shivu project

An Exploratory study on Debt Recovery Management at “The BCCB Ltd”

Dissertation submitted to the

BANGALORE UNIVERSITY

In partial fulfillment of the requirements for the award of the

POST GRADUATE DEGREE

of

MASTER OF COMMERCE

Submitted by

SHIVAKUMAR S.L.Reg. No. O8ATCM1028

Under the guidance of

Dr. H. PRAKASH,M.Com, M.B.A., Ph.D.

Co-ordinator – M.B.A

Govt. R.C.College of Commerce & ManagementGovt. R.C.College of Commerce & Management

Palace Road, Bangalore – 560 001.Palace Road, Bangalore – 560 001.

Govt. R.C. College of Commerce & Management 1


2009-102009-10

CO-ORDINATOR’S CERTIFICATE

This is to certify that the dissertation entitled

“AN EXPLORATORY STUDY ON DEBT RECOVERY MANAGEMENT

OF CO-OPERATIVE BANKS WITH SPECIAL RFERENCE TO THE

BANGALORE CITY CO-OPERATIVE BANK LTD.” is the bonafide

research work carried out by Mr. SHIVAKUMAR S.L. bearing

Reg. No. 08ATCM1028 under the guidance and supervision of

Dr.H.PRAKASH, Co-ordinator of M.B.A., Govt. R.C. College of

Commerce and Management.

Place: Bangalore Dr. M.ASHFAQ AHMED



Date: Co-ordinator– M.Com

GUIDE’S CERTIFICATE

This is to certify that the dissertation entitled



BANGALORE CITY CO-OPERATIVE BANK LTD.” is the bonafide

research work carried out by Mr. SHIVAKUMAR S.L. bearing

Reg. No. 08ATCM1028 under my guidance.

Place: Bangalore Dr.H.PRAKASH



Date: Co-ordinator of M.B.A

\

STUDENT’S DECLARATION

I hereby declare that the dissertation entitled



BANGALORE CITY CO-OPERATIVE BANK LTD.” has been carried out

by me under the guidance and supervision of Dr.H.PRAKASH,

M.Com, M.B.A., Ph.D, Govt.R.C.College of Commerce &

Management, Bangalore., submitted in partial fulfillment for the

award of degree of Master of Commerce of Bangalore University.



I also declare that no part of this representation has been

previously published or submitted as a project representation for

any degree, diploma, fellowship or any other similar title to any

university or institution.

Place: Bangalore SHIVAKUMAR S.L.

Date: Reg. No. 08ATC M1028

ACKNOWLEDGMENT

I am happy to express my gratitude to Prof.H.K. KUMARARAJ URS, Principal of Govt. R. C. College of commerce and management & Dr.M.ASHFAQ AHMED, Co-ordinator of M.com for their encouragement, guidance and many valuable ideas imported to me for my project, with great pressure.

I extend my gratitude towards internal guide of the project Dr. H.PRAKASH, Co-odinator of MBA, and external guides Mr.N.MANJUNATHA, General Manager, Mr.K.G.RAJU, Deputy General Manager and Mr.B.GANGADHARA, Asst. General Manager of the BCCB



Ltd., and also Mr.SATHISHA.H.K. (Asst. Prof. GFGC, Nagamangala), under whose valuable guidance, constant interest and encouragement I have been able to complete the project successfully. This co-operation is not useful only for this project but, will also be a constant source of inspiration for the future.

I am also thankful to my parents, all my lecturers and my friends for theirs constant help in preparation of my project successfully.

SHIVAKUMAR S.L.

Reg. No. 08ATCM1028

CERTIFICATE BY THE PRINCIPAL



This is to certify that the project “AN

EXPLORATORY STUDY ON DEBT RECOVERY

MANAGEMENT OF CO-OPERATIVE BANKS

WITH SPECIAL RFERENCE TO THE

BANGALORE CITY CO-OPERATIVE BANK LTD.”

has been completed by Mr. SHIVAKUMAR S.L.

bearing Reg.No.08ATCM1028 under the guidance

of Dr.H.PRAKASH, Co-ordinator of M.B.A.

This dissertation is based on original result

and has not formed the basis for the award previously

of any degree, diploma, associate ship, fellowship or

any other similar title.

Prof. H.K.KUMARARAJ URS

Principal

CONTENTS

CHAPTER NO.

DESCRIPTION PAGE NO.

CHAPTER – 1 INTRODUCTION Introduction about banking industry History of modern banking in India Classification of banks Functions of Banking

1 - 45



Co-operative Banks Definitions & features of Co-operative banks Structure of Co-operative Banks Introduction of Debt Recovery Management Meaning of Debt Recovery Management Introduction to NPAs Meaning of NPAs RBI guidelines on Income Recognition Accounting Standard – 9 on Revenue

Recognition issued by ICAI RBI Guidelines on Classification &

provisioning requirement of Bank Advances Impact of NPAs Consequences of NPAs Objectives of Debt Recovery Management Factor affecting the recovery of Loans &

Advances Recovery Methods

CHAPTER – 2 RESEARCH DESIGN Title of the study Statement of the problem Objectives of the study Scope of the study Research Methodology Plan of analysis Limitations of the study Chapter layout

46 - 49

CHAPTER – 3 BANK PROFILE History of the bank Goals & objectives of the bank Vision statement Organization structure List of board of directors Statement of growth of the bank

50 - 57



Braches of the bank Awards & competitors details

CHAPTER – 4 ANALYSIS & INTERPRETATION OF DATA 58 - 78

CHAPTER – 5 SUMMARY OF FINDINGS, SUGGESTIONS & CONSLUSIONS

79 - 83

BIBLIOGRAPY

ANNEXTURE – QUESTIONNAIRE



LIST OF TABLES

TABLE 4.1 Showing Recovery as a Percentage of Loans & Advances 65

TABLE 4.2 Showing Status of NPAs in the bank 67

TABLE 4.3 Showing Net NPAs & Recovery performance of the bank 69

TABLE 4.4 Showing Net NPAs as a percentage of Loans & Advances 71

TABLE 4.5 Growth of Deposits 73

TABLE 4.6 Loan Position of the Bank 75

TABLE 4.7 Profit Position of the Bank 77

LIST OF GRAPHS

GRAPH 4.1 Showing Recovery as a Percentage of Loans & Advances 66

GRAPH 4.2 Showing Status of NPAs in the bank 68

GRAPH 4.3 Showing Net NPAs & Recovery performance of the bank 70

GRAPH 4.4 Showing Net NPAs as a percentage of Loans & Advances 72

GRAPH 4.5 Showing Growth of Deposits 74

GRAPH 4.6 Showing Loan Position of the Bank 76

GRAPH 4.7 Showing Profit Position of the Bank 78



CHAPTER – 01

INTRODUCTION

INTRODUCTION ABOUT BANKING INDUSTRY:

The word bank originated the French word ‘benque’ or Italian ‘banco’

which means an office for monitory transaction over the counter. In those

days banks or desks were used as centers for monitory transactions.

During the barter system also, there existed traces of banking, i.e.

people used to deposit cattle and agricultural products in specified places

get loans of some other form in exchange for these. There is solid evidence

found in records excavated from Mesopotamia, showing some bank existed

around 1700 B.C. During this time barley, silver, gold, copper, etc., were

used as a standard for valuation.

ORIGIN OF BANKING INDUSTRY:

Greece was the first country to introduce a satisfactory system of

coinage. After the invention of coins started, a meaningful system of

banking came into existence taking into account all the avenue of banking a

credit system.

Rome was the first country to start a bank at the department of state

level in the 4th century B.C. with transactions such as depositing and



investments in other forms. In India ancient records show that banking was

popular and money lending was a common practice among the common

people.

In the olden days’ Goldsmith, merchants and money lenders conducted the

business. They had transactions among themselves by which funds were

transferred from one business firm to another. They had no general or

uniform principles of banking, lending, rate of interest, etc.

INTRODUCTION TO BANKING IN INDIA

The Indian Companies Act defines the term banking as “accepting for

the purpose of lending or investment of deposits of money from the public,

repayable on demand or otherwise and withdrawable by cheque, draft or

otherwise”.

A Banker is a dealer in money and credit. The business of Banking

consists of borrowing and lending banks acts as financial intermediaries

between savers (lenders) and investors (borrowers) by accepting deposits of

money from a large number of customers and lending a major position of a

accumulated ‘pool’ of money to those who wish to borrower. In this process

banks secure reasonable return for the savers, make funds available to the

investors at a cost and earn a profit for themselves after covering the cost of

funds and providing for corporate taxes to the government. Thus, the

banking institutions in a country mobilizes savings by accepting monetary



deposits from the people, participate in the mechanism for the exchange of

goods and services and extend credit while lending money.

HISTORY OF MODERN BANKING IN INDIA

Pre-nationalization period:

The history of modern banking in India dates back to the last quarter

of 18th century. During this period the English agency houses of Bombay and

Calcutta started banking business to India. They setup the Bank of Hindustan

around 1770 followed by setting up of quasi government banking

institutions like presidency bank of Bombay in 1840 and presidency Bank of

Madras in 1873.

In 1921 all these banks were amalgamated and imperial bank was

constituted. In the late 19th and early 20th centuries, the Swadeshi

Movement inspired to start banks in India. The Indian Banks were

established during this period. In 1935 the Reserve Bank of India was

established as a central bank for regulating and controlling the Banking

business in the country. Soon after independence, the Reserve Bank was

nationalized in September 1948. The outlook of Reserve Bank further

changed after the inception of planning in 1950-51 and the country adopting

a socialistic pattern of society.



Post-nationalization period:

On an account of the top-sided growth of the banking system and to

bridge the gap between a few industrial houses and banks, the scheme of

the social control was imposed on banks with effect from Feb 1, 1969. It

resulted in setting up of National Credit Council for more equitable

distribution of bank credit and legislative changes in the Banking Regulation

Act for making the board of directors of the banks more board based. As a

result the government resorted to a more radical measure by nationalizing

14 major banks on July 1969. Later on in April 1980, six more banks were

nationalized to achieve the objective.

The objective of nationalization was to control the commanding

heights of economy and to meet progressively and serve the needs of the

developing economy in conforming to the national policy and objectives.

Another welcome feature of post – nationalization period is setting up of

regional rural banks setting up of regional rural banks as per the provisions

of the Regional Rural Bank Act 1976. These banks confine in themselves the

simplicity of operations as required by local conditions and the efficiency

and business like approach of commercial banks. At the end of June 1986

there were 194 regional rural banks covering 342 districts. Thus, the banking

system, during the post – nationalization period has undergone a major

structural transformation. There has been a phenomenal expansion of

branch network particularly the hitherto under banked areas.



Present scenario of banking industry:

The Indian banking can be broadly categorized into nationalized

(government oriented), private banks and specialized banking institution.

The RBI acts as a centralized body monitoring any discrepancies and

shortcoming in the system. Since the nationalized banks have required a

place of prominence and has then seen tremendous progress.

The need to become highly customer focused has forced the slow of

moving public sector banks to adapt a fast track approach.

The Indian Banking has come a long way from a sleepy business

institution to a highly proactive and dynamic activity. This transformation

has been largely brought by the large close of liberalization and economic

reform that allowed banks to explore new business opportunities rather

than generating revenue from conventional stream i.e. borrowing and

lending. The Co-operative banks too have invested heavily in information

technology to after computerized banks services o its clients.

New Generation Banking:

The liberalized policy of government of India permitted entry of

private sector in banking, the industry has witnessed the entry of new

generation private banks. The major parameter that distinguishes these

banks from all the other banks in Indian Banking is the level of services that



is offered to the customer. Verifying the focus has always being centered on

the customer understanding his needs and delighting him with various

configurations of benefits and a wide portfolio of product and services. The

popularities of these banks can be gauged by the fact, that in as short span

of time, these banks have gained considerable customer confidence and

consequently have shown impressive growth sales.

CLASSIFICATION OF BANKS

Banks are classified into several types based on the function they

perform. Generally banks are classified into

1. Investment banks

2. Exchange banks

3. Commercial banks

4. Co-operative banks

5. Land development banks

6. Savings banks

7. Central banks



FUNCTIONS OF BANKING

A. The main functions are as follows;

1. Borrowing of money in the form of deposits.

2. Lending or advancing of money in the form of different types of loan.

3. The drawing, making, accepting, discounting, buying and selling,

collecting and dealing in bills of exchange, promissory notes, coupons,

drafts, bills of lading, railway receipts, warrants, debentures,

certificates, securities both negotiable and non-negotiable.

4. The granting and issuing of credit, travelers cheques, etc.

5. The acquiring, holding, issuing on commission, underwriting, dealing

in stock, funds, shares, debentures, bonds, securities of all kinds.

6. Providing safe deposits vaults.

7. Collecting transmitting of money and securities.

8. The purchasing and selling of bonds scripts and other forms of

securities on behalf of constituents or others.

9. Buying and selling of foreign notes.

B. The subsidiary functions are as follows;



1. Acting as agents for governments or local authorities or any other

persons.

2. Carrying out agency business of any description.

3. Contracting for public and private loans and negotiation and issuing

the same.

4. Carrying on guarantee and indemnity business.

5. Managing to sell and realize any property or any interest in any such

property.

6. Undertaking and executing of trusts.

7. Granting of pensions and allowances and making payments towards

pensions.



CO-OPERATIVE BANKS

The Co operative banks in India started functioning almost 100 years

ago. The Cooperative bank is an important constituent of the Indian

Financial System, judging by the role assigned to co operative, the

expectations the co operative is supposed to fulfill, their number, and the

number of offices the cooperative bank operate. Though the co operative

movement originated in the West, but the importance of such banks have

assumed in India is rarely paralleled anywhere else in the world. The

cooperative banks in India play an important role even today in rural

financing. The businesses of cooperative bank in the urban areas also have

increased phenomenally in recent years due to the sharp increase in the

number of primary co-operative banks.

While the co-operative banks in rural areas mainly finance agricultural

based activities including farming, cattle, milk, hatchery, personal finance

etc. along with some small scale industries and self-employment driven

activities, the co-operative banks in urban areas mainly finance various

categories of people for self-employment, industries, small scale units,

home finance, consumer finance, personal finance, etc.

Co operative Banks in India are registered under the Co-operative

Societies Act. The cooperative bank is also regulated by the RBI. They are



governed by the Banking Regulations Act 1949 and Banking Laws (Co-

operative Societies) Act, 1965.

Cooperative banks in India finance rural areas under:

1. Farming

2. Cattle

3. Milk

4. Hatchery

5. Personal finance

Cooperative banks in India finance urban areas under:

1. Self-employment

2. Industries

3. Small scale units

4. Home finance

5. Consumer finance

6. Personal finance



According to NAFCUB the total deposits & landings of Cooperative

Banks in India is much more than Old Private Sector Banks & also the New

Private Sector Banks. This exponential growth of Co operative Banks in India

is attributed mainly to their much better local reach, personal interaction

with customers and their ability to catch the nerve of the local clientele.

EVOLUTION OF CO-OPERATAIVE BANK IN INDIA

The Cooperatives were first started in Europe to serve the credit-

starved people in Europe as a self-reliant, self-managed people’s movement

with no role for the Government. British India replicated the Raiffeisen-type

cooperative movement in India to mitigate the miseries of the poor farmers,

particularly harassment by moneylenders.

The first credit cooperative society was formed in Banking in the year

1903 with the support of Government of Bengal. It was registered under the

Friendly Societies Act of the British Government. Cooperative Credit

Societies Act of India was enacted on 25th March 1904. Cooperation

became a State subject in 1919. In 1951, 501 Central Cooperative Unions

were renamed as Central Cooperative Banks. Land Mortgage Cooperative

Banks were established in 1938 to provide loans initially for debt relief and

land improvement.

Cooperatives have played an important role in the liberation and

development of our country. The word Cooperative has become



synonymous for dedicated and efficient management of rural credit system.

Reserve Bank of India started refinancing cooperatives for Seasonal

Agricultural Operations from 1939. From 1948, Reserve Bank started

refinancing State Cooperative Banks for meeting the credit needs of Central

Cooperative Banks and through them the Primary Agricultural Cooperative

Societies. Only 3% of rural families availed farm credit in 1951.

In 1954, the All India Rural Credit Survey Committee recommended

strengthening of DCC Banks and PACS with State partnership and patronage

to solve the farmers’ woes. Registrar of Cooperative Societies became the

custodian of Cooperatives from 1962 with the enactment of respective State

Acts. Reserve Bank introduced Seasonality and Scale of Finance for crop

loans and provided for conversion, replacement and reschedulement to tide

over crop loss due to calamities.

The Primary Agricultural Cooperative Societies became multipurpose.

Reorganization of PACS into viable units, FSCS, LAMPS started under action

programme of RBI in 1964. The finding of All India Rural Credit Review

Committee that coverage of cooperatives is limited to hardly 30% of farmers

led to nationalization of Banks. However, Cooperatives have played a key

role in meeting the credit needs of weaker sections of farmers.

The establishment of Regional Rural Banks from 1975 has not reduced

the problems of rural credit as they reached only 6% of the farmers.

Cooperatives have contributed their part in the implementation of 20-point

programme and Integrated Rural Development Programme. Though the



Cooperatives were lagging behind in rural credit till 1991, they regained

their prime place with 62% share in rural crop loans between 1991 and 2001

DEFINITION OF CO-OPERATIVE BANKS:

In the words of Henry Wolff “Co-operative banking is an agency which

is in a position to deal with the small means on his own terms”.

Devine defines “a mutual society formed composed and governed by

working people themselves for encouraging regular saving and generating

miniature loans on easy terms of interest and repayments”.

FEATURES OF CO-OPERATIVE BANK:

1. They are organized and managed on the principles of co-operation

self-help and mutual help. They function with the rule of “one

member one vote”.

2. Co-operative banks perform all the main banking function of deposit

mobilization, supply of credit and provision for remittance facilities.

3. Co-operative banks belong to the money market as well as the capital

markets.

4. Co-operative banks are perhaps the first government supported

agency in India.

5. Co-operative banks accept current, saving, fixed and other types of

time deposits from individuals and institutions including banks.



6. Co-operative banks do banking business mainly in the agricultural and

rural sector.

7. Some co-operative banks are schedule co-operative banks while

others are non-schedule co-operative banks.

8. Co-operative banks also required to comply with requirement of

statutory liquidity ratio [SLR] and cash reserve ratio [CRR] liquidity

requirements as other scheduled and non-scheduled banks.

STRUCTURE OF COOPERATIVE BANKS


CO-OPERATIVE BANKS

STATE CO-OPERATIVE

BANKS

STATE LAND DEVELOPMENT

BANKS

URBAN CO-OPERATIVE

BANKS

CENTRAL CO-OPERATIVE

BANKS

PRIMARY AGRICULTURAL

CREDIT SOCIETIES

CENTRAL LAND DEVELOPMENT

BANKS

BRANCHES OF STATE LAND DEVELOPMENT

BANKS

PRIMARY LAND DEVELOPMENT

BANKS


REFORMS IN CO-OPERATIVE BANKS

The field of rural credit is so vast in India the problems so diverse and

complex and the field of experimentation so wise that only if the important

issues and challenges before the rural credit are taken adequately

cooperative banks as major purveyors of rural credit would be able to make

the crucial difference in the lives of millions of our countrymen in the

countryside.

The financial sector reforms 1991 aimed at promoting a diversified

and efficient, competitive financial sector with the ultimate objective of

improving the efficiency of available resources, increasing the return on

investments and promoting an accelerated growth of the real sector of the

economy. In conformity with this and banking sector reforms gave raise to

reforms in cooperative sector, which is an integral part in delivery of rural

credit and promote its growth.

Reserve Bank of India has over the years put its faith in cooperative

banks as they hold a major share in agricultural credit. With its number if

branches it can percolate to all the corners of the country. The Indian

financial system has undergone several changes and now comprises of



widespread network of financial institutions. Accordingly the co-operative

credit structure has also grown. Despite the progress reforms are required

to bring out efficiently reduce non-performing assets and increase capital

base.

These reforms aim at improving the financial health and capabilities

by prescribing prudential norms. Prudential norms are required for

cooperative banks to reduce non-performing assets. Due to the non-

performing assets co-operative credit system is affected as a whole.



DEBT RECOVERY MANAGEMENT

INTRODUCTION:

The efficiency of a financial institution as a financial intermediary

depends to a great extent on timely recovery of loans. Abnormal delay in

recovery of loans builds up NPAs which affect FI’s adversely with respect to

liquidity and impair their ability to service the maturing liabilities. The

blocked funds in NPAs increase the cost of financial intermediary as FI’s

resort to raising deposits and borrowings at a higher cost as a measure to

minimize the imbalance between cash outflow and cash inflow arising out of

the NPAs. This has an adverse impact on the profitability of the banks both

in the short run and long run.

Good recovery is an important ingredient for profitability of any

financial institution as it leads to increased financial capacity to deliver

credit.

The business of a bank is managing risks and its effectiveness lies in an

efficient recovery management. Better recovery performance corresponds

to lower NPAs.

MEANING OF RECOVERY MANAGEMENT:

Recovery Management is the process of planning, testing, and

implementing the recovery procedures and standards required to restore



service in the event of a component failure; either by returning the

component to normal operation, or taking alternative actions to restore

service.

Recovery Management is the acknowledgement that failures will

occur regardless of how well the system is designed. The intent is to

anticipate and minimize the impact of these failures through the

implementation of predefined, pretested, documented recovery plans and

procedures.

DEBT:

The word debt comes from the Latin Debere which means “to owe”.

DEFINITION OF DEBT:

According to Recovery of debts due to Banks and Financial

Institutions Act, 1993 debt means “Any liability(inclusive of interest) which is

alleged as due from any person by a bank or a financial institution or by a

consortium of banks or FI’s during the course of any business activity

undertaken by the bank or the FI or the consortium under any law for the

time being in force , in cash or otherwise , whether secured or unsecured or

whether payable under a decree or order of any civil court or otherwise and

subsisting on , and legally recoverable on , the date of the application” .

RECOVERY:



In simple words recovery means to get back our own thing back which

we have given it to others. In banks recovery means to get back the amount

back which they have given to the customers in the form of loans and

advances.

Recovery is “the process of regaining and saving something lost or in

danger of becoming costs”. Recovery is a key to the stability of the banking

sector.

OVERDUES, RECOVERY AND NPAs:

Overdues and Recovery:

The term "over dues" is used to convey the meaning that installments

of loans and Interest thereon are not paid on due date.

The term "recovery" of dues relates to repayments of loans and

interest thereon in time. Therefore, over dues exist if recovery of loans is

not in time.

NON PERFORMING ASSETS

INTRODUCTION TO NON-PERFORMING ASSETS

Indian laws permitted banks to conceal much with the result that the

balance sheet and profit and loss account rarely revealed the true state of

their affairs.



The Narasimhan committee therefore strongly emphasized the need

for bringing transparency in the financial statements of the banks and

recommended for a new set of formats for balance sheet and profit and loss

statements which were made effective from 1991-1992.

Banks provide loans advances subjects to borrowers promise for the

payment of principal and interest in the future. In this process banks are

exposed to various types of risks including credit risk arising from Non-

performing of loans and defaults of borrowers.

Moreover with globalization and diversified ownership where credit

rating agencies constantly review the strength of the banks managing the

levels of NPAs assumes greater importance.

The cost of financial intermediation by banks is high partly because of

the cross subsidization of NPA. NPAs are inevitable burden of the banking

industry. NPAs badly affect the financial health of the banks. Hence control

and management of NPAs have assumed serious importance. It is well

known fact that NPAs are the threat on the profitability of the banks

because the banks have not only to make provisions but they have to meet

the cost of funding these unremunerative assets.

ADVANCES IN THE BANKING SECTOR ARE CLASSIFIED INTO TWO CATEGORIES ARE AS FOLLOWS:

Advances which are yielding revenue and there is no immediate

likelihood of their going other way called as standard assets.



Advances which have stopped yielding revenue beyond a period have the

instances of irregularity in repayment, chances of recovery bleak in some

cases, chances of recovery absolutely in some other cases categorized as

sub standard assets doubtful assets and loss assets depending on their

nature of irregularity and chance of recovery.

MEANING OF NON-PERFORMING ASSETS

An asset is classified as non-performing asset (NPAs) if dues in the

form of principal and interest are not paid by the borrower for a period of

180 days. However with effect from March 2004, default status would be

given to a borrower if dues are not paid for 90 days. If any advance or credit

facilities granted by bank to a borrower become non-performing, then the

bank will have to treat all the advances/credit facilities granted to that

borrower as non-performing without having any regard to the fact that

there may still exist certain advances / credit facilities having performing

status.

RBI GUIDELINES ON INCOME RECOGNITION (INTEREST INCOME

ON NPAS)

Banks recognize income including interest income on advances on

accrual basis. That is, income is accounted for as and when it is earned.



The prima-facie condition for accrual of income is that it should not

be unreasonable to expect its ultimate collection. However, NPAs involves

significant uncertainty with respect to its ultimate collection.

Considering this fact, in accordance with the guidelines for income

recognition issued by the Reserve Bank of India (RBI), banks should not

recognize interest income on such NPAs until it is actually realized.

WHAT DOES ACCOUNTING STANDARD 9 (AS- 9) ON REVENUE

RECOGNITION ISSUED BY ICAI SAY?

The Accounting Standard 9 (AS 9) on `Revenue Recognition' issued by

the Institute Of Chartered Accountants of India (ICAI) requires that the

revenue that arises from the use by others of enterprise resources yielding

interest should be recognized only when there is no significant uncertainty

as to its measurability or collectability.

Also, interest income should be recognized on a time proportion basis

after taking into consideration rate applicable and the total amount

outstanding.

IS RBI GUIDELINES ON NPAS AND ICAI ACCOUNTING STANDARD- 9 ON REVENUE RECOGNITION CONSISTENT WITH EACH OTHER?



In view of the guidelines issued by the Reserve Bank of India (RBI),

interest income on NPAs should be recognized only when it is actually

realized.

As such, a doubt may arise as to whether the aforesaid guidelines

with respect to recognition of interest income on NPAs on realization basis

are consistent with Accounting Standard 9, `Revenue Recognition'.

For this purpose, the guidelines issued by the RBI for treating certain

assets as NPAs seem to be based on an assumption that the collection of

interest on such assets is uncertain.

Therefore complying with AS- 9, interest income is not recognized

based on uncertainty involved but is recognized at a subsequent stage when

actually realized thereby complying with RBI guidelines as well.

In order to ensure proper appreciation of financial statements, banks

should disclose the accounting policies adopted in respect of determination

of NPAs and basis on which income is recognized with other significant

accounting policies.

RBI GUIDELINES ON CLASSIFICATION OF BANK ADVANCES:

Reserve Bank of India (RBI) has issued guidelines on provisioning

requirement with respect to bank advances. In terms of these guidelines,

bank advances are mainly classified into:



STANDARD ASSETS: Standard accounts are those which are well

conducted and in which no threat of default. All “performing assets

are to be classified as “standard”.

SUB-STANDARD ASSETS: It is classified as non-performing asset for a

period not exceeding 18 months.

DOUBTFUL ASSETS: Asset that has remained NPA for a period

exceeding 18 months is a doubtful asset.

LOSS ASSETS: Here loss is identified by the banks concerned or by

internal auditors or by external auditors or by Reserve Bank India

(RBI) inspection.

In terms of RBI guidelines, as and when an asset becomes a NPA, such

advances would be first classified as a sub-standard one for a period that

should not exceed 18 months and subsequently as doubtful assets.

It should be noted that the above classification is only for the purpose

of computing the amount of provision that should be made with respect to

bank advances and certainly not for the purpose of presentation of

advances in the bank’s balance sheet.

The Third Schedule to the Banking Regulation Act, 1949, solely governs

presentation of advances in the balance sheet.



Banks have started issuing notices under the Securitization Act, 2002

directing the defaulter to either pay back the dues to the bank or else give

the possession of the secured assets mentioned in the notice. However,

there is a potential threat to recovery if there is substantial erosion in the

value of security given by the borrower or if borrower has committed fraud.

Under such a situation it will be prudent to directly classify the advance as a

doubtful or loss asset, as appropriate.

RBI GUIDELINES ON PROVISIONING REQUIREMENT OF BANK ADVANCES:

As and when an asset is classified as an NPA, the bank has to further

sub-classify it into sub-standard, loss and doubtful assets. Based on this

classification, bank makes the necessary provision against these assets.

Reserve Bank of India (RBI) has issued guidelines on provisioning

requirements of bank advances where the recovery is doubtful. Banks are

also required to comply with such guidelines in making adequate provision

to the satisfaction of its auditors before declaring any dividends on its

shares.

In case of loss assets, guidelines specifically require that full provision

for the amount outstanding should be made by the concerned bank. This is

justified on the grounds that such an asset is considered uncollectible and

cannot be classified as bankable asset.



Also in case of doubtful assets, guidelines requires the bank

concerned to provide entirely the unsecured portion and in case of secured

portion an additional provision of 20%-50% of the secured portion should be

made depending upon the period for which the advance has been

considered as doubtful.

For instance, for NPAs which are up to 1-year old, provision should be

made of 20% of secured portion, in case of 1-3 year old NPAs up to 30% of

the secured portion and finally in case of more than 3 year old NPAs up to

50% of secured portion should be made by the concerned bank.

In case of a sub-standard asset, a general provision of 10% of total out

standings should be made.

Reserve Bank of India (RBI) has merely laid down the minimum

provisioning requirement that should be complied with by the concerned

bank on a mandatory basis. However, where there is a substantial

uncertainty to recovery, higher provisioning should be made by the bank

concerned.

IMPACT OF NON PERFORMING ASSETS:

a) Non-Performing Assets are drag on profitability of banks

because besides provisioning banks are also required to meet the cost

of funding these unproductive assets.



b) Non-Performing Assets reduce earning capacity of assets.

Return on assets also gets affected.

c) As Non-performing Assets not earn any income, they adversely

affect capital adequacy ratio.

d) No recycling of funds.

e) Non-Performing assets also attract cost of capital for

maintaining capital adequacy ratio.

f) Non-Performing assets demoralize the operating staff and the

stake holders.

g) It will badly affect the image of the bank concerned.

h) Affect the moral of the employees and decisions making for

fresh loans suffer.

i) Enhances administrative, legal and recovery costs.

CONSEQUENCES OF NON-PERFORMING ASSETS

DIRECT:

A. It affects profitability of the unit substantially.

B. Affects banks credibility and render rising of fresh capital from the

market difficult.



C. Recycling of funds gets blocked.

INDIRECT:

A. Reduction in lending rate is made difficult.

B. Affect risk taking ability which ultimately affects competitiveness

of the branch unit.

C. Lack of market competitiveness results in slump in credit

expansion. The cost of poor quality loans is shifted to bank

customers through higher spread

OBJECTIVES OF DEBT RECOVERY MANAGEMENT

1. To review customer account details

2. To identify overdue transactions.

3. To resolve overdue and disputed transactions.

4. To reduce Non-Performing Assets and thereby avoiding its impact on

the performance of the bank.

5. To minimize the imbalance between cash outflow and cash inflow

arising out of the non performing assets.

FACTORS AFFECTING THE RECOVERY OF LOANS BY BANKS:



The factors may be broadly classified in to two;

(1) INTERNAL FACTORS

A. BANKS RELATED:

Improper Identification Of Borrower

Lack Of Appraisal Skills

Delay In Loan Sanctioning

Lack Of Post-Disbursement Follow- Up

Poor Management Information System.

B. BORROWER RELATED

Diversion Of Funds

Willful Default

Personal Accident, Death Etc.

Shifting Of Place Of Residence / Business

(2) EXTERNAL FACTORS

Natural Calamities



Loan Waiver, Write off etc.

Changes In Policy Environment

Changes In Economic Conditions

Legal Process

RECOVERY METHODS:

As soon as the borrower becomes defaulter, generally the bank follows two

methods of recovery.

1. General recovery methods.

2. Legal recovery methods.

GENERAL RECOVERY METHODS

The general recovery methods are usually the primary collection process

consists of the following activities.



AWARENESS CALLING: When the first payment is due from the

customer, a call is initiated to make him aware of the date of payment

of his dues to the bank. Customer details are also verified during the

process.

COLLECTION CALLING: This activity involves contacting the customer

over the phone, making him aware that he has missed the due date

and thereby requesting him to pay the arrears at the earliest. Repeat

calls are made if the customer does not honour his promises.

DEMAND NOTICES: In the event of the customer not responding to

the telephonic calls, a written communication is issued to the

customer informing him of the status of the account and calling upon

him to effect payment towards the overdues in the account.

FIELD COLLECTION: This activity involves meeting the customer at his

place of meeting or residence. Repeat visits will be made to persuade

the customer to repay the loan or even to strike a compromise deal if

it is found that the financial position of the customer has deteriorated

as a result of which recovery of the entire dues may not be possible.

Finally, if the customer has disappeared or refuses to have any

contact with the bank a final detailed notice should be issued to the



borrower through the legal council better taking legal proceedings

against him.

LEGAL RECOVERY METHODS:When all efforts to recover an advance in the normal course fail, banks have

to resort to legal and other remedies. The options available to banks are the

following:

1. Civil Courts

2. Criminal Court

3. Lok Adalats

4. Debt Recovery Tribunals (DRT)

5. SARFAESI Act

a. Taking possession and sale of assets of the borrower

b. Securitization of the debt and sale to Asset Reconstruction

Companies

6. Sale of Debt to other banks / NBFCs.

7. Compromise and write off

CIVIL COURTS

When all efforts to recover an advance fail, banks resort to legal action.

However, recovering any money through the civil courts is a time consuming

process due to the elaborate procedures to be followed and the large



number of cases pending in all courts. Often it takes more than a decade to

effect recoveries. The procedure involved is as follows;

1. Bank’s lawyer will issue a notice (legal notice) to the borrowers and

guarantors giving them one more chance to settle their dues within

the time specified in the notice.

2. On the borrowers/guarantors ignoring the legal notice the bank’s

lawyer will draft a “plaint” to be filled in the court to initiate legal

action. The plaint will be drafted based on the information provided

by the bank. The plaint has to be drafted on judicial stamp paper of

required value, as specified by the state governments.

3. The plaints will be filed in the civil court under whose jurisdiction the

bank branch is.

4. The court will admit the case and allot a number

5. The court will issue a summons to the plaintiff (bank) and defendants

(borrowers and guarantors) to appear before the court for a hearing.

6. If the defendants deny the allegations of the plaintiff, which they

usually do, the plaintiff is asked to prove the charges made by them in

the plaint.

7. The process of proving the charges could take several hearings and

stretch over a long period.

8. After the hearings are completed the court will deliver its judgment.

9. If the court decides in favour of the bank, they will issue a “decree” or

order directing the defendants to pay the amount decreed to the



plaintiff and authorizing the plaintiff to take possession and dispose of

the securities, if any, with the help of the court.

10.The plaintiff will file with the court a petition for execution of the

decree. The bank will request the court to appoint a receiver to take

possession of the securities and dispose them off on behalf of the

bank. In case it is a clean advance, the bank has to ascertain the assets

of the borrowers / guarantors and provide the details in the execution

petition to enable the “receiver” to attach the assets, take possession

and sell them to recover the dues to the bank.

CRIMINAL COURT

Under section 138 of Negotiable Instruments Act, causing a cheque to

be dishonoured is a criminal offence. If a cheque is dishonoured, the payee

can initiate criminal proceedings against the drawer of the cheque, provided

notice of dishonour was given to him. Normally, before filing a case the

lawyer of the plaintiff would send a notice to the drawer of the cheque and

give him one more opportunity to pay the amount of the cheque. Once a

case is filed, the court can impose a fine equivalent to twice the amount of

the cheque and / or imprison the drawer of the cheque for up to 2 years.

Banks and finance companies resort to this remedy whenever post

dated cheques taken by them for payment of loans / installments are

dishonored.



LOK ADALATS

To facilitate speedy settlement of cases involving small amounts and

to reduce the burden on courts, the Government of India passed the legal

services authorities act 1987 under which the National Legal Services

Authority was set up. Similar authorities were set up at the state, district

and taluk levels too. The primary role of the agencies is to resolve disputes,

both civil cases involving amounts up to Rs.10 lakhs and simple criminal

cases including cases under section 138 of NI Act for dishonour of cheques,

through reconciliation and settlement. When disputes are affected through

compromise the settlement is much faster. Such settlements are effected by

Lok Adalats which are run by the respective legal services authority Lok

Adalats which are run by the respective legal services authority. Lok Adalats

do not levy any charge from the parties to the dispute. Their role is

conciliatory only and cannot hear arguments and pass an order like a court.

The orders passed by Lok Adalats have the legal status of Decrees issued by

courts.

Lok Adalats can entertain only cases referred to them by civil and

criminal courts or the legal service authority. No other person can directly

approach a Lok Adalat. Parties to the dispute have to first file a case in a civil

court. After hearing both the sides, if the court decides that it is a fit case for

compromise, the court may refer it to the Lok Adalat for settlement.



The Lok Adalats are presided over by the judges of courts, as an

additional responsibility. The judge of a district court may also head a Lok

Adalat at the centre. As a district judge, he may refer a case to the Lok

Adalat and then decide the case as the presiding officer of the Lok Adalat. If

the Adalat is not able to work out a compromise, the parties can continue

the case in the court.

DEBT RECOVERY TRIBUNALS

Alarmed by the large amounts of bank funds blocked in litigation,

government if India passed the recovery of debts due to banks and financial

institutions act in 1993, under which a new set of institution called debt

recovery tribunals or DRTs were set up to deal with cases for recovery of

dues to banks and financial institutions, expeditiously. DRTs being tribunals

and not courts are not required to follow the elaborate procedures that

courts are required to follow under the civil procedure code. Hence they are

able to dispose of cases expeditiously. Further, since they deal with only

cases relating to dues to banks and FIs, they have developed necessary

expertise to deal with such cases which also facilitates speedy disposal. To

prevent DRTs from getting clogged with small value cases, it has been

specified that only cases for Rs.10 lacs and above can be filed with DRTs.

THE PROCEDURE INVOLVED IN DRT PROCEEDINGS ARE:



1. Filing of application with the registrar of DRT.

2. Admission of the application after scrutiny and allotment of number

by the registrar.

3. Issue of summons by the presiding officer. Repeated attempts are

made till the summons is served. In case summons cannot be served

in the usual manner summons could be made by publication in

newspapers.

4. Once the summons is served the case is listed for hearing by the

presiding officer.

5. In case the bank seeks any interim order such as attachment of the

security an affidavit has to be submitted to the presiding officer on

the case being listed.

6. Within 30 days of receipt of summons the defendants have to file

their written statements on the points raised by the bank in their

interrogatory.

7. At the subsequent hearings the arguments of the parties will be

heard, witnesses will be examined and documentary proof presented

by the parties examined by the presiding officer.

8. The presiding officer will pass final orders, asking the defendants to

pay the amount that is proved to be owing by them within the

permitted period.

9. If the defendants do not pay the amount within the permitted period,

the presiding officer will issue a “Recovery Certificate”. Details of the

security will be given in the RC.



10.The recovery officer will issue a demand notice asking the defendants

to pay the due to the bank.

11.If the defendants do not pay the amount due within 15days from the

date of receipt of the RC, the recovery officer will attach the

properties of the defendants, appoint a receiver to manage the

properties and auction them. Even without appointment of ea

receiver the recovery officer can proceed to sell the attached

properties.

12.The recovery officer has powers to order arrest of the defendants in

case they refuse to pay the dues despite having the means to pay or

obstructs recovery proceedings by trying to abscond, removing /

alienating his properties or giving false information about his

properties.

Recovery of debt through DRT being much faster than through civil courts,

banks have practically stopped filing civil suits for recovery except for

recovery of amounts up to Rs.10 lakhs for which there is no other

alternative.

SARFAESI Act

The Securitization and Reconstruction of Financial Assets and

Enforcement of Security Interest Act were passed in 2002 to give greater



powers to banks to recover amounts due to them. The act also facilitated

sale of loans by the banks to asset Reconstruction Companies.

Recovery of debt without intervention of DRT/court

The SARFAESI Act authorizes banks to do the following without the

intervention of the court or DRT provided at least 75% of the secured

creditors, by value, of the company agree to initiate action under

SARFAESI act:

Issue a notice and restrain the borrower from transferring the

charged assets by sale or lease.

Take possession of the charged assets of the borrower, subject to

giving a notice period of 60 days to enable the debtor to pay their

dues.

Appoint a person to manage the assets taken over (similar to

appointment of receiver)

Sell the charged assets.

Order those who owe money to the borrowers to deposit the

amounts with the bank(similar to issuing garnishee order)

Effectively, the act authorizes banks to do all that is necessary to

recover money due to them without having to go to DRT or court. The only

limitation is that the bank should be a secured debtor to initiate action

under SARFAESI Act. Banks can take action under SARFAESI Act even when a

case relation to the same debt is pending in a DRT or a court. Since banks

can recover only secured debt under SARFAESI Act, they need the help of



DRT for recovery of unsecured debt. Bank can initiate action under the

SARFAESI Act even in the case of a company under liquidation. However, the

banks have to give an undertaking to the official liquidator that out of the

sale proceeds, the amounts due under the Workmen Compensation Act will

be paid first.

In case the borrower has a grievance against the bank that has

initiated proceedings under SARFAESI Act, they can file an appeal with the

local DRT after depositing with them 50% of the dues to the bank. This

condition has been stipulated to prevent frivolous appeals to prevent banks

from proceeding under the SARFAESI Act.

While the DRT Act and SARFAESI Act have improved the recoverability

of bad debts fact remains that it involves a lot of effort, cost and time. Legal

remedies are inherently time consuming even if they are administered by

the banks themselves or by specialized institutions like DRT. Since

recovering bad debts as expeditiously as possible is beneficial to banks in

terms of being able to redeploy the funds profitably and using the time and

effort spent on recovery for generating new business, banks prefer to

recover bad debts by sale to others who are willing to buy the bad debts at a

discount or by making a compromise settlement with the borrowers

themselves and waiving some portion of the dues in return or recovering

the balance amount immediately.

SECURITIZATION OF DEBT AND SALE TO ARC’S



SARFAESI Act authorized setting up of Asset Reconstruction

Companies (ARCs) to enable banks to get rid of their NPAs by selling them to

ARCs. The RBI was authorized to issue detailed guidelines regarding ARCS

and to regulate them.

ARCs primary business being buying and recovering bad loans, they

are in a better position to pay focused attention to recovery of bad loans

and to develop necessary expertise in the activity. The banks are benefited

as the bad loans are moved out of their balance sheet, which helps them to

present a better financial picture. The bad loans are transferred to ARCs at a

discount to the book value so that the ARC can earn a profit from the

activity. For instance, if the loan outstanding is Rs.23lacs, an ARC may take it

over at, say Rs.19 lacs. The sale price will be decided by mutual agreement.

At the time of takeover, the ARC will issue Security Receipt for Rs.19 lacs to

the Bank. As and when recoveries are made, the amount, less expenses

incurred for recovery, will be paid by the ARC to the bank. Any recovery in

excess of Rs. 19 lacs will usually be shared at some pre-decided ratio

between the ARC and bank. ARC’s profit comes from such excess recovery.

If the entire or part of the amount is not recovered even after 5 years,

the bank has to buy back the unrecovered portion of the loan from the ARC

and make a provision in their books.

Every year the portfolio taken over by ARC has to be rated by CRISIL. If

according to their assessment the amount recoverable is less than the

amount of the outstanding security receipt, the bank has to make a

provision for the short fall. For instance, suppose the ARC does not recover



any part of the Rs.19 lacs during the first year. At the end of the first year, if

CRISIL assesses the recoverable amount to be Rs.17.5 lakhs only, the bank

has to make a provision of Rs.1.5lacs to cover the shortfall.

SALE OF NPAS TO OTHER BANKS/NBFCs

Some banks like Kodak Band and Standard Chartered Bank have

created a business out of bad loans. They buy bas loans from other banks at

a discount with a view to make a profit from higher recoveries. They have

set up specialized departments for buying and recovering bad loans. The

prices at which bad loans are sold are decided mutually by the selling and

buying banks. The selling bank gets immediate cash for loans sold and gets

rid of the bad loans from their balance sheet. Sale of bad loan to another

bank is more attractive to banks compared to sale to ARCs because of

immediate receipt of cash as against receipt of Security Receipt from ARCs.

RBI has issued the following guidelines with respect to sale of bad loans by a

bank to another bank or NBFC.

Banks can sell only assets which have remained NPAs in their books

for at least two years.

The sale has to be on without recourse basis, i.e., the entire risk should

pass on to the buyer.

The buyer has to make upfront payment. The price cannot be

contingent upon recovery.

The selling bank cannot buy back the assets sold.

The selling band cannot provide and guarantee or other comforts to

the buyer.



The buyer cannot sell the asset purchased from one bank to another

bank within 15 months from the date of purchase.

The buyer has to do all due diligence before negotiating a price and buying

the bad assets. The seller can sell individual assets or a pool of assets as one

unit.

COMPROMISE SETTLEMENTS AND WRITE OFF

A. Compromise settlements

Since legal remedies take time and sale of bad debts to ARCs and

other banks involve large discounts, banks find it more expedient to effect

compromise settlements with the borrowers and recover as much of the

bad debts as possible. In certain situations like defective documents or poor

security cover, compromise settlement may be the only viable option as

legal remedies or sale of asset may not be possible at all.

The starting point in negotiating a compromise settlement is

crystallizing the total amount due. This would include the following;

a. Balance Outstanding In The Account

Principal

Unpaid interest

Unpaid penal interest

b. Uncharged interest from the date the account became NPA till the

date of settlement.



c. Expenses incurred since the account became NPA

Insurance premium paid

Expenses on security arrangements, if any

Legal expenses

When negotiating compromise settlements, banks are guided by the

following factors;

a. Value of security available.

b. Likely time taken for realization of the security

c. Likely cost involved in making the recoveries

d. The present value of the likely net cash inflows from the above

discounted at a reasonable rate of interest.

e. The sacrifice to be made in terms of

Waiver of unpaid interest / penal interest

Waiver of uncharged interest

Write off of principal amount

f. Whether the provision made in the account is sufficient to cover the

concessions or whether the account has already been written off.

g. Impact on profit and loss account in the current year; amount of

concession in excess of provision available will reduce current year

profit, if the provisions are more than the concessions there will be a

net credit to the profit and loss account. Similarly if the account has

already been written off, any recovery will help to increase the

current year profits.



B.WRITE OFF

Banks make provision to cover NPAs as per guidelines issued by RBI.

While the NPA will remain as a debit balance in the advances accounts, the

provisions will accumulate as a credit balances in the provisions account.

The total amount of NPAs outstanding in the books is known as Gross NPA.

The Gross NPA less the provisions made against them is called Net NPA.

Effectively the net NPA is the actual bad debts of the bank.

Banks continue to carry both the NPA and the provisions in their

books rather than adjusting the provisions against the balance in the

accounts in the hope that the bad debt will be recovered, in which case the

provision can be credited back to the profit and loss account or used to

cover another bad accounts. A point comes when the provisions made for

an account has to be adjusted against the balance in the account by debiting

the provision account and crediting the advance account. Setting of the

provision against the debit balance in the advance account is called write

off. When an account is written off, the balances in both the provision

account and the advance account come down.

Writing off the balance in an account does not take away the right of

the bank to recover the amount from the customer. Even after write off

banks continue their recovery efforts including cases filed with DRT. Banks

maintain records of all written off accounts to facilitate such recovery

efforts.



CHAPTER-02

RESEARCH DESIGN

TITLE OF THE STUDY:



“An Exploratory study on Debt Recovery Management

of co-operative banks with special reference to The Bangalore

City Co-operative Bank Ltd”.

STATEMENT OF THE PROBLEM:

Banks were never so serious in their efforts to ensure timely recovery

and consequent reduction of NPA’s as they are today. As we all know

growing percentage of non-performing assets is a big concern for modern as

well as traditional financial institutions. If recovery is been made effective

then certainly it will reflect positively on reducing percentage of NPA’s. So

recovery management, of fresh loans or old loans, is central to NPA

management. Hence the focus is on Debt Recovery Management of “The

BCCB Ltd.”



OBJECTIVES OF THE STUDY:

(1) To study the objectives of Debt Recovery Management of the bank.

(2) To study the Debt Recovery Policy and Debt Recovery Methods of the

bank.

(3) To study the position of NPA’s in the bank.

(4) To understand how non-performing asset affect the performance of

the bank.

(5) To offer suggestions on the basis of analysis and interpretations

made.

SCOPE OF THE STUDY:

The scope of this study is limited only to the study of Debt Recovery

Management in “The Bangalore City Co-operative Bank Ltd”.

RESEARCH METHODOLOGY:

The methodology used in the study is an exploratory research design and in

order to arrive at the above objective both primary data and secondary data

has been collected.



1. PRIMARY DATA: “Primary data is first hand information which is

collected a fresh and thus happens to be original in character”.

This data is collected through personal discussions with the DEPUTY

GENERAL MANAGER, ASSISTANT GENERAL MANAGER and other officials

in charge of recovery department through structured questionnaire were

held.

2. SECONDARY DATA: “Secondary data are those which have already been

passed through the statistical process”

This data is collected through Annual Reports of the bank, Books on

Research Topic, Journals, and Websites.

PLAN OF ANALYSIS:

The data collected is raw and it is complied, classified, tabulated and

then analysed using statistical tools like simple percentages. Graphs and

Charts are used to highlight the statistics. Based on these data analysed and

interpreted, suggestion and conclusions are drawn.

LIMITATIONS OF THE STUDY:

Due to time constraint depth analysis could not be made.



Some of the information is considered confidential and not available for

the study.

The data taken for analysis and interpretation is for a limited period (only

the recent three years data has been considered i.e. from 2006-07 to

2008-09).

The study is confined to only one Bank i.e., The Bangalore City Co-

operative Bank Ltd.

The study is subject to the views and statistics as expressed by the

concerned officials of the bank.

CHAPTER LAYOUT:

The chapter layout of this project is as follows.

CHAPTER-1: INTRODUCTION

CHAPTER-2: RESEARCH DESIGN

CHAPTER-3: BANK PROFILE

CHAPTER-4: ANALYSIS AND INTERPRETATION OF DATA

CHAPTER-5: SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

BIBLIOGRAPHY AND ANNEXURE



CHAPTER – 03

BANK PROFILE

History of “The Bangalore City Co-Operative Bank Limited”

“THE BANGALORE CITY CO-OPERATIVE BANK LIMITED” was the first urban

co-operative bank in the country started in April 06, 1907 by Sri.K.Ramaswamy

and others.

[Administrative Office: No.3, Pampamahakavi Road, Chamarajpet, Bangalore – 560018.]

The Bangalore City Co-operative Bank Limited was established under the

Co-operative society act bearing registration number 314/CS, dated 08.04.1907

from the Registrar of Co-operative Societies in Karnataka and the License was

granted by RBI No.UBD/KA/642, dated 11.11.1986 for conducting the “Banking

Business”. The bank has 12 branches along with one administrative office and all

branches have been computerized under the jurisdiction of Bangalore City Co-



operative Corporation, Bangalore Development Authority and Bangalore urban &

peripheral areas. The operation of the bank is throughout Bangalore Co-operative

Limited.

Trademark of “The Bangalore City Co-operative Bank

Ltd”:

In consideration of the application submitted to the Govt. of

India, to get registered the above image of godess Lakshmi as

Trademark, as per the Trademark Act of 1959, sec 23(2), rule

62(1) Trademark No.943843 dated 31-7-2000 the Govt.

approved and registered the above image as a trademark and has been given

letter of approval on 15-03-2008.

GOALS AND OBJECTIVES OF THE BANK:

The Bangalore City Co-operative Bank Ltd., believes that every individual from

each status of society needs affordable, relevant and quality services. The goals

and objectives of bank are as follows;

1. To take measures / steps to increase the deposits to Rs.500 crores and

loans and advances to Rs.370 crores.

2. To earn more than Rs.9 crores of net profit.

3. To reduce the net non-performing assets to 0%.

4. To give more advantages to customers by converting all the branches into

core- banking system.

5. To take steps to have own building for all the branches.

6. To provide more and more training and development programmes to

increase efficiency of employees.



7. To encourage savings, self help and co-operative principles among the

members and depositors of the bank.

8. To undertake banking transaction and co-operative system as per direction

of RBI, Central Government and State Government.

9. To reduce the cost of the management through the honorary services of

members and thereby keep the cost of credit as low as possible.

10. To promote the effectiveness of credit and to reduce the risk in granting a

credit through careful and continuous supervision of the operations of the

borrowing members.

VISION STATEMENT

OUR VISION IS OUR MISSION

Founded in 1907, this unique financial institution rests on the pillars of

thrift, fellowship, character, accommodation and the selfless service of all

individuals and organizations who wish to help themselves progress. We see

ourselves as a family of honest, loyal and committed professionals, harmoniously

employing technology, innovation and the human touch to achieve customer

satisfaction and goodwill the corner stones of our success and the focus of all our

efforts.

The prosperity of our customer is the engine of our success and they will

find in us a fast, timely, flexible, co-operative and competitive partner in their

progress. We are committed to approachability, simplicity and transparency in our

dealings with all our stakeholders and shall be a temple of their trust.



We shall use our employee involvement and sense of togetherness to

generate high levels of teamwork, efficiency, excellence and profits. We shall

mobilize aggressively, invest wisely, disburse prudently, recover assiduously,

reduce costs and create a learning organization that offers products and services

in tune with and ahead of the time.

ORGANIZATION CHART OF THE BANGALORE CITY CO-OPERATIVE BANK LTD.





LIST OF BOARD OF DIRECTORS:

PRESIDENT: Sri. Avalahalli chandrappa.R

VICE-PRESIDENT: Dr. Devaraj T.M., MBBS, D.H.A., FAGE

DIRECTORS: Sri. Obanna raju (up-to 7-4-2008)

Dr.T.P.Yoga, B.sc., M.A. (lit), LLB, PGDPM, MBA., P.hd

Sri.B.K.Ashwatha Narayana

Sri.Dayashankar

Sri. G.S. Rajendra

Sri. T.D.Dananjaya, B.sc.

Sri.K.Krishnappa

Sri.Anjanappa

Sri.M.Hanumaiah, B.A., H.D.C

Sri.N.Raghavendra, M.A

Sri.Basavaraju (co-opt from 30-4-2008)

Smt.L.Bhagyalakshmamma

Sri.N.Thimmiah

Sri.U.P.puranik, M.com, LLB, RBP, C.A.I.I.B

Sri.K.Krishnamurthy, FCA, C.A.I.I.BGENERAL MANAGER: Sri.N.Manjunath,B.sc, M.A, H.D.CBRANCHES:



At the end of the financial year 2008-09, including administrative office “The

Bangalore City Co-operative Bank Ltd” is having 13 branches throughout the

Bangalore City. Its branch wise deposit, loans & advances and net profit are as

follows.

Rs. 000’s

Sl. No.

Branches Date of Started

Total Deposits

Total Loans &

advances

Net Profit

1. Main Branch, Chamarajpet.

06-04-2007 906580 819506 33202

2. Vijaynagar 24-02-1980 642129 419626 8777

3. Vijayanagar 9th Block 25.01.1981 396813 173112 302

4. Indiranagar 19-12-1983 571798 182287 1535

5. Chamarajpet West 07-02-1988 163382 248523 14617

6. Shanthinagar 03-09.1992 94564 143545 6492

7. Mahalakshmipuram 07-07-1994 264201 160861 1204

8. Sanjaynagar 11-08-1994 220257 95412 1045

9. Padmanabhanagar 04-09-1995 144098 113703 2157

10. Koramangala 30-10-1996 165431 181855 10849

11. Avalahalli 16-01-2002 154604 210876 10021

12. R.T.Nagar 15-02-2002 57433 159250 9038

13. Jnana Jyothi Nagar 22-03-2009 3019 838 3



3.8 AWARDS:

Since from the opening of the bank, it is been functioning effectively.

The Bangalore City Co-operative Bank Ltd. was awarded by “Shri.

Kanteerava Narasimha Raja Odeyar Bahadur” Ex. King of Mysore in 1926,

1927 and 1928 as the “Best Urban Co-operative Bank”.

In 2001-2002, 2003-2004 and 2007-2008 the State Government of

Karnataka awarded as the “Best Urban Co-operative Bank”.

3.9 COMPETITORS INFORMATION:

As The Bangalore City Co-operative Bank Ltd., is the urban Co-

operative Bank, it is facing competition from the commercial banks.

Commercial banks undertake a number of banking services. Since the

urban co-operative banks are localized and do not have network of bankers

they are not in a position to meet all the banking services. Therefore the

institution like Government, public sector undertakings and the urban co-

operative banks are facing competition from the commercial banks.



CHAPTER-04

DATA ANALYSIS AND INTERPRETATION

DEBT RECOVERY MANAGEMENT OF BANK

The Debt recovery management of The Bangalore City Co-operative Bank

Ltd is analysed and interpreted with the following selected parameters.

OBJECTIVES OF RECOVERY MANAGEMENT OF “THE BCCB LTD”

NPA REDUCTION: Abnormal delay in recovery of loans builds up

NPA’s which affect the financial performance of the bank. Better

recovery performance corresponds to lower NPA’s.

DEPOSIT GROWTH: If NPA occurs then lots of bank assets are being

blocked and they are converted into bad debts so it reduces the

assets of the bank which creates a lot of problem in generating the

banks business. So if Debt recovery is done properly then it will help

the bank to generate the outstanding amount that is due from the

customer and it will increase its deposit growth and do its business

efficiently without any problem.

ADVANCE GROWTH: If recovery is being properly made then it will

help to generate fund and then the bank will have sufficient fund and

it could provide loans and advances to its customer and generate its



business. So it could be said that if recovery is properly done then it

will help in all round development of the bank.

PROFITABILITY GROWTH: Good recovery is an important ingredient

for profitability of any financial institutions it leads to increased

financial capacity to deliver credit. So it could be said that if recovery

is properly done then it will help in all round development of the bank

by increasing profits.

LOAN RECOVERY POLICY OF “THE BCCB LTD”

The debt collection policy (Recovery policy) of the bank is built around

dignity and respect to customers. The bank will not follow policies that are

unduly coercive in recovery of dues from borrowers. The policy is built on

courtesy, fair treatment and persuasion.

The bank believes in following fair practices with regard to recovery of

dues from borrowers and taking possession of security (properties / assets

charged to the bank as primary (or) collateral security) (known as security

repossession) and thereby fostering customers confidence and long term

relationship.

The repayment schedule for any loan sanctioned by the bank will be

fixed taking into account the repaying capacity and cash flow pattern

of the borrower.



The bank will explain to the customer upfront the method of

calculation of interest and how the Equated Monthly Installments

(EMI) or payments through any other mode of repayment will be

appropriated against interest and principal due from the customers.

The bank would expect the customers to adhere to the repayment

schedule agreed to and approach the bank for assistance and

guidance in case of genuine difficulty in meeting repayment

obligations.

The bank’s security Repossession policy (taking possession of the

mortgaged properties under SARFAESI Act (or) acquiring the property

as non banking asset through enforcement of decree) aims at

recovery of dues in the event of default and is not aimed at whimsical

deprivation of property.

The policy recognizes fairness and transparency in repossession,

valuation and realization of security.

All the practices adopted by the bank for follow up and recovery of

dues and repossession of security will be in consonance with the law.



RECOVERY METHODS FOLLOWING BY “THE BANGALORE CITY CO-

OPERATIVE BANK LTD”:

As soon as borrower becomes defaulter, generally the bank follows two

methods of recovery.

General recovery method.

Legal recovery method.

GENERAL RECOVERY METHODS:

(1) When the first payment is due from the customer, a call is initiated to

make him aware of the date of payment of his dues to the bank.

(2) In the event of the customer not responding to the telephonic calls, a

written communication is issued to the customer informing him of the

status of the account and calling him to effect payment towards the

overdues in the account.

(3) If there is no response, further letters may take a strong line insisting

on immediate reply.

(4) If these are ignored, the recovery team of the bank goes for field

collection. This activity involves meeting the customer at his place of



meeting or residence. Repeat visits will be made to persuade the

customer to repay loan.

(5) Finally, if the customer has disappeared or refuses to have any

contact with the bank a final detailed notice will be issued to the

borrower through the legal council better taking legal proceedings

against him.

LEGAL RECOVERY METHODS:

(1) When all efforts to recover loans in the normal course fail, the file is

referred to legal department of arbitration.

(2) The legal department will initiate all the steps to recover the amount,

finally E.P (Execution Petition) will be filed.

(3) The E.P FILES are handed by Sale Officer / ARCs who is appointed from

co-operative department. As soon as the file is received, the sale

officer will send the recovery force to identify the defaulter and his

property. After identification, form no.6 will be issued attaching the

property for sale and to pay the amount within 10days.

(4) If the party does not settle the amount with in 10days, then Form

no.8 & 9 (sale date of the mortgaged property) will be fixed giving one

month time.



(5) Even though after issuing of Form No.8 & 9, if the party does not give

fruitful then a paper publication “fixing the sale of property” will be

advertised.

(6) Before three days of option, the locality people where the mortgaged

property exists and the others are invited to participate.

(7) Then auction of that property will be conducted among the bidders

and the auction will be confirmed to the highest bidder.

Measures to recovery Non performing Assets with regard to

SARFAESIA – 2002:

With an objective of speedy recovery of NPA’s that arises in the

banking organizations , the central government of India has implemented

securitization and reconstruction of financial assets and enforcement of

security interest act 2002 (SARFAESIA-2002).

SARFAESI Act 2002 extends to whole of India including the State of

Jammu & Kashmir. The act is effective from 21.06.2002. It also covers the

earlier loans which are outstanding.



The same act has been made applicable for URBAN CO-OPERATIVE

BANKS also, with effect from 28-01-2003.

As per the directions of RBI if any loans of the bank has been classified

as NPA the securities taken on such loans can be taken to possession by

giving notice and advertisement in the newspapers and there is an

opportunity in this act to adjust such loans by disposing of securities that

has been taken to possession through above mentioned process.

In order to implement the measures that can be taken under this act

the bank has appointed Sri.K.G.Raju, the Deputy General Manager as an

authorized officer and all branch managers as assistant authorized officers.



TABLE-4.1:

SHOWING RECOVERY AS A PERCENTAGE OF LOANS & ADVANCES

YearTotal loans & advances

Percentage of recoveryIssued

(Amount In Lakhs)Recovered

2006-07 15017.48 14436.91 96.13

2007-08 23367.94 22858.79 97.82

2008-09 29484.43 28889.17 97.98

Analysis:

It is clear from the above statement that the recovery of loans

and advances is increased from 96.13% to 97.98% during the year 2006-

2007 to 2008-2009.



GRAPH-4.1:

SHOWING RECOVERY AS A PERCENTAGE OF LOANS & ADVANCES

Interpretation:

From the above analysis it is found that the recovery performance

of the bank is increasing year by year and the bank has taken effective

measures to collect the loans and advances.



TABLE-4.2:

SHOWING STATUS OF NPAs IN THE BANK

Year

Gross NPAs Net NPAs

Amount

(in Lakhs)

Percent

(%)

Amount

(in Lakhs)

Percent

(%)

2006-07 2339.84 15.58 359.23 2.76

2007-08 2268.83 9.71 203.71 0.96

2008-09 3499.30 11.87 1332.04 4.88

Analysis:

From the above table it is observed that the NPAs in the bank is

considerably decreasing from 2006-07 to 2008-09.

Gross NPAs during the year 2006-07 was Rs.2339.84 lakhs at a %

of 15.58, in 2007-08 it is decreased to Rs.2268.83 at 9.71% and during

2008-09 it is Rs.3499.30 lakhs at 11.87%.

The net NPAs of the bank during 2006-07 was Rs.359.23 at the rate of

2.76%, it was Rs.203.71 lakhs at 0.96% in 2007-08 and increased to

Rs.1332.04 lakhs in 2008-09 at 4.88%.



GRAPH-4.2:

SHOWING STATUS OF NPAs IN THE BANK

Interpretation:

From the above analysis it can be interpreted that the level of

NPAs is decreasing year by year. In 2008-09 the NPAs is increased

compared to 2007-08 by 2.16% (11.87% - 9.70%). As it is said by bank

officials, this is due to the impact of economic crisis in India. There was

fluctuation in the income level of the borrower, due to this the recovery

performance was little bit low because of which the NPAs are slightly

increased during the year 2008-09.





TABLE-4.3:

SHOWING THE NET NPAs & RECOVERY PERFORMANCE OF THE BANK

Year% age of

Net NPA to Loans% age of Recovery

2006-07 2.76 96.13

2007-08 0.96 97.85

2008-09 4.88 97.98

Analysis:

From the above table it is analysed that in the year of 2006-07

net NPAs in the bank was 2.76% corresponding to Recovery performance

at 96.13%, In the year of 2007-08 net NPAs has reduced to 0.96% where

Recovery performance increased to 97.82% and during the year of 2008-

09 net NPAs suddenly increased to 4.88% where recovery performance is

also increased to 97.98%.



GRAPH-4.3:

SHOWING THE NET NPAS & RECOVERY PERFORMANCES OF THE BANK

Interpretation:

As it is said higher the recoveries lower the NPA’s. Thus recovery

and level of NPA’s are inversely related.

From the above analysed data it is clear that recovery

performance of NPA’s is increasing year to year though in the year of

2008-09 the net NPA’s has increased to 4.88% compared to previous

years. The reason for this is the impact of economic crisis in India the

bank was also not exceptional to this. There was fluctuation in the

income level of the borrower due to this the recovery performance was

little bit low because of which the net NPA’s are slightly increased during

the year 2008-09.



TABLE-4.4:

SHOWING THE NET NPAs AS A PERCENTAGE OF LOANS & ADVANCES

Year

Total Loans &

Advances (Amount

in Lakhs)

Net NPAs

(Amount in

Lakhs)

%age of Net NPAs

to Total Loans &

Advances

2006-07 15017.48 359.23 2.76

2007-08 23367.94 203.71 0.96

2008-09 29484.43 1332.04 4.88

Analysis:

From the above collected data it is observed that total loans and

advances were Rs.15017.48 lakhs, Rs 23367.94 lakhs and Rs.29484.43

lakhs on which net NPA’s were 2.76% , 0.96% and 4.88% during the year

2006-07 , 2007-08 and 2008-09 respectively.



GRAPH-4.4:

SHOWING THE NET NPAs AS A PERCENTAGE OF LOANS & ADVANCES

Interpretation:

It is found from the above analysis that total loans and

advances are increasing year by year and net NPA’s on total loans and

advances are decreasing except during the year 2008-09 which should be

taken care of.



TABLE-4.5:

SHOWING THE GROWTH OF DEPOSITS

YearTotal Deposits

(Amount in

Lakhs)

Growth of deposits in

Percentage

2006-07 22443.62 100.00

2007-08 28910.54 128.81

2008-09 37863.10 168.70

Analysis:

From the above data collected it is found that the growth of

deposit of the bank has been increased from 100% to 128.81% and

168.70% during the year 2006-07, 2007-08 and 2008-09 respectively.



GRAPH-4.5:

SHOWING THE GROWTH OF DEPOSITS

Interpretation:

It is clear from the above analysis that there is increasing trend

in the growth of deposit in the bank. It shows that bank is following

effective recovery methods.



TABLE-4.6:

SHOWING THE LOAN POSITION OF THE BANK

Year Loans (Amount in lakhs) Percentage of loan position

2006-07 15017.48 100.00

2007-08 23367.95 155.61

2008-09 29484.43 196.33

Analysis:

As the transaction of the bank increased lending of funds also

raised from Rs.15017.48 lakhs to Rs.23367.94 lakhs, Rs.29484.43 during

the year 2006-07, 2007-08 and 2008-09 respectively where there is

increase of 96.33% (196.33-100) and 40.73% (196.33-155.61) in lending

of funds during the year 2008-09 compared to the year of 2006-07 and

2007-08 respectively.



GRAPH-4.6:

SHOWING THE LOAN POSITION OF THE BANK

Interpretation:

The above analysis shows that the growth of lending position of

the bank is being considerably increased. As it is clear that the bank has

been taken effective recovery measures.



TABLE-4.7:

SHOWING PROFIT POSITION OF THE BANK

YearNet Profit

(Amount Rs. lakhs) Percentage

2006-07 355.49 100.00

2007-08 427.24 120.18

2008-09 517.00 145.43

Analysis:

Net profit of the bank as shown a good growth during the

years. As it has steady growth in earning profit from Rs.355.49 lakhs to

Rs. 427.24 lakhs and Rs.517.00 lakhs in the financial year 2006-07, 2007-

08 and 2008-09 respectively where there is increase of profit by 45.43%

(145.43-100) and 25.25% (145.43-120.18) during the year 2008-09

compared to the year of 2006-07 and 2007-08 respectively.



GRAPH-4.7:

SHOWING PROFIT POSITION OF THE BANK

Interpretation:

As though the bank is earning profit steadily it requires earning

more profit by recovering the non performing assets through effective

measures .So there will be further growth in profit earnings of the bank.



CHAPTER-05

SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

FINDINGS OF THE STUDY:

It is observed that the debt collection policy (Recovery policy) of the

bank is built around dignity and respect to customers. The bank will

not follow policies that are unduly coercive in recovery or dues from

borrowers. The policy is built on courtesy, fair treatment and

persuasion.

It is found that all the practices adopted by the bank for follow up and

recovery of dues and repossession of security will be in consonance

with the law.

It is observed that the level of non-performing assets of the bank is

decreasing year by year except during the year 2008-09 compared to

previous years. It is due to the impact of economic crisis in India,

there was fluctuation in the income level of the borrower because of

this reason the NPAs are slightly increased in the year 2008-09.



As per the information given by the bank officials, the main reason for

loans becoming due /accounts becoming non performing asset in the

bank are willful default and diversion of fund.

It is examined that though the position of deposit, loan and profit of

the bank is in increasing trend during the year 2006-07 to 2008-09 it

requires recovering the non performing assets through effective

measures .So there will be further growth in the performance of the

bank.

It is found that before the enactment of the Securitisation Act the

banker had limited options for recovery which consisted of having an

intensive follow-up and interaction with the borrower and initiating

legal action through courts.

It is observed that the securitization Act empowers banks to change

or take over the management/possession of secured assets of the

defaulting borrowers and sell or lease out the assets without the

intervention of the court.



SUGGESTIONS:

It is suggested to bank that the proper documentation and verification to

be made before sanctioning the loan.

It is suggested to bank empower staff to make decisions related to

sanctioning of loans.

The borrowers are constantly reminded about their overdues and notices

to clear them are regularly sent.

Constant interactions have to be maintained with the customers to keep

track of their loan payment.

Strict measures have to be taken while issuing or sanctioning the loan.

The measures can include verification of job and salary slips, verification

of securities and the like.

While sanctioning loans to customers past credit history is to be

considered, along with current income and assets.

The guidelines issued both by the RBI and concerned statutory board of

the bank regarding the issue of loans as well as recovery methods should

be strictly considered and implemented.

List of defaulters is displayed in the notice board of the branch with out

disclosing the account number, amount of loan, overdue etc., the idea is



simply to draw attention of the defaulters to contact the branch

manager.

Identify critical branches for intensive recovery, fix targets of recovery

and draw time bound action programme. Monitor implementation of

time bound action plan.

In order to increase the recovery, rebates should be given on interest

amount to its old customers so that they can recover the amount. As it

brings loyalty towards bank.

Effective policies should be framed regarding the process of recovery of

loans/debts during the time of changes in economic conditions of the

country like recession, inflation etc.

“The Bangalore City Co-operative Bank Ltd” is trying to reduce NPA

through various techniques and it is suggested that these measures have

to be continued.



CONCLUSION

It has been said that a bank “never” makes a bad loan - a loan goes

bad after it has been made. If a customer fails to make repayment on due

date it is considered a sticky account. Any customer who becomes defaulter

may bring problems to the banker who grants the loan from depositor’s

money and that money has to be returned to the depositors with regular

interest. Then recovery of such loans and advances become inevitable.

Recovery management system will design a collection strategy to

meet bank’s objectives. Bank can recover their debts without losing

customers.

“The Bangalore City Co-operative Bank Ltd “which had started 103

years back has occupied a prestigious place in India and it Is one among the

top urban co-operative banks of the country, also it is 3rd among the urban

co-operative banks of Karnataka state. It is providing excellent services to its

depositors, shareholders, borrowers through its computerized branches and

motivated staff. It is highly appreciative that the bank has reached this

position within the period. Overall the bank is found to be one of the

pioneers among the urban co-operative banks and has become instrumental



in the economic development of its members. But of bank is facing the

problem of increasing level of NPA’s over the years which should be taken

care of.

QUESTIONNAIRE

TOPIC:

An Exploratory study on Debt Recovery Management of

Co-operative banks with special reference to “THE BCCB ltd.”

Dear sir/ madam,

This is with respect to MY M.com project in ‘THE BCCB Ltd” On Debt

Recovery Management. This questionnaire is to be answered for my

research purpose. I request you to give your co-operation to do my

survey as the same will be kept confidential.



Name:

Designation:

Department:

Phone no.:

1. What are the types of loans you are providing to customers?

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2. What are the terms and conditions to get loan in your bank?

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3. What are the measures you are taking when loans are become due

Or Debt?



-------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------

4. Under which guidelines you are taking steps to collect the Debts?

--------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------

5. When will you consider the loans and advances given, as NPAs?

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6. Does NPAs are classified into ,

a. substandard assets

b. doubtful assets

c. loss assets

d. all the above



7. Have you been conducted any surveys on “why loans are becoming due in the bank”?

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8. What are the main reasons for NPAs in the Bank?

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9. What are the effects of NPAs on growth of “THE BCCB Ltd”?

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10.Do you have loan or Debt recovery committee on your bank?

*Yes *No

If yes, give the details -------------------------------------------------------



11.What are the measures for the recovery of NPAs adopted by the bank?

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12. Does bank have made any insurance coverage on NPAs ,

*Yes No If yes, give details --------------------------------------------

13. Details of NPAs of the bank for the following years,

particulars 2006-07 2007-08 2008-2009

Standard Assets

Substandard Assets

Doubtful Assets

Loss Assets



BIBLIOGRAPHY

1. BOOKS REFERRED

SL.NO

BOOK NAME

AUTHORPUBLICATION EDITION

1.Management of Banking

S.Scott MacDonald / Timothy W.

Koch

South Western – Cengage Learning

Sixth 2006

2Banking

principles & operation

M.N.GopinathSnow white

publications ltd.First2008

3Introduction to banking

Vijayaragavan Iyengar Excel Book

First2007

4Management

ofbank credit

H.R. Suneja Himalaya publishing house

First2008

2. THREE YEARS ANNUAL REPORTS OF THE BANK:(2006-07, 2007-08 & 2008-09)

3. WEBSITES

www.rbi.org.in


http://www.rbi.org.in/


Search Engine: www.google.com & Yahoo.com


http://www.google.com/

Documents

shivu project