Page 225 - DCOM208_BANKING_THEORY_AND_PRACTICE

Banking Theory and Practice

Notes
Non-performing asset management is one of the major areas of focus and the bank is
making all efforts to bring down the net non-performing assets ratio to fewer than 3% in
to 3 years time. A close monitoring the non-performing assets accounts, aggressive policy
for recovery, compromise and settlement has yielded good results.
In India, the regulation traditionally has been very strict and in the opinion of certain
quarters, responsible for the present condition of bank, where non-performing assets are
of high order. The multiplicity of policy and regulations that a bank has to work, which
makes its operations even more complicated, sometimes illogical. Banks are supposed to
play an important role in achieving the objective of economic institutional credit support
to various regions and sectors. Due to heavy competition in the banking industry,
particularly among the Public sector banks, the SBI and its Associates have to concentrate
much on the development of resources and to accelerate the collection mechanism to
make it viable to strengthen profitability and efficiency in a better way.
It is important to take stock of special feature of the banking sector in India. Table-1
presents sector-wise analysis of non-performing assets.
Table 1: The Non-performing Assets of Commercial Banks Sector-wise March 2008
(as Percentage to total Non-performing Assets)
Banks Agriculture Small- Others Public Non-priority Total NPA
Scale Sector Sector (` in Crores)
Sector
Public 20.80 14.60 28.22 0.75 35.63 39748.51
Sector
Private 11.30 5.02 10.02 - 73.66 12976.06
Sector
Old 9.48 14.03 28.83 - 47.66 2557.15
Private
Foreign - 2.10 10.80 - 87.1 3114
Total 58395.72
SBI 21.82 10.08 26.58 0.63 40.88 15220.39
Group
SBG/Total 0.26
SBG/PSB 0.38

Source: rbi.org
Table 1 shows as far as the Public Sector Banks are concerned, about 63.62% of
Non-Performing Assets belong to the Priority Sector lending where as in the case of
Private Sector Banks 73.66% belongs to Non-Priority Sector and Foreign Banks show
47.66% in Non-Priority Sector. This pointed out Public Sector focus majority on Priority
Sector. In the case of State Bank of India 58.49% of Non-performing Assets belongs to Non
Priority Sector. State Bank Group consists more than one-third of Public Sector Banks.
Table 2: The Trend of Gross Non-performing Assets in Commercial Banks
as on 31st March 2008
(as Percentage of Total Assets)
Banks GNPAs/Total Assets
Public Sector –21.99 –24.03
Private Sector –13.24 –13.82
Foreign Banks –13.28 –14.21
SBI Group –19.37 –22.78
Source: rbi.org
Contd...

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