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NON PERFORMING ASSETS IN

ALLAHABAD BANK

PROJECT REPORT

In Partial fulfillment for the award of

Requirements for the award of the degree of

Master of Business Adinistration

DECLARATION

I here by declare that the project report titled!NON PERFORMING

ASSETS IN ALLAHABAD BANK" prepared under the guidance ###

(finance department) of #### towards partial fulfillment for the

requirement of award of M$B$A$

The Project report has not been submitted to any other University for

the ward of any !egree or !iploma"

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####

CHAPTERISATION

#$PT%R & I I'TR!U#TI'

#$PT%R & II RI%* PR*I+% * ++$! ',

#$PT%R & III P%RTI'+ !%*I'ITI'-

#$PT%R & I. 'Ps & ' '+/TI#+ -TU!/

0 1%'I'2 '! 'TUR%

3 #U-%- *R 'Ps

4 12'ITU!% * 'Ps I'

++$! ',

#$PT%R & . I1P#T * 'Ps

0 I1P#T * 'Ps I'

++$! ',

3 R%#.%R/ * 'Ps I'

++$! ',

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#$PT%R & .I 1'2%1%'T * 'Ps

4 1'2% 'Ps

5 #11ITT%%-

#$PT%R & .II *I'!I'2- '! -%R.TI'-

#$PT%R & .III #'#+U-I' '! -%R.TI'-

#$PT%R & I6 PR7%#TI' * 'Ps

CHAPTER % I

INTROD&CTION

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INTROD&CTION TO THE TOPIC'

The Indian ban8ing sector underwent a major transformation in 09:9

when a large number of ban8s were nationali;ed" The policy thrust in those

days was to spread ban8ing services far and wide into the country side" nd

this objective was largely achieved"

an8 branches increased rapidly and deposit mobili;ation rose

steadily" This has undeniably aided the process of bringing in large amount

of savings into the financial mar8ets for development purposes" esides non@performing assets?('P)< which were cutting

into the ban8s bottom lines in two ways@

0 an8s were not able to boo8 interest accrued on such assets

3 They had to ma8e provisions for these 'Ps

ver the years< much has been tal8ed about 'Ps< which has also become

ne of the parameters to decide partial autonomy to be given to select

ban8s" $ow ever< the emphasis so far has been only on identification and

quantification of 'Ps rather than on ways to reduce and upgrade them"

Though< the term 'P can notes a financial asset of a commercial

ban8 which has stopped earning an e=pected reasonable return< it is also a

reflection of the productivity of the unit< firm< concern< industry and nation

where that asset is idling"

.iewed with this broad perspective< the 'P is a result of an

environment which prevents it from performing up to e=pected levels"

$ow ever< the global slow down and the fall of ban8s world wide

give IndiaAs financial system some breathing space to catch up" The problem

of 'Ps is two fold@

0 Tac8ling the e=isting 'Ps

3 Preventing a build up for additional 'Ps

The 'P level has to be brought down to at least BC to :C" *or thisIt is now or never?"

The study conducted to analyse the importance of 'Ps in the

ban8ing sector" The study lays emphasis to find out the causes for 'Psopen to receive money in current and fi=ed deposit account?" !rafts

negotiable at par at nine Indian towns could be secured >at moderate rate of

e=change?" ills of e=change on +ondon were also available" The ban8 was

from the first 8een on fi=ed deposits< being prepared to pay :C on money

requiring 03 months notice of withdrawal" 'o charge was made on current

deposit account< but no interest was paid either"

THE RAPID RACE'

The story of the ban8As second century of e=istence is a story of

rapid development and fast e=pansion" draft bill which created quite a

flutter was introduced on 34rd!ecember< 09: with provisions of control

over ban8ing policy and was referred to a select committee on 3: thmarch

09:H" fter critical deliberations< the bill passed through and came in to

effect from 3nd*ebruary 09:9" The measure of social control< a midway

measure between public ownership and private control of ban8ing< howevercompromise committees? at regional< ;onal and head office

levels" This is also in terms of RI guidelines"

I" -peciali;ed recovery branches should be set up at selected centersest borrower certificate? should be

given to such borrowers in a borrowers meeting specially organi;ed

for the purpose< in the presence of gram pradhan" This is li8ely to

encourage others to repay ban8 dues in time and create healthy

recovery climate in the area"

Ehere recovery is not forthcoming despite due efforts< compromise

proposals should be mobili;ed by concerned region committee and

sent to ;onal officer for necessary action"

H $ead office and ;onal offices should also ta8e advantage of lo8

adalats" Ehere available< for stri8ing instant compromise judgements

in the presence of both parties" ut

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00 In cases where adequate security is available< activity is continuing