CHAPTER-1

INTRODUCTION

1
INTRODUCTION:

NEED OF THE STUDY:

NPA have adverse impact on the banking system because these accounts show that the money of
bank is locked and cannot be further used for any productive purpose. If there is a continuous
increase in NPA then it is very dangerous for the existence of the bank because it hampers the
repayment capacity of the bank. The study concentrates on how to improve the efficiency and
profitability of banks by monitoring the NPA. This study highlights the concept of NPA, causes of
NPA, Intra comparison of NPA of Union Bank of India.

2
OBJECTIVES OF THE STUDY:

 To analyze the quantum of NPA in bank

 To examine the NPA levels of Union Bank of India.

 To study the past trends of NPA To learn Preventive Measures

3
RESEARCH METHODOLOGY:
The secondary data is used in the present study.
The secondary data to non-performing assets were collected from various issues of
UBI Annual Report
RBI bulletins
RBI circulars,
Journals,
Magazines,
Data from internet
Report on Trend and Progress of Banking in India, RBI, and Statistical Tables Relating to Banks in
India.

Period of the Study

The study period covers past 5 financial years covering the period 2019 to 2023.

Tools used in the study

Percentage
4
Provisions Coverage Ratio

LIMITATIONS:

 This study is only restricted to Union Bank of India.

 The result of the study may not be applicable to any other bank.
 Where the bank operations are confidential, detailed information could not be obtained.
 The conclusion of the study is based on the Secondary information only.

5
SCOPE OF THE STUDY:
 Study pertains the NPA in Union Bank of India and it overall impact on the banks
performance.
 Study purely covers different strategies initiated by the bank to avoid the NPAs.
 The study takes deep into NPAs in different sectors and comparison of total and percentage
of NPA
 Study depends on the data given by the bank and its sites.  Survey and assess the
aggregate size of the NPAs

6
 CHAPTER-2

REVIEW OF LITERATURE

7
REVIEW OF LITERATURE:
Karunakar et al. (2008) discuss the various factors that boost NPAs, their size, their effect on
Indian banking operations and suggest measures to control the curse on the banking industry. Use
ofsuitable credit assessment and risk management methods is the key to solve the problem of NPA
accumulation.

T.R. Gurumoorthy et.al (2012) discussed that “NPA of public sector banks can be reduced by
reviewing loan application on the basis of 5 c‟s. Here 5 c‟s denotes capacity, collateral, condition,
capital and character of borrower.”

Joseph and M. Prakash, 2014 have studied the NPAs levels of the private sector banks and public
sector banks. They found that NPAs level was more in case of substandard asset and doubtful asset.
However in case of standard asset, private banks rule over which shows a good position of private
sector banks. Also it shows that they have adopted all necessary measures in order to avoid any
account becoming NPAs.

S.S. Prasad and P. Goyal, 2015 revealed that NPAwas not the factor which significantly affected
the ROCE, ROAand RONW of Vijaya Bank. The study concluded that Vijaya Bank was effectively
able to manage its NPAs resulted in not affecting its profitability.

8
R.K. Uppal and P. Khanna, 2015 has analyzed the primary reasons for the growth of NPAs in
scheduled commercial banks of Punjab and also suggested the measures for controlling the same.
The objectives of study were to find out the factors that affect the loan repayment capacity of the
bank customers.

Kumar (2018), in his study has found that NPAs have a serious negative impact on the profitability
and liquidity of the banking sector. According to him, if the issue of NPAs is managed efficiently,
then many microeconomic issues such as poverty, unemployment, imbalances of balance of
payments can be reduced, the money market can be strengthened, and thus, the image of the Indian
banking system can be improved in the international market.

CHAPTER-3

9
 INDUSTRY PROFILE

&

COMPANY PROFILE

INDUSTRY PROFILE:

Indian Equity Market

Overview

Indian equity market has a prominent place in India’s financial sector as it is quite
developed and modern on par with international standards.

Drivers of

1) The prevalence of easy monetary policy and lower interest rates.

2) Technological developments facilitating easy access to market.

3) Easy availability of data and internet.

10
India’s share in global market capitalisation (m-cap) has been rising over the years.
India now ranks 5th in the world market capitalisation
Market Capitalisation of the Largest Stock Exchanges*

NYSE 25.2
Nasdaq - US Shanghai Stock Exchange
Euronext Japan Exchange Group 17.9
Shenzhen Stock Exchange 6.6
Hong Kong Exchanges and Clearing 6.2
BSE India Limited National Stock 5.4
Exchange of India LSE Group London 4.7
Stock Exchange 4.3
3.5
3.5
3.1
510

0 15 20 25 30
USD Trillion

Primary market

The primary equity market is a channel through which companies raise

capital for investment by issuing fresh shares.

11
 Share in World Market Capitalisation*
50
45 42.9
40
35
30
25
%

20
15
10 10.1
5 5.5 5.0
0 3.5 2.9 2.9 2.8

USChinaJapanHong KongIndiaUKFranceCanada

Listed Companies

6,100 2,155 2,200

5,900 2,100
5,700 2,000
5,500 1,900
1,800
1,700
5,300 1,600
5,133 5,414
5,100 1,500
4,900
4,700
4,500 1,646

BSE NSE (RHS)

Number of Listed Companies

Resource Mobilisation Through IPOs

12
Resource Mobilisation Through IPOs - India
1.2 1.13 200
180
1.0 160
0.78
0.8 140
0.6 120
100
0.48
80
0.4 0.29 60
0.220.21 0.31
0.16
Rs

0.2 40
0.050.06 0.02 0.02 20
0.0 0

Amount No. of issues (RHS)

The stock exchange is an important institution in the economic life of a country.

The primary exchanges in India are
National Stock Exchange (NSE)
Bombay Stock Exchange (BSE).

NSE offers trading and investment in the following segments

 Equity
 Indices
 Mutual fund
 Exchange-traded funds
 Initial public offerings
 Security Lending and Borrowing etc.
 Equity Derivatives (including Global Indices like S&P 500, Dow Jones and FTSE)
 Currency derivatives
 Commodity Derivatives
 Interest rate futures
 Corporate bonds

13
COMPANY PROFILE:

Sharekhan Limited is an Indian stock broking company. The company headquarter is in

Mumbai, Maharashtra, India. It is one of India’s largest retail broking houses. The company was
founded by Shripal Morakhia. It is a subsidiary of BNP Paribas, one of the largest banking
groups in the world with a net income of 7.5 Bn EUR in 2018.

The company has developed its leadership in full-service retail brokerage and financial services
by focusing on end to end customer experience. The company offers a wide range of trading and
investment solutions that includes equities, futures and options, commodities, currency, portfolio
management services, research, mutual fund distribution and investor education.

Products and Services

 Trade tiger
 Sharekhan App
 Sharekhan Mini
 Dial-N-Trade
 Pattern Finder
 Sharekhan Classroom
 EMF
 Equity trading
 Bond
 IPO
 Portfolio Management Services
 NRI Services
 Learn to trade
 Mutual funds and SIP
 Derivatives trading

14
Peers:

• IIFL Securities
• India Bulls
• Reliance Capital
• Angel one
• Religare
• ICICI Web Trade Ltd
• Kotak Securities Ltd
• MotilalOswal Securities Ltd
• Zerodha Securities
• Geojit Securities
• North West Securities Ltd

15
 CHAPTER-4

DATA ANALYSIS

&

INTERPRETATION

16
Advances:

Table-1:

Year Advances (Rs. Cr.) Change(%)

2018-19 297177.15 -
2019-20 315294.41 6.10
2020-21 591227.88 87.52
2021-22 661249.66 11.84
2022-23 762090.46 15.25

Graph-1:

Advances
100.00
90.00 87.52
80.00
70.00
60.00
50.00
40.00
30.00
20.00 11.84 15.25
10.00 6.10
0.00
2019-20 2020-21 2021-22 2022-23

Year

Interpretation:

According the above table, advances were continuously increased during the period of study by
more than 2.5 times approximately.

17
Gross NPA:

Table-2:

Year Gross NPA (Rs. Cr.) Change(%)

2018-19 48729.00
2019-20 49085.30 0.73
2020-21 89788.20 82.92
2021-22 79587.07 -11.36
2022-23 60987.29 -23.37

Graph-2:

Gross NPA
100.00
82.92
80.00
60.00
40.00
20.00
0.73
0.00
2019-20 2020-21 2021-22 2022-23
-20.00 -11.36
-23.37
-40.00

Year

Interpretation:

From the table, Gross NPA was also raised during the period under consideration by twenty five
percent approximately.

18
Gross NPA (%)

Table-3:

Year Gross NPA (%)

2018-19 15
2019-20 14
2020-21 14
2021-22 11
2022-23 8

Graph-3:

Gross NPA (%)

16 15
14 14
14
12 11
10
8 8
6
4
2
0
2018-19 2019-20 2020-21 2021-22 2022-23
Year

Interpretation:

Based on the above table, Gross NPA (%) was shown in down trend during the entire period, that
indicates higher performance and increase in profitability.

19
Net NPA

Table-4:

Year Net NPA (Rs. Cr.) Change(%)

2018-19 20332.00 -
2019-20 17303.14 -14.90
2020-21 27280.52 57.66
2021-22 24303.30 -10.91
2022-23 12927.44 -46.81

Graph-4:

Net NPA
80.00
57.66
60.00
40.00
20.00
0.00
2019-20 2020-21 2021-22 2022-23
-20.00 -14.90 -10.91
-40.00
-60.00 -46.81

Year

Interpretation:

Net NPA’s were drastically decreased in the period studied which is good sign for the bank and
improvement in the financial situation of the institute.

20
Net NPA (%)

Table-5:

Year Net NPA (%)

2018-19 6.85
2019-20 5.49
2020-21 4.62
2021-22 3.68
2022-23 1.70

Graph-5:

Net NPA (%)

8.00
6.85
7.00
6.00 5.49
5.00 4.62
4.00 3.68
3.00
2.00 1.70
1.00
0.00
2018-19 2019-20 2020-21 2021-22 2022-23
Year

Interpretation:

One can observe from the above table that Net NPA (%) was continuously decreased from 6.85
to 1.70 percent, that indicates healthy loan disbursement and there by increase in profitability of
bank.

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Net NPA To Advances (%):

Table-6:

Net NPA To
Year
Advances (%)
2018-19 7.00
2019-20 5.00
2020-21 5.00
2021-22 4.00
2022-23 1.70

Graph-6:

Net NPA To Advances (%)

8.00
7.00
7.00
6.00
5.00 5.00
5.00
4.00
4.00
3.00
2.00 1.70
1.00
0.00
2018-19 2019-20 2020-21 2021-22 2022-23

Year

Interpretation:
One can interpret from Net NPA To Advances (%) table that the ratio was continuously down,
that indicates good financial condition of the bank.

22
Recoveries

Table-7:

Year Recoveries (Rs. Cr.) Change(%)

2018-19 4509.00 -
2019-20 4267.00 -5.37
2020-21 7865.00 84.32
2021-22 13595.00 72.85
2022-23 11943.00 -12.15
42179.00
Graph-7:

Recoveries
100.00
84.32
80.00 72.85

60.00
40.00
20.00
0.00
2019-20
-5.37 2020-21 2021-22 2022-23
-20.00 -12.15

Year

Interpretation:

From the above table, one can tell that the recoveries after treating the asset as NPA was around
Rs 42,000 crore during the period. This shows a higher efficiency of bank.

23
Write-Offs

Table-8:

Year Write-Offs (Rs. Cr.) Change(%)

2018-19 7771.00
2019-20 8417.00 8.31
2020-21 16983.00 101.77
2021-22 19484.00 14.73
2022-23 19175.00 -1.59
71830.00
Graph-8:

Write-Offs
120.00
101.77
100.00
80.00
60.00
40.00
20.00 14.73
8.31
0.00
2019-20 2020-21 2021-22 -1.59
2022-23
-20.00

Year

Interpretation:

Write off’s table indicates the bank was write off Rs. 71830 crore during the period which is loss
for the bank.

24
Provision Coverage Ratio (PCR)

Table-9:

Provision Coverage
Year
Ratio (PCR)
2018-19 66.24
2019-20 73.64
2020-21 81.27
2021-22 83.61
2022-23 90.34

Graph-9:

Provision Coverage Ratio (PCR)

100 90.34
90 81.27 83.61
80 73.64
70 66.24
60
50
40
30
20
10
0
2018-19 2019-20 2020-21 2021-22 2022-23

Year

Interpretation:

According to the above table, the ratio was greatly improved during the period. The ratio
indicates banks ability to sustain in case of bad financial conditions.

25
 CHAPTER-5

FINDINGS,

SUGGESTIONS &

CONCLUSION

26
FINDINGS:

 Advances were greatly improved year on year with different growth rates by
more than 2.5 times on the closing year.
 Gross NPA’s were initially increased and decreased in later half period of study.
 Gross NPA (%) was decreased from 15% to 8%
 Net NPA’s were decreased considerably during the period.
 Net NPA (%) situation of the bank was significantly improved as the ratio was down
from 6.85% to 1.70% in this period.
 Cash recoveries were also increased year on year and total recoveries were beyond Rs
42,000 crore in this period.
 The Provision Coverage ratio was greatly improved during the period.

27
SUGGESTIONS:

 Bank needs adequate manpower for effective management.

 Awareness & Training camps should be organized by bank for providing knowledge
about the NPA.
 The credit section should carefully watch the working signals viz. non-payment of
quarterly interest, dishonor of cheque etc.
 Effective inspection system should be implemented.
 Checking financial projections like profitability ratios, liquidity ratios, cash book and
bank statements of customer.
 Set up new special recovery cells in branches having substantial NPAs, to be looked after
by a team specially trained in recovering bad loans.
 Settlement of loans by better innovative schemes.
 Making use of Factoring services.

28
CONCLUSION:

Net Performing Assets of UBI is studied in detail for the given time period 2019 to 2023 with its
type of assets, Nipagin terms of rupees as well as in percentage terms. In the above study, the
bank was reducing the NPA from the 2019 to 2023. It will help to protect the banks total profit of
the financial year and to avoid the losses. Compared to 2019 the NPA of UBI was reduced at a
very high rate.

29
BIBLIOGRAPHY:
BOOKS:

1. I M Pandey, Essentials of Financial Management, Vikas Publishing House Pvt Ltd, New
Delhi, 1995.
2. Khan, M Y and P K Jain, Financial Management, Tata McGraw-Hill
Publishing Co., New Delhi, 2007.
3. Prasanna Chandra, financial Management, Tata McGraw-Hill Publishing Co., New Delhi,
4. Ramesh, S and A Gupta, Venture Capital and the Indian Financial Sector, Oxford university
press, New Delhi, 1995.

WEBSITES:

1. www.wikipedia.com
2. www.moneycontol.com
3. www.unionbankofindia.com
4. www.rbi.gov.in

30