL DD RA TOTAL
Sub-standard
asset
567584 1403788 230422 17697 0 2219491
D1 228440 3153874 105936 57644 2373 3548267
D2 760212 1549436 26408 782090 1096586 4214732
D3 662928 527562 0 0 928511 2119001
Loss assets 0 654738 260345 198061 5671006 6784150
Total provision 2219164 7289398 623111 1055492 7698476 18885641

Interpretations:
In the chart if we see the facility wise Demand Loan has the least provision i.e.623111
among the other 2 facilities.

0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
Sub-
standard
asset
provision
CC 567584 228440 760212 662928 0 2219164
TL 1403788 3153874 1549436 527562 654738 7289398
DL 230422 105936 26408 0 260345 623111
Facility wise 2010

Page 55

If we see the assets under the Term Loan then, D1 has the highest portion i.e. 3153874
as compare to other assets in Term Loan.

Interpretations:
In the above chart among the facility wise, RA has the highest provision i.e.7698476 as
compare to DD provision.

In the chart if we see the total column then, D3 has the least amount i.e.2119001 as
compare to the totals of all the other assets.

In RA facility, Loss assets i.e.5671006 has the highest proportion as compare to other
assets in RA.

0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
Sub-
standard
asset
provision
DD 17697 57644 782090 0 198061 1055492
RA 0 2373 1096586 928511 5671006 7698476
TOTAL 2219491 3548267 4214732 2119001 6784150 18885641
Facility wise 2010

Page 56

Segment wise classification of assets as on 31/3/09 (Rs in crores)
Items assets
SSI SBF C&I PER TOTAL
Sub-standard asset
0 0 0 1619009 1619009
D1
2962446 50147 0 2924555 5937148
D2
123721 871999 2822461 608476 4043684
D3
123721 871999 0 608476 1604196
Loss assets
0 33703 99000 4103516 4816303
Total provision
3650882 1196724 2921461 9671189 18020340

0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
Sub-
standard
asset
provision
SSI 0 2962446 123721 123721 0 3650882
SBF 0 50147 871999 871999 33703 1196724
C&I 0 0 2822461 0 99000 2921461
Segment wise 2009

Page 57

Interpretations:
From the chart we can see that Small Banking Finance has the least amount in total
provision i.e.1196724 crores as compare to Small Scale Industries and Commercial &
Industrial Loans provisions.

In the chart we can see that Sub-Standard Assets is zero for all the 3 segments for the
year 2009.

We can also see that in the Commercial & Industrial Loans segment only loss assets are
there, were as all other assets is zero.

Page 58

Interpretations:
Asset D1 overall total has the highest i.e.5937148 as compare to other assets.

Under Personal loan segment asset D2 and D3 amount is same there is no change and it
has the least amount among other assets i.e. 608476 and even the total provision of
Personal Loan has the highest i.e. 9671189 as compare to other segments.

0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
Sub-
standard
asset
provision
PER 1619009 2924555 608476 608476 4103516 9671189
TOTAL 1619009 5937148 4043684 1604196 4816303 18020340
Segment wise 2009

Page 59

Sector wise classification of assets as on 31/03/09 (Rs in crores)
Items assets
Priority Others Total
Sub-standard asset 846476 772533 1619009
D1 3260379 2676769 5937148
D2 901974 3141710 4043684
D3 1349467 254729 1604196
Loss assets 1655235 3161068 4816303
Total provision 8013531 10006809 18020340

Interpretations:
In the above chart we can see that in the priority sector, asset D1 has the highest amount
i.e. 3260379 as compare to other assets.

0
2000000
4000000
6000000
8000000
10000000
12000000
Sub-
standard
asset
provision
Priority 846476 3260379 901974 1349467 1655235 8013531
Others 772533 2676769 3141710 254729 3161068 10006809
Sector wise

Page 60

Priority sector has the least total provision i.e. 8013531 as compare to others sectors.

Interpretations:
From the above chart we can come to know that asset D3 has the least amount in overall
total i.e. 1604196.

Even the total provision is increased by taking into overall considerations in sector wise.

0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
Sub-
standard
asset
provision
Total 1619009 5937148 4043684 1604196 4816303 18020340
Total column 2009

Page 61

Facility wise classification of assets as on 31/03/09 (Rs in crores)
Items assets
CC TL DL DD RA TOTAL
Sub-standard asset 0 1539282 54139 25588 0 1619009
D1 1067780 1139299 0 658407 3071662 5937148
D2 361043 3367104 0 0 315537 4043684
D3 566535 665103 0 0 372558 1604196
Loss assets 0 1585309 0 0 2298428 4816303
Total provision 1995358 8296097 738219 932481 6058185 18020340

Interpretations:
From the above chart we can see that among the 3 facilities Term Loan total provision
has the highest amount i.e. 8296097.

Under the Demand Loan facility, sub - standard assets alone is there i.e. 54139 and
remaining all the assets are zero and its total provision is also least among the 3.
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
9000000
Sub-
standard
asset
provision
CC 0 1067780 361043 566535 0 1995358
TL 1539282 1139299 3367104 665103 1585309 8296097
DL 54139 0 0 0 0 738219
Facility wise 2009

Page 62

If we see the Cash Credit facility, we can see that asset D2 has the least amount i.e.
361043 as compare to other assets.

Interpretations:
From the chart we can come to know that facility DD has the least total provision as
compare to others i.e. 932481.

Sub standard asset under the facility DD is the least i.e. 25588 and under the DD
facility D2, D3 and loss assets are zero.

0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
Sub-
standard
asset
provision
DD 25588 658407 0 0 0 932481
RA 0 3071662 315537 372558 2298428 6058185
TOTAL 1619009 5937148 4043684 1604196 4816303 18020340
Facility wise 2009

Page 63

1. Commercial and Industrial loans are less which are turning out as NPA as compare to
others because there amounts are high.
2. Sub- Standard Assets and D3 assets totals are very less, where it has the less provisions
in all cases.
3. Demand Loan is decreased by 15.59% in 2010 as compared to last year 2009 because
there was a recession and economy slow down in the market. As it was recession,
customers started taking loan for a short term period so that they can pay the amount
regularly only for shorter period of time rather going for the long term period were they
cant pay the loan.
4. Under the segment wise Personal Loan total shows the highest amount in the year 2010
and it has increased by 47.43% from the last year 2009. It has increased because in the
year 2010 everyone started taking personal loans and as the economy was just coming to
the recovery stage so the people started taking the loans and thats the reason increase in
the personal loan in 2010.
5. In the sector wise in the year 2010 others sector total has decreased from the last year
2009 by 25.42% it has occurred due to the loans given to the other sectors in the year
2010 has reduced which leads to decrease in the total of the others sectors in the year
2010.
6. In the facility wise Term Loan is decreased in the year 2010 by 12.13% as compare to the
last year 2009. It has occurred because customers took short term loans more rather than
long term loans which lead to the decrease in the year 2010.

1. From the observations & the past data, it is suggestible that the bank should plan their
advances towards various segments hereon.
2. The proportion of the advances made towards Personal loan segment should be partly
diversified towards SBF segment & SSI segment.
Findings

Suggestions

Page 64

3. If there is a huge customer database for SBF & SSI segments then the loans should be
advanced to these in a relatively higher proportion than the personal loan segment. If
there is high number of customers towards the personal loan segment then the bank
officials could advice the customer on the repayment options which better help the
customer to pay back the loan easily.
4. Effective inspection system should be implemented, before sanctioning the loan.
5. The branch should take compromising measures for settlement of NPA accounts.
6. The computer should give the intimation of the accounts, which are going to be turned
as NPA and should tell well in advance before 15 days of the account which are turning
to be NPA.
7. In the segment wise the bank can go for issuing more to C&I loan because the provision
is less as compare to SBF and SSI.
8. In sector wise they can go for others sector because were there provision is less and
more importance can be given to others sector as they can reduce their NPA by issuing
loan to others rather than priority sector.
9. In facility wise bank can issue in DL and TL loans were it has less provision as compare
to others and were they can recover their money from DL loan rather than losing the
money given to others like CC, DD and RA.
10. Identification and monitoring of Special Mention Accounts as per the RBI guidelines in
order to check the slippages of standard assets to NPA category by making prompt
review and taking quick corrective action.
11. The Credit section department should carefully watch the accounts which are going to
be turned as NPA and should give warning signals to customers for the payment.

NPA is a weapon, which affects banks profitability due to interest income not being recognized
on NPA accounts and loan loss previously incurred to be absorbed from profit earned. Also the
provisions are to be made on the NPA accounts which will reduce the profits of the Bank. The
bank must adopt structured NPAs management policy for eliminating or reducing the NPAs in
the Bank.
CONCLUSION

Page 65

The situation calls for an urgent action by bank for improvement. Based on our experience we
consider that the branches will have to constantly work to prevent the NPA virus from
contaminating the new credit portfolio. Also concurrently they will have to reinforce effective
strategies to remove the virus from the existing NPA portfolio. The task although difficult is
achievable. Monitoring and follow-up are the key watchwords in the task of managing and
reducing NPAs.

Personal interview
Banks journals
Web Sites: www.sbi.co.in

Bibliography

Annexure

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K.L.E.

COLLEGE OF ENGINEERING AND TECHNOLOGY, BELGAUM

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