Page 224 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 13: Non Performing Assets

or the District Magistrate within whose jurisdiction any such secured assets or other Notes
documents relating thereto may be situated or found, to take possession thereof and the
Chief Metropolitan Magistrate or as the case may be, the District Magistrate shall, on such
request being made to him:
(i) take possession of such asset and documents relating thereto;

(ii) forward such asset and documents to the secured creditor; and
(iii) no act of the Chief Metropolitan Magistrate or the District Magistrate done in this
respect shall be called in question in any court or before any authority.

5. Any person (including borrower), aggrieved by any of the measures as referred to above
taken by the secured creditor or his authorized officer, may prefer an appeal to the Debts
Recovery Tribunal having jurisdiction in the matter within forty five days from the date
on which such measures had been taken.
6. Where an appeal is preferred by a borrower, such appeal shall not be entertained by the
Debts Recovery Tribunal, unless he deposits 75 percent of the amount claimed in the
notice, as referred to above. However, the Debts Recovery Tribunal may, for reasons to be
recorded in writing, waive or reduce the amount to be deposited.

Self Assessment

Fill in the blank:
17. ................... is one of the major security interest taken by the Bank/financial institution.

Case Study The Impact of Non-performing Assets on Profitability

of State Bank of India

he country’s largest commercial bank is the State Bank of India. The bank has a
network of 52 overseas offices spread over 31 countries covering all the time zone
Tand has correspondent relationship with 720 foreign banks. The bank recently
incorporated a subsidiary State Bank of India Life Insurance Company Ltd (SBI Life) for its
foray in to the Insurance business. Expansion was the main theme for banks and not
consideration, which continued till the early nineties and as far as project financing is
concerned, big financial institutions like IFCI, ICICI, and IDBI were the major players for
the corporate world.
Assessment of Non-Performing Asset through Ratios
The following ratios were calculated to assess the effect of non-performing assets on the
financial operations of the selected banks:
1. Ratio of net non-performing assets to net advances and the ratio of gross
non-performing assets to gross advances
2. Ratio of operating expenditure to total income
3. Ratio of net profit to total assets
4. Ratio of net non-performing assets to total assets.
Contd...

LOVELY PROFESSIONAL UNIVERSITY 219