ACKNOWLEDGEMENT

Firstly, I would like to thanks to God, the Almighty, for

his showers of blessing throughout my research work to
complete the research successfully.

I would like to express my deep and sincere gratitude to

my respected supervisor Dr. S B. Singh, Professor (Retired),
Department of Accounting, Faculty of commerce & management
studies, Jai Narain Vyas University, Jodhpur for his continuous
motivation and constructive guidance given to me throughout the
study. Without Sir guidance and advice this work would not have
appeared in the present form. It is indeed my privilege to express
gratitude to him for the keen interest he has taken in the work.

My sincere thanks to Dr. Anil Verma, Head, Department

of Accounting, Faculty of commerce & management studies, Jai
Narain Vyas University, Jodhpur for his valuable guidance.
I would like to thank department Professors and Staffs for
guidance and motivation to complete my research

I also express my deep gratitude to my family and friends

for motivating and guiding me. Their valuable assistance
throughout the work was remarkable.

I would like to thanks my Chartered Accountancy

Profession as it helps me a lot in doing this research.

Last but not the least I offer my thanks to all those whose
names could not be acknowledged individually and all well-
wishers.

(Sanjiv Bhootra)

i
 PREFACE

Finance is critical to a country's development. As a result, it

has been given the highest priority. The economic development
of a country and the development of the banking industry are
inextricably linked. Under the influence of technological
advancements and banking reforms, the financial sector is
undergoing tremendous changes all over the world. Due to the
effects of liberalisation, restructuring, technological
developments, and consolidation, the traditional and conservative
face of Indian banking has transformed. A range of reformative
actions were implemented in the deregulated environment to
improve the operation of Indian banks in accordance with
international banking principles.

The accumulation of large non-performing assets (NPAs) in

bank balance sheets has been a burning or major issue in the
Indian economy's financial sector for the past decade. Non-
performing assets (NPAs) in the Indian banking sector are a major
source of worry, and cleaning up and reducing NPAs on bank
balance sheets has become a critical issue. The number of non-
performing assets has risen dramatically and unexpectedly
(NPAs). Bank recovery would necessitate unique arrangements,
efforts, and successful techniques. The high level of
nonperforming assets (NPAs) had a negative influence on bank
performance. As a result, an attempt has been made to provide
some insight into the management of non-performing assets by a
number of public and private sector banks, as well as to provide
solutions to the problem.

ii
 The purpose of this study is to examine the gross and net Non-
Performing Assets (NPAs) of public and private sector banks.
With relevant analytical debates in line with the aims proposed.
Three banks from the public sector and three banks from the
private sector were chosen at random for this study. Accordingly,
State Bank of India, Punjab National Bank and Bank of
Baroda from the public sector and HDFC Bank, ICICI Bank
and Axis Bank from the private sector banks have been selected
for the study.

In Present study data has been used from 2015-2016 to 2019-

2020. To compare, analysis and hypothesis testing of comparable
financial performance of the selected banks has been studied, as
well as data from five years (2015-2016 to 2019-2020) for
examining NPAs.

Secondary data used for the study, secondary data have been
collected using annual report of “Reserve Bank of India”
publication including “Trend & Progress of banking in India”,
statistical tables related to banks in India and for those annual
reports of the year 2015-2016 to 2019-20 and related websites
used.

The research has been separated into two sections. The

theoretical talks concerning bank history, the conceptual
framework of NPA, and bank performance are examined and
analysed in the first half of the study. The second section
comprises the analysis of obtained data using various statistical
tools, as well as conclusions and recommendations for better
management of NPAs based on the analysis findings. The current

iii
thesis is divided into seven (7) chapters.

The increase in NPA ratios shown in this study reflects badly

on the efficiency and efficacy of Indian banking in the post-
liberalization period.

iv
 LIST OF ABBREVIATIONS
ANOVA Analysis of Variance

ARC Asset Reconstruction Committee

ARCs Asset-Reconstruction Companies

ARCIL Asset-Reconstruction Company India Limited

ARF Asset Reconstruction Fund

ATM Automated Teller Machines

AXIS AXIS Bank

BOB Bank of Baroda

BCBS Basel Committee on Banking Supervision

BIFR Board for Industrial and Financial Reconstruction

CAR Capital Adequacy Ratio

CFS Committee on Financial Sectors

CDR Corporate Debt Restructuring

CIBIL Credit Information Bureau of India Limited

CMS Credit Monitoring System

CRM Customer Relationship Management

DRTs Debt Recovery Tribunals

DRAT Debt Recovery Appellate Tribunals

DICGC Deposit Insurance and Credit Guarantee Corporation of

India Ltd.
EASER-C Electronic Accounting Systems of E Receipts-Customs

EBSU Electronic Banking Service Unit

EBPP Electronic Bill Presentment and Payment

ECGC Export Credit Guarantee Corporation of India

EDI Electronic Data Interchange

v
EXIM Export-Import

FIs Financial Institutions

GDP Gross Domestic product

GOI Government of India

GNPA Gross Non-Performing Assets

HDFC Housing Development Finance Corporation Bank

IRAC Income Reorganization and Asset Classification

ICICI Industrial Credit and Investment Corporation of India

IDBI Industrial Development Bank of India

IRDP Integrated Rural Development Programme

IMPS Interbank Mobile Payment Services

KYC Know Your Client

MIS Management Information System

NABARD National Bank for Agriculture and Rural Development

NBFC Non-Banking Financial Corporation

NCLT National Company Law Tribunal

NNPA Net Non-Performing Assets

NRTA Net Return to Total Assets

NPAs Non-Performing Assets

NPLs Non-Performing Loans

NRDS Non-Reportable Deposit Scheme

OBU Offshore Banking Unit

PNB Punjab National Bank

SBI State Bank of India

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TSS One Time Settlement Schemes

OSCB Other Indian Scheduled Commercial Banks

OD/CC Overdraft/ Cash Credit

PA Performing Assets

POS Point of Sale

PACs Primary Agricultural Credit Societies

PMRY Prime Minister Rozgar Yojna

PAT Profit After Tax

PCTA Provisions and Contingencies to Total Assets.

PSBs Public Sector Banks

RRBs Regional Rural Banks

RBI Reserve Bank of India

ROE Return on Equity

ROI Return on Investment

RWA Risk Weighted Assets

SCBs Scheduled Commercial Banks

SEBI Securities Exchange Board of India

Securitization & Reconstruction of Financial Assets and

SARFAESI Enforcement of Security Interest
SACs Settlement Advisory Committees

SBI State Bank of India

SWOT Strength Weakness Opportunity and Threats

vii
 LIST OF TABLES
SR. TITLE PAGE
NO. NO.
1 Figure: 1.1 History of Banking in India 04

2 Figure: 1.2 First Phase of Nationalization of India 07

3 Figure: 1.3 Second Phase of nationalization 08

4 Figure: 1.4 Functions of Commercial Banks 15

5 Figure: 1.5 Functions of Commercial Banks 15

6 Figure: 1.6 Primary Function of Banking 16

7 Figure: 1.7 Secondary Functions of Banks 18

8 Figure: 1.8 Role of Central Bank 21

9 Figure: 1.9 Roles of Banks in Development 27

10 Figure: 1.10 List of Public Sector Banks 32

11 Figure 1.11: List of Private Sector Banks 33

12 Figure: 2.1 Assets Classification 38

13 Figure: 2.2 Provisioning norms of NPA 41

14 Figure: 5.1 Last Five Years Key Figures - SBI 88

15 Figure 5.2: Gross NPA Ratio Graph -SBI 89

16 Figure 5.3: Net NPA Ratio Graph - SBI 89

17 Figure 5.4: Last Five Years Key Figures - PNB 90

18 Figure 5.5: Gross NPA Ratio Graph -PNB 91
19 Figure 5.6: Net NPA Ratio Graph - PNB 91

20 Figure 5.7: Last Five Years Key Figures - BOB 92

21 Figure 5.8: Gross NPA Ratio Graph -BOB 93

22 Figure 5.9: Net NPA Ratio Graph - BOB 93

viii
 PAGE
SR. NO. TITLE
NO.

23 Figure 5.10: Last Five Years Key Figures - HDFC 94

24 Figure 5.11: Gross NPA Ratio Graph -HDFC 95

25 Figure 5.12: Net NPA Ratio Graph - HDFC 95

26 Figure 5.13: Last Five Years Key Figures - ICICI 96

27 Figure 5.14: Gross NPA Ratio Graph -ICICI 97

28 Figure 5.15: Net NPA Ratio Graph - ICICI 97

29 Figure 5.16: Last Five Years Key Figures - AXIS 98

30 Figure 5.17: Gross NPA Ratio Graph -AXIS 99

31 Figure 5.18: Net NPA Ratio Graph - AXIS 99

32 Figure 5.19: Gross NPA Ratio Graph year 2016 101

33 Figure 5.20: Net NPA Ratio Graph year 2016 101

34 Figure 5.21: Gross NPA Ratio Graph year 2017 102

35 Figure 5.22: Net NPA Ratio Graph year 2017 102

36 Figure 5.23: Gross NPA Ratio Graph year 2018 103

37 Figure 5.24: Net NPA Ratio Graph year 2018 103

38 Figure 5.25: Gross NPA Ratio Graph year 2019 104

39 Figure 5.26: Net NPA Ratio Graph year 2019 104

40 Figure 5.27: Gross NPA Ratio Graph year 2020 105

41 Figure 5.28: Net NPA Ratio Graph year 2020 105

42 Figure 5.29: Capital Adequacy Ratio Basel III–Tier I 106

43 Figure 5.30: Capital Adequacy Ratio Basel III–Tier II 107

44 Figure 5.31: Capital Adequacy Ratio Basel III–TOTAL 108

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SR. PAGE
TITLE
NO. NO.

45 Figure 5.32: Capital Adequacy Ratio Graphs 109

46 Figure 5.34: Bank wise Total Assets 110

47 Figure 5.34: Bank Wise Total Income 111

48 Figure 5.35: Bank wise Total Assets Graph 112

49 Figure 5.36: Bank Wise Total Income Graph 112

50 Table: 6.1.1 Gross NPA to Gross Advance ratio 115

51 Figure: 6.1 Gross NPA Graph 116

52 Figure: 6.2 GROSS NPA Line Graph 116

53 Table 6.1.2 Mean, S.D. and C.V. Calculated 124

54 Figure: 6.3 Mean of Gross NPA of Selected Banks 124

55 Figure: 6.4 Standard Deviation 125

56 Figure: 6.5 Coefficient of Variation 125

57 Figure: 6.6 Mean, S.D. and C.V. Calculated Graph 127

58 Table 6.1.3 ANOVA 1 129

59 Table 6.2.1 Net NPA to Net Advances ratio 130

60 Figure: 6.7 Net NPA Graph 131

61 Figure: 6.8 Net NPA Line Graph 131

62 Table 6.2.2 Mean, S.D. and C.V. Calculated 139

63 Figure: 6.9 Mean of Net NPA of Selected Banks 139

64 Figure: 6.10 Standard Deviation 140

65 Figure: 6.11 Coefficient of Variation 140

66 Figure: 6.12 Mean, S.D. and C.V. Calculated Graph 141

x
SR. PAGE
NO. TITLE NO.

67 Table 6.2.3 ANOVA 1 143

68 Table 7.1 Results of Testing of Hypotheses 150

69 Table 7.2 NPA Recovery by DRT 175

70 Table 7.3 NPA Recovery by Lok Adalat 177

71 Table 7.4 NPA Recovery by SARFAESI 184

xi
 CONTENT
Chapter
Title Page No.
No.
Title Page

Declaration by Research Scholar i

Research Supervisor Certificate ii

Acknowledgments iii

Preface iv

Abbreviations vii

List of Tables and Graphs x

CONTENT

1 INTRODUCTION 001 - 033

2 CONCEPTUAL FRAMEWORK OF NPA OF 034 - 059

BANKS

3 REVIEW OF LITERATURE 060 - 080

4 OBJECTIVE OF STUDY AND RESEARCH 081 - 086

METHODOLOGY

5 PROFILE OF THE SELECTED BANKS 087 - 112

6 ANALYSIS AND OBSERVATIONS 113 - 144

7 SUMMARY AND SUGGESTIONS 145 - 197

BIBLIOGRAPHY 198 - 202

xii