“A Study of Non Performing Assets with Special Reference to Axis

Bank”

Bhanotu Babu
Master of Business Administration - (MBA),
Joginpally B.R.Engineering College,
JNTU – Hyderabad.

ABSTRACT: analytical content and policy foresight. Banking sector

A strong banking sector is important for flourishing reforms in India has progressed promptly on aspects
economy. The failure of the banking sector may have like interest rate deregulation, reduction in statutory
an adverse impact on other sectors. Non-performing reserve requirements, prudential norms for interest
assets are one of the major concerns for banks in India. rates, asset classification, income recognition and
NPAs reflect the performance of banks. A high level provisioning. But it could not match the pace with
of NPAs suggests high probability of a large number which it was expected to do. The accomplishment of
of credit defaults that affect the profitability and net- these norms at the execution stages without
worth of banks and also erodes the value of the asset. restructuring the banking sector as such is creating
The NPA growth involves the necessity of provisions, havoc. During pre-nationalization period and after
which reduces the over all profits and shareholders independence, the banking sector remained in private
value. The issue of Non Performing Assets has been hands Large industries who had their control in the
discussed at length for financial system all over the management of the banks were utilizing major portion
world. The problem of NPAs is not only affecting the of financial resources of the banking system and as a
banks but also the whole economy. In fact high level result low priority was accorded to priority sectors.
of NPAs in Indian banks is nothing but a reflection of
the state of health of the industry and trade. This report Government of India nationalized the banks to make
deals with understanding the concept of NPAs, its them as an instrument of economic and social change
magnitude and major causes for an account becoming and the mandate given to the banks was to expand
non-performing, projection with special reference to their networks in rural areas and to give loans to
AXIS bank. priority sectors such as small scale industries, self-
employed groups, agriculture and schemes involving
INTRODUCTION: women. To a certain extent the banking sector has
The crucial role of bank economists in transforming achieved this mandate. Lead Bank Scheme enabled the
the banking system in India. Economists have to be banking system to expand its network in a planned
more „mainstreamed‟ within the operational structure way and make available banking series to the large
of commercial banks. Apart from the traditional number of population and touch every strata of society
functioning of macro-scanning, the inter linkages by extending credit to their productive endeavours.
between treasuries, dealing rooms and trading rooms This is evident from the fact that population per office
of banks need to be viewed not only with the day-to- of commercial bank has come down from 66,000 in
day needs of operational necessity, but also with the year 1969 to 11,000 in 2004.

Page 25
Similarly, share of advances of public sector banks to that the financial performance of the banks would not
priority sector increased form 14.6% in 1969 to 44% show good results.
of the net bank credit. The number of deposit accounts
of the banking system increased from over 3 crores in RESEARCH METHODOLOGY
1969 to over 30 crores. Borrowed accounts increased The research methodology means the way in which we
from 2.50 lakhs to over 2.68 crores. would complete our prospected task. Before
undertaking any task it becomes very essential for
OBJECTIVE OF THE STUDY anyone to determine the problem of study. I have
Following are the objectives of the study: adopted the following procedure in completing my
 What types of challenges banking industry is study report.
facing with special reference to NPA. 1. Formulating the problem
 How AXIS bank cope with NPA and its impact 2. Research design
in recent economic crisis. 3. Determining the data sources
 To find the factors that would effect level of 4. Analyzing the data
NPAs. 5. Interpretation
 To analyze the significance of each variable that 6. Preparing research report
might effect the NPA level.
 To understand what is Non Performing Assets (1) Formulating the Problem
and what are the underlying reasons for the I am interested in the banking sector and I want to
emergence of the NPAs. make my future in the banking sector so decided to
 To understand the impacts of NPAs on the make my research study on the banking sector. I
operations of the banks. analyzed first the factors that are important for the
 To know what steps are being taken by the banking sector and I came to know that providing
Indian banking sector to reduce the NPAs? credit facility to the borrower is one of the important
 To evaluate the comparative ratio of the banks factors as far as the banking sector is concerned. On
with concerned to the NPAs. the basis of the analyzed factor, I felt that the
important issue right now as far as the credit facilities
NEEDS OF THE STUDY are provided by bank is non performing assets. I
The banks not only accept the deposits of the people started knowing about the basics of the NPAs and
but also provide them credit facilities for their decided to do study on the NPAs. So, I choose the
development. Indian banking sector has the nation in topic “A STUDY OF NON PERFORMING ASSETS”
developing the business and service sectors. But with special reference to AXIS BANK LTD.
recently the banks are facing the problem of credit
risk. It is found that many general people and business (2) Research Design
people borrow from the banks but due to some genuine The research design tells about the mode with which
or other reasons are not able to repay back the amount the entire project is prepared. My research design for
drawn to the banks. The amount which is not given this study is basically descriptive. Because I have
back to the banks is known as the non performing utilized the large number of data of the banks.
assets. Many banks are facing the problem of NPAs
which hampers the business of the banks. Due to (3) Determining The Data Source
NPAs the income of the banks is reduced and the The data source can be primary or secondary. The
banks have to make the large number of the provisions primary data are those for data which are used for the
that would curtail the profit of the banks and due to first time in the study. However such data take place

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much time and are also expensive. Whereas the The huge amounts of loan granted under these
secondary data are those data which are already schemes were totally unrecoverable by banks due to
available in the market. These data are easy to search political manipulation, misuse of funds and non-
and are not expensive too. For my study I have utilized reliability of target audience of these sections. Loans
totally the secondary data. Which is raw in state I given by banks are their assets and as the repayments
analyzed this data for my research purpose. of several of the loans were poor, the qualities of these
assets were steadily deteriorating. Credit allocation
Source of Secondary Data became 'Lon Melas', loan proposal evaluations were
 Annual reports of banks slack and as a result repayments were very poor. There
 Reports of RBI are several reasons for an account becoming NPA.
 Internet * Internal factors
 Books etc. * External factors

Data generated by the comparison of banks: EXTERNAL FACTORS

For this purpose I compare following facts or data of  Ineffective recovery tribunal
banks The Govt. has set of numbers of recovery tribunals,
 Comparison of credit growth with GNPA and which works for recovery of loans and advances. Due
NNPA to their negligence and ineffectiveness in their work
 Between credit growth and repo rate the bank suffers the consequence of non-recover, their
 Comparison of unsecured loans by reducing their profitability and liquidity.
 Comparison of deposit growth
 Willful Defaults
 Comparison of provision coverage
There are borrowers who are able to payback loans but
are intentionally withdrawing it. These groups of
(4) Analyzing the Data
people should be identified and proper measures
The primary data would not be useful until and unless
should be taken in order to get back the money
they are well edited, tabulated and analyzed. When the
extended to them as advances and loans.
person receives the primary data many unuseful data
would also be there. So, I analyzed the data and edited
 Natural calamities
them and turned them in the useful tabulations. So, that
This is the measure factor, which is creating alarming
it can become useful in my report.
rise in NPAs of the PSBs. every now and then India is
hit by major natural calamities thus making the
LITERATURE REVIEW
borrowers unable to pay back there loans. Thus the
Macro Perspective Behind NPAs
bank has to make large amount of provisions in order
A lot of practical problems have been found in Indian
to compensate those loans, hence end up the fiscal
banks, especially in public sector banks. For Example,
with a reduced profit.Mainly ours framers depends on
the government of India had given a massive wavier of
rain fall for cropping. Due to irregularities of rain fall
Rs. 15,000 Crs. under the Prime Minister ship of Mr.
the framers are not to achieve the production level thus
V.P. Singh, for rural debt during 1989-90. This was
they are not repaying the loans.
not a unique incident in India and left a negative
impression on the payer of the loan.
 Industrial sickness
Poverty elevation programs like IRDP, RREP, SUME,
Improper project handling , ineffective management ,
SEPUP, JRY, PMRY etc., failed on various grounds in
lack of adequate resources, lack of advance technology
meeting their objectives.

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, day to day changing govt. Policies give birth to INTERNAL FACTORS
industrial sickness. Hence the banks that finance those  Defective Lending process
industries ultimately end up with a low recovery of There are three cardinal principles of bank lending that
their loans reducing their profit and liquidity. have been followed by the commercial banks since
long.
 Lack of demand i. Principles of safety
Entrepreneurs in India could not foresee their product ii. Principle of liquidity
demand and starts production which ultimately piles iii. Principles of profitability
up their product thus making them unable to pay back
the money they borrow to operate these activities. The i. Principles of safety
banks recover the amount by selling of their assets, By safety it means that the borrower is in a position to
which covers a minimum label. Thus the banks record repay the loan both principal and interest. The
the non recovered part as NPAs and has to make repayment of loan depends upon the borrowers:
provision for it. a. Capacity to pay
b. Willingness to pay
 Change on Govt. policies Capacity to pay depends upon: 1. Tangible assets 2.
With every new govt. banking sector gets new policies Success in business
for its operation. Thus it has to cope with the changing Willingness to pay depends on: 1. Character 2. Honest
principles and policies for the regulation of the rising 3. Reputation of borrower
of NPAs. The fallout of handloom sector is continuing
as most of the weavers Co-operative societies have The banker should, there fore take utmost care in
become defunct largely due to withdrawal of state ensuring that the enterprise or business for which a
patronage. The rehabilitation plan worked out by the loan is sought is a sound one and the borrower is
Central govt to revive the handloom sector has not yet capable of carrying it out successfully .he should be a
been implemented. So the over dues due to the person of integrity and good character.
handloom sectors are becoming NPAs. Apart from
these factors there may be others external factors  Inappropriate technology
which can cause of NPA‟s, these factors are: Due to inappropriate technology and management
information system, market driven decisions on real
1. Sluggish legal system - Long legal tangles Changes time basis can not be taken. Proper MIS and financial
that had taken place in labour laws accounting system is not implemented in the banks,
Lack of sincere effort. which leads to poor credit collection, thus NPA. All
2. Scarcity of raw material, power and other resources. the branches of the bank should be computerized.
3. Industrial recession.
4. Shortage of raw material, raw material\input price  Improper swot analysis
escalation, power shortage, industrial recession, excess The improper strength, weakness, opportunity and
capacity, natural calamities like floods, accidents. threat analysis is another reason for rise in NPAs.
5. Failures, nonpayment\ over dues in other countries, While providing unsecured advances the banks depend
recession in other countries, externalization problems, more on the honesty, integrity, and financial soundness
adverse exchange rates etc. and credit worthiness of the borrower.
6. Government policies like excise duty changes,
Import duty changes etc., 1. Banks should consider the borrowers own capital
investment.

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2. It should collect credit information of the borrowers Like OSCB suffered loss due to the OTM Cuttack,
from and Orissa hand loom industries. The biggest
a. From bankers defaulters of OSCB are the OTM (117.77lakhs), and
b. Enquiry from market/segment of trade, industry, the handloom sector Orissa hand loom WCS ltd
business. (2439.60lakhs).
c. From external credit rating agencies. · Analyse the
balance sheet  Absence of regular industrial visit
True picture of business will be revealed on analysis of The irregularities in spot visit also increases the NPAs.
profit/loss a/c and balance sheet. Absence of regularly visit of bank officials to the
customer point decreases the collection of interest and
3. Purpose of the loan principals on the loan. The NPAs due to wilful
When bankers give loan, he should analyse the defaulters can be collected by regular visits.
purpose of the loan. To ensure safety and liquidity,
banks should grant loan for productive purpose only.  Re loaning process
Bank should analyse the profitability, viability, long Non remittance of recoveries to higher financing
term acceptability of the project while financing. agencies and re loaning of the same have already
affected the smooth operation of the credit cycle. Due
Poor credit appraisal system to re loaning to the defaulters and CCBs and PACs, the
Poor credit appraisal is another factor for the rise in NPAs of OSCB is increasing day by day.
NPAs. Due to poor credit appraisal the bank gives
advances to those who are not able to repay it back. Apart from these the other internal factors are:
They should use good credit appraisal to decrease the 1. Funds borrowed for a particular purpose but not use
NPAs. for the said purpose.
2. Project not completed in time.
 Managerial deficiencies 3. Poor recovery of receivables.
The banker should always select the borrower very 4. Excess capacities created on non-economic costs.
carefully and should take tangible assets as security to 5. In-ability of the corporate to raise capital through
safe guard its interests. When accepting securities the issue of equity or other debt instrument from
banks should consider the capital markets.
1. Marketability 6. Business failures.
2. Acceptability 7. Diversion of funds for expansion\ modernization\
3. Safety setting up new projects\ helping or promoting sister
4. Transferability. concerns.
8. Willful defaults, siphoning of funds, fraud, disputes,
The banker should follow the principle of management disputes, mis-appropriation etc.,
diversification of risk based on the famous maxim “do 9. Deficiencies on the part of the banks viz. in credit
not keep all the eggs in one basket”; it means that the appraisal, monitoring and follow-ups, delay in
banker should not grant advances to a few big farms settlement of payments\ subsidiaries by government
only or to concentrate them in few industries or in a bodies etc.,
few cities. If a new big customer meets misfortune or
certain traders or industries affected adversely, the
overall position of the bank will not be affected.

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 in the trading book of the bank and (iii) Foreign
Currency Risk.

Strategic Risk
Strategic Risk is the risk arising from adverse business
decisions, improper implementation of decisions, or
lack of responsiveness to industry changes. This risk is
Basel Report Framework and India
a function of the compatibility of an organization‟s
Various risks in bank
strategic goals, the business strategies developed to
Liquidity Risk
achieve those goals, the resources deployed against
Market Liquidity Risk arises when a bank is unable to
these goals, and the quality of implementation.
conclude a large transaction in a particular instrument
near the current market price. Funding Liquidity Risk
Reputation Risk
is defined as the inability to obtain funds to meet cash
Reputation risk is the risk arising from negative public
flow obligations. For banks, funding liquidity risk is
opinion. This risk may expose the institution to
more crucial.
litigation, financial loss, or a decline in customer base.
Interest Rate Risk
Transaction Risk
Interest Rate Risk (IRR) is the exposure of a Bank‟s
Transaction risk is the risk arising from fraud, both
financial condition to adverse movements in interest
internal & external, failed business processes and the
rates. Banks have an appetite for this risk and use it to
inability to maintain business continuity and manage
earn returns. IRR manifests itself in four different
information.
ways: re-pricing, yield curve, basis and embedded
options.
Compliance Risk
Compliance risk is the risk of legal or regulatory
Pricing Risk
sanctions, financial loss or reputation loss that a bank
Pricing Risk is the risk to the bank‟s financial
may suffer as a result of its failure to comply with any
condition resulting from adverse movements in the
or all of the applicable laws, regulations, codes of
level or volatility of the market prices of interest rate
conduct and standards of good practice. It is also
instruments, equities, commodities and currencies.
called integrity risk since a bank‟s reputation is closely
Pricing Risk is usually measured as the potential
linked to its adherence to principles of integrity and
gain/loss in a position/portfolio that is associated with
fair dealing.
a price movement of a given probability over a
specified time horizon. This measure is typically
Operational Risk
known as value-at-risk (VAR).
The term Operational Risk includes both compliance
risk and transaction risk but excludes strategic risk and
Foreign Currency Risk
reputation risk.
Foreign Currency Risk is pricing risk associated with
foreign currency.
Credit Risk
Credit Risk is most simply defined as the potential of a
Market Risk
bank borrower or counter-party to fail to meet its
The term Market Risk applies to (i) that part of IRR
obligations in accordance with agreed terms.
which affects the price of interest rate instruments, (ii)
Pricing Risk for all other assets/portfolio that are held

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For most banks, loans are the largest and most obvious cent. It also gave rise to a significant gap between the
source of credit risk. regulatory measurement of the risk of a given
transaction and its actual economic risk. The most
Evolution of Basel Committee Initiatives troubling side effect of the gap between regulatory and
actual economic risk has been the distortion of
financial decision-making, including large amounts of
regulatory arbitrage, or investments made on the
basis of regulatory constraints rather than genuine
economic opportunities. The strict rule based approach
of the 1988 accord has also been criticised for its `one
The Basel I Accord and the 1996 Amendment thereto size fits all‟ prescription. In addition, it lacked proper
have evolved into Basel II, as depicted in the figure recognition of credit risk mitigants such as credit
above. derivatives, securitisation, and collaterals. The recent
cases of frauds, acts of terrorism, hacking, have
The New Accord (Basel II) brought into focus the operational risk that the banks
Close on the heels of the 1996 amendment to the Basel and financial institutions are exposed to.
I accord, in June 1999 BCBS issued a proposal for a
New Capital Adequacy Framework to replace the 1988 The proposed new accord (Basel II) is claimed by
Accord. The proposed capital framework consists of BCBS to be `an improved capital adequacy framework
three pillars: minimum capital requirements, which intended to foster a strong emphasis on risk
seek to refine the standardised rules set forth in the management and to encourage ongoing improvements
1988 Accord; supervisory review of an institution's in banks‟ risk assessment capabilities‟. It also seeks to
internal assessment process and capital adequacy; and provide a `level playing field‟ for international
effective use of disclosure to strengthen market competition and attempts to ensure that its
discipline as a complement to supervisory efforts. The implementation maintains the aggregate regulatory
th
accord has been finalized recently on 11 May 2004 capital requirements as obtaining under the current
and the final draft is expected by the end of June 2004. accord. The new framework deliberately includes
For banks adopting advanced approaches for incentives for using more advanced and sophisticated
measuring credit and operational risk the deadline has approaches for risk measurement and attempts to align
been shifted to 2013, whereas for those opting for the regulatory capital with internal risk measurements
basic approaches it is retained at 2011. of banks subject to supervisory review and market
disclosure.

PILLAR I:
Minimum Capital Requirements
There is a need to look at proposed changes in the
measurement of credit risk and operational risk.

The Need for Basel II

The 1988 Basel I Accord has very limited risk
sensitivity and lacks risk differentiation (broad brush
structure) for measuring credit risk. For example, all
corporations carry the same risk weight of 100 per

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Credit Risk The IRB calculation of risk weighted assets for
Three alternate approaches for measurement of credit exposures to sovereigns, banks, or corporate entities
risk have been proposed. These are: relies on the following four parameters:
• Standardised
• Internal Ratings Based (IRB) Foundation  Probability of default (PD), which measures the
• Internal Ratings Based (IRB) Advanced likelihood that the borrower will default over a
given time horizon.
The standardised approach is similar to the current  Loss given default (LGD), which measures the
accord in that banks are required to slot their credit proportion of the exposure that will be lost if a
exposures into supervisory categories based on default occurs.
observable characteristics of the exposures (e.g.  Exposure at default (EAD), which for loan
whether the exposure is a corporate loan or a commitment measures the amount of the facility
residential mortgage loan). The standardised approach that is likely to be drawn in the event of a default.
establishes fixed risk weights corresponding to each  Maturity (M), which measures the remaining
supervisory category and makes use of external credit economic maturity of the exposure.
assessments to enhance risk sensitivity compared to
the current accord. The risk weights for sovereign, Operational Risk
inter-bank, and corporate exposures are differentiated Within the Basel II framework, operational risk is
based on external credit assessments. An important defined as the risk of losses resulting from inadequate
innovation of the standardised approach is the or failed internal processes, people and systems, or
requirement that loans considered `past due‟ be risk external events. Operational risk identification and
weighted at 150 per cent unless, a threshold amount of measurement is still in an evolutionary stage as
specific provisions has already been set aside by the compared to the maturity that market and credit risk
bank against that loan. measurements have achieved. As in credit risk, three
alternate approaches are prescribed:
Credit risk mitigants (collaterals, guarantees, and • Basic Indicator
credit derivatives) can be used by banks under this • Standardised
approach for capital reduction based on the market risk • Advanced Measurement (AMA)
of the collateral instrument or the threshold external
credit rating of recognised guarantors. Reduced risk BANKING INDUSTRY
weights for retail exposures, small and medium size Banking in India
enterprises (SME) category and residential mortgages Banking in India originated in the last decades of the
have been proposed. The approach draws a number of 18th century. The oldest bank in existence in India is
distinctions between exposures and transactions in an the State Bank of India, a government-owned bank that
effort to improve the risk sensitivity of the resulting traces its origins back to June 1806 and that is the
capital ratios. largest commercial bank in the country. Central
banking is the responsibility of the Reserve Bank of
The IRB approach uses banks‟ internal assessments India, which in 1935 formally took over these
of key risk drivers as primary inputs to the capital responsibilities from the then Imperial Bank of India,
calculation. The risk weights and resultant capital relegating it to commercial banking functions. After
charges are determined through the combination of India's independence in 1947, the Reserve Bank was
quantitative inputs provided by banks and formulae nationalized and given broader powers.
specified by the Committee.

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In 1969 the government nationalized the 14 largest March 2014. The overseas operations of the Bank are
commercial banks; the government nationalized the six spread over its seven international offices with
next largest in 1980. Currently, India has 88 scheduled branches at Singapore, Hong Kong, DIFC (Dubai
commercial banks (SCBs) - 27 public sector banks International Financial Centre), Colombo and
(that is with the Government of India holding a stake), Shanghai and representative offices at Dubai and Abu
29 private banks (these do not have government stake; Dhabi. During the year, the Bank has upgraded its
they may be publicly listed and traded on stock representative office in Shanghai, China to a branch to
exchanges) and 31 foreign banks. They have a become the first Indian private sector bank to set up a
combined network of over 53,000 branches and 17,000 branch in China. During the year, the Bank‟s overseas
ATMs. According to a report by ICRA Limited, a subsidiary namely Axis Bank UK Ltd. commenced
rating agency, the public sector banks hold over 75 banking operations. Axis Bank is one of the first new
percent of total assets of the banking industry, with the generation private sector banks to have begun
private and foreign banks holding 18.2% and 6.5% operations in 1994. The Bank was promoted in 1993,
respectively. jointly by Specified Undertaking of Unit Trust of India
(SUUTI) (then known as Unit Trust of India),Life
CHALLENGES FACING BANKING INDUSTRY Insurance Corporation of India (LIC), General
IN INDIA Insurance Corporation of India (GIC), National
The banking industry in India is undergoing a major Insurance Company Ltd., The New India Assurance
transformation due to changes in economic conditions Company Ltd., The Oriental Insurance Company Ltd.
and continuous deregulation. These multiple changes and United India Insurance Company Ltd. The
happening one after other has a ripple effect on a bank shareholding of Unit Trust of India was subsequently
(Refer fig. 2.1) trying to graduate from completely transferred to SUUTI, an entity established in 2003.
regulated sellers market to completed deregulated With a balance sheet size of Rs.3,83,245 crores as on
customers market. 31st March 2014, Axis Bank has achieved consistent
growth and stable asset quality with a 5 year CAGR
(2015-14) of 21% in Total Assets, 19% in Total
Deposits, 23% in Total Advances and 28% in Net
Profit.

DATA ANALYSIS AND INTERPRETATION

COMPANY PROFILE
Axis Bank is the third largest private sector bank in
India. Axis Bank offers the entire spectrum of financial
services to customer segments covering Large and
Mid-Corporates, MSME, Agriculture and Retail
Businesses. The Bank has a large footprint of 2402
domestic branches (including extension counters) and
12,922 ATMs spread across the country as on 31st

Page 33
 CONCLUSIONS
The issue of Non-Performing Assets (NPAs) in the
financial sector has been an area of concern for all
economies and reduction in NPAs has become
synonymous with functional efficiency of financial
intermediaries. Although NPAs are a balance sheet
issue of individual banks and financial institutions, it
has wider macroeconomic implications. It is important
that, if resolution strategies for recovery of dues from
NPAs are not put in place quickly and efficiently,
these assets would deteriorate in value over time and
only scrap value would be realized at the end. It
Loan growth CAGR (from FY04 to FY08) should, however, be kept in mind that NPAs are an
integral part of the business financial sector and the
players are in as they are in the business of taking risk
and their earnings reflect the risk they take. They
operate in an environment, where there would be
defaults as well as deterioration in portfolio value, as
market movements can never be predicted with
certainty. It is in this context, that countries have
adopted regulatory measures and the guiding structure
has been provided by the Basel guidelines.
ROWTH METRIC - DEPOSIT COMPARISON
In terms of the deposit growth (CAGR) achieved by SUGGESTION
these banks during the last 5 years, Axis Bank and After all these points, I just want to say that NPA is a
AXIS Bank retain top two slots as seen in loan big problem of banks. Due to this crisis the NPA are
growth. AXIS Bank registered a deposit growth of also increased. That‟s why all the banks are facing
just 6% in FY08. This was in sharp contrast to the 40% problems and AXIS bank is top most in those banks,
growth the bank achieved in the 4 years before FY08. AXIS banks has a big exposure in that crisis as
PSU banks, on the other hand, grew at a much slower compare to other banks. So banks have to take care of
pace. those banks. My recommendations are:
1. Strengthening provision norms and loan
Deposits growth CAGR (from FY04 to FY08) classification standards based on forward looking
AXIS BOB BOI HDFC AXIS PNB SBI criteria (like future cash flows) were implemented.
BANK 2. Through securitization they can reduce NPA
43% 20% 20% 35% 38% 17% 14% 3. Speed of action- the speedy containment of
systematic risk and the domestic credit crunch

Page 34
 problem with the injection of large public fund for  www.geocities.com/kstability/content/index.html
bank recapitalization are critical steps towards  http://en.wikipedia.org/wiki/banking in india
normalizing the financial system.  www.rbi.org.in
4. Strengthening legal system  www.moneycontrol.com.
5. Maintain required capital adequacy ratio as per
basel 2 norms. That means now the provision for
NPL will be more. This may look a conservative
approach. But it should be implemented to reduce
risk.
6. Modification in accounting system
7. Use the concept of credit derivative
8. Aligning of prudential norms with international
standard.

LIMITATION OF THE STUDY

The limitation that I felt in my study are:
 It was critical for me to gather the financial data of
the every bank of the public sector banks so the
better evaluation of the performance of the banks
are not possible.
 Since my study is based on the secondary data, the
practical operation as related to the NPAs are
adopted by the banks are not learned.
 Since the Indian banking sector is so wide so it
was possible for me to cover all the banks of the
Indian banking sector.

BIBLIOGRAPHY
 Pandey I M , financial management, Vikas
publication, new Delhi, 2012
 Khan M Y and K Jain “management accounting:
Tata Mcgraw-Hill Publishing Company Limited,
New Delhi 1999
 Malhotra Naresh, Marketing Research
 Annual reports of AXIS bank from year 2004 to
2014
 Annual reports of HDFC from year 2004 to 2014
 Annual reports of SBI from year 2004 to 2014
 Annual reports of Bank of Boarda from year
2004 to 2014
 Annual reports of Bank of India from year 2004 to
2014
 Research paper of Prasanta K Reddy

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