International Journal of Advanced Research in ISSN: 2278-6236

Management and Social Sciences Impact Factor: 4.400

A STUDY ON NON-PERFORMING ASSETS OF STATE BANK OF INDIA WITH

SPECIAL REFERENCE TO CHINTAMANI BRANCH IN CHIKKBALLAPUR DISTRICT,
KARNATAKA
Bhavya MA*
N. Sathyanarayana**

Abstract: Non-performing assets are one of the major concerns for banks in India. NPAs
reflect the performance of banks. A high level of NPAs suggests high probability of a large
number of credit defaults that affect the profitability and net-worth of banks and also erodes
the value of the asset. This paper analyzes the NPA levels of SBI Chintamani Branch. The
purpose of the project is to know how NPA levels will affect the profitability of [Link]
research design used was descriptive research. The study has been carried out with the help
of annual reports to determine the level of non-performing assets. The research processed,
tabulated and analyzed using with appropriated graphs. Statistical tools like t-test,
correlation and regression used to test hypothesizes with the help of [Link] result
showed that, there was a gradual decrease in the percentage of NPA during the last four
year, and again 2012-13 is increased. This is achieved by adopting the various strict recovery
measures by bank. Trend percentage of Gross Advances recorded continuous increasing
trend from 100 per cent to 882.04 per cent from the year 2008-09 to 2012-13. Trend
percentage of Gross NPA sowed increasing trend till 2011-12 later it skipped to very high
level in the year [Link] is actual correlation between Priority Sector NPAs and Non
priority Sector NPAs in contribution of Total NPAs of SBI bank in Chintamani branch during
the study [Link] the result showed the significant impact of Non Priority Sector
Advances on Total NPAs of SBI bank in Chintamani branch during the study period.
Key Words: Advances, Correlation, Non-Performing Asset, Non-Priority Sector, Priority
Sector,Regression and Trend percentage.

*MBA Student, 4th Sem. Department of Management Studies and Research Centre, T John
Institute of Technology, Bangalore, Karnataka
**Asst. Professor, Department of Management Studies and Research Centre, T John
Institute of Technology, Bangalore, Karnataka
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1) INTRODUCTION
Banking in India originated in the last decades of the 18th century. The first banks were
Bank of Hindustan (1770-1829) and The General Bank of India, established 1786 and since
defunct. The largest bank, and the oldest still in existence, is the State Bank of India, which
originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank
of Bengal. This was one of the three presidency banks, the other two being the Bank of
Bombay and the Bank of Madras, all three of which were established under charters from
the British East India Company. The three banks merged in 1921 to form the Imperial Bank
of India, which, upon India's independence, became the State Bank of India in 1955. For
many years the presidency banks acted as quasi-central banks, as did their successors, until
the Reserve Bank of India was established in 1935.
The State Bank of India and all its associate banks are identified by the same
blue keyhole logo. The State Bank of India word mark usually has one Pursuant to the
provisions of the State Bank of India Act of 1955, the Reserve Bank of India, which is India's
central bank, acquired a controlling interest in the Imperial Bank of India. On 1 July 1955,
the Imperial Bank of India became the State Bank of India. In 2008 the government of
India acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of
interest because the RBI is the country's banking regulatory authority.
In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, which made
eight state banks associates of SBI. A process of consolidation began on 13 September 2008,
when the State Bank ofSaurashtra merged with [Link] has acquired local banks in rescues.
The first was the Bank of Behar (est. 1911), which SBI acquired in 1969, together with its 28
branches. The next year SBI acquired National Bank of Lahore (est. 1942), which had 24
branches. Five years later, in 1975, SBI acquired Krishna ramBaldeo Bank, which had been
established in 1916 in Gwalior State, under the patronage of Maharaja MadhoRaoScindia.
The bank had been the DukanPichadi, a small moneylender, owned by the Maharaja. The
new banks first manager was Jall N. Broacha, a Parsi. In 1985, SBI acquired the Bank of
Cochin in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, the State Bank
of Travancore, already had an extensive network in Kerala.

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Management and Social Sciences Impact Factor: 4.400

2) NON PERFORMING ASSETS

A Non-performing asset (NPA) is defined as a credit facility in respect of which the interest
and/or instalment of principal has remained ‘past due’ for a specified period of time. The
banking industry has undergone a sea change after the first phase of economic liberalization
in 1991 and hence credit management. While the primary function of banks is to lend funds
as loans to various sectors such as agriculture, industry, personal loans, housing loans etc.,
in recent times the banks have become very cautious in extending loans. The reason being
mounting non-performing assets (NPAs).
Identification
NPA is a classification used by financial institutions that refer to loans that are in jeopardy
of default. Once the borrower has failed to make interest or principle payments for 90 days
the loan is considered to be a non-performing asset. Non-performing assets are problematic
for financial institutions since they depend on interest payments for income. Troublesome
pressure from the economy can lead to a sharp increase in non-performing loans and often
results in massive write-downs.
With a view to moving towards international best practices and to ensure greater
transparency, it had been decided to adopt the ‘90 days’ overdue’ norm for identification of
NPA, from the year ending March 31, 2004. Accordingly, with effect from March 31, 2004, a
non-performing asset (NPA) is a loan or an advance where;
With a view to moving towards international best practices and to ensure greater
transparency, it has been decided to adopt the ‘90 days’ overdue’ norm for identification of
NPAs, from the year ending March 31, 2004. Accordingly, with effect from March 31, 2004, a
non performing asset (NPA) shall be a loan or an advance where, an asset, including a leased
asset, becomes non-performing when it ceases to generate income for the bank.
A Non-Performing Asset (NPA) is a loan or an advance where;
Interest and/ or installment of principal remain overdue for a period of more than 90 days in
respect of a term loan,
 The account remains ‘out of order’ as indicated at paragraph 2.2 below, in respect of
an Overdraft/Cash Credit (OD/CC),
 The bill remains overdue for a period of more than 90 days in the case of bills
purchased and discounted,

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 The installment of principal or interest thereon remains overdue for two crop
seasons for short duration crops,
 The installment of principal or interest thereon remains overdue for one crop season
for long duration crops,
 The amount of liquidity facility remains outstanding for more than 90 days, in
respect of a securitization transaction undertaken in terms of guidelines on
securitization dated February 1, 2006.
 In respect of derivative transactions, the overdue receivables representing positive
mark-to-market value of a derivative contract, if these remain unpaid for a period of
90 days from the specified due date for payment.
In case of interest payments, banks should, classify an account as NPA only if the interest
due and charged during any quarter is not serviced fully within 90 days from the end of the
quarter. In addition, an account may also be classified as NPA in terms of paragraph
3) LITERATURE OF REVIEW
Chaudhary & Singh (2012) A Committee on Banking Sector Reforms known as Narasimham
Committee was set up by RBI to study the problems faced by Indian banking sector and to
suggest measures revitalize the sector. The committee identified NPA as a major threat and
recommended prudential measures for income recognition, asset classification and
provisioning requirements. These measures embarked on transformation of the Indian
banking sector into a viable, competitive and vibrant sector. The committee recommended
measures to improve “operational flexibility” and “functional autonomy” so as to enhance
“efficiency, productivity and profitability”.
Veerakumar (2012) reviewed on “Non-Performing Assets in Priority Sector: A Threat to
Indian Scheduled Commercial Banks”. This research study aims to find out the categories of
priority sector advances which contribute to the growth of total priority sector NPAs during
the study period of 10 years between 2001-02 and 2010-11. The researcher found that, the
Gross NPAs of Scheduled Commercial Banks have been increasing year after year. The NPAs
in priority sector were more in public sector banks when compared to private and foreign
banks. NPAs in Priority sector have significant impact on total NPAs in Public sector banks,
whereas in Private sector banks, NPAs in priority sector have no significant impact on total
NPAs.
Suresh Patidar and AshwiniKataria (2012) was conducted study to analyze priority sector
lending by selected public and private sector banks in India. They assessed based on using

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Management and Social Sciences Impact Factor: 4.400

statistical tools like regression analysis, ratio analysis and t-test. The authors found the
significant impact of priority sector lending on total NPA of Public Sector banks, whereas in
case of Private Sector Banks, there was no significant impact of priority sector lending on
total NPA of Banks. Also the result showed the significant difference between NPA of SBI &
Associates, Old Private Banks and New Private Banks with the NPA of Nationalized Banks,
the benchmark category.
4) OBJECTIVES OF THE STUDY
1. To analyze the NPA levels of State Bank of India (SBI) Chintamani Branch.
2. To study the procedures and policies followed in SBI Chintamani Branchfor the
recovery of NPAs.
3. To identify the impact of Non-Performing assets on performance of a SBI Chintamani
Branch.
4. To suggest measures for efficient management of NPA’s.
5) RESEARCH METHODOLOGY
The present study has been conducted on the basis of secondary data and is descriptive in
its nature. The study period is confined to a period of five financial years from 2002-03 to
2011-12. The required secondary data for the study was collected through different
websites, annual reports of SBI, RBI reports and different banking journals. To make the
analysis meaningful advanced statistical tools like – percentage and trend percentage were
applied. To test the hypothesizes Correlation, ‘t’ test and Regression were applied with the
help of SPSS.21 Software package.
6) DATA ANALYSIS&INTERPRETATION
Table 4.1: Shows Total Net NPAsto Total Net Advances Ratio
Total
Total Net Trend Percentage
Net NPA Trend Percentage Net NPA
Years Advances (Rs of Total Net
(Rs In of Total Net NPA to Ratio
In Lakhs) Advances
Lakhs)
2008-09 1171 115.20 100.00 100.00 9.83
2009-10 1802 185.41 153.89 160.95 10.28
2010-11 2397 132.24 204.70 114.79 5.52
2011-12 2742 97.03 234.16 84.23 3.53
2012-13 3081 473.21 263.11 410.77 15.36
(Source: SBI Bank Reports of Chintamani Branch)
(Base Year: 2008-09)

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Graph -1

Total Net NPAs to total Net Advances Ratio

18
16 15.36
14
12
RATIO

10 9.83 10.28
8
6 5.52 Net NPA to Ratio
4 3.53
2
0
2008-09 2009-10 2010-11 2011-12 2012-13

YEARS

Graph-2

Trend Percentage of Total Net Advances & NPAs

800
TREND PRECENTAGE

700 410.77
600
500
400 Trend Percentage
300 160.95 114.79 84.23 of Total Net NPA
234.16 263.11
200 100 204.7 Trend Percentage
153.89
100 100 of Total Net
0 Advances
2008-09 2009-10 2010-11 2011-12 2012-13
YEARS

Analysis & Interpretation: In the above table 4.1 shows the Total Net NPA to Total Net
Advances ratio of SBI chinatamani branch. It showed that 9.83 per cent in the year 2008-09.
Again it was increased to 10.28 per cent in the year 2009-10 and it decreased continuously
in the next two years 2010-11 to 2011-12 it was 5.52, 3.53 per cent. The year 2012-13
rapidly it increased to 15.35 per cent. It showed overall increasing trend during the study
period. Finally it can interpret that the bank was failed to control of nonperforming assets in
SBI chintamani branch in the year 2012-13. The trend percentage of Total Net Advances
showed very high increase in the 2012-13 by comparing to base year [Link]

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trend from last five years where as trend percentage of Total Net NPAs showed over all
increasing trend during study period.
Table 4.2: Shows Total Agriculture Sector Gross Advances and Gross NPA
Trend Trend
Total Gross Total Gross
Percentage Percentage Gross
Years Advances NPA
of Gross of Gross NPA Ratio
( Rs in lakhs) (Rs in lakhs)
Advances NPA
2008-09 201.03 97.75 100.00 100.00 48.62
2009-10 783.00 96.09 389.49 98.30 12.27
2010-11 1218.24 65.55 606.00 67.06 5.38
2011-12 1490.86 48.35 741.61 49.46 3.24
2012-13 1801.15 274.80 895.96 281.13 15.26
(Source: SBI Bank Reports of Chintamani Branch)
(Base Year: 2008-09)
Graph -3

Total Gross NPAs to Total Gross Advaces Ratio

48.62
50
45
40
35
30
RATIO

25
20 15.26 Gross NPA Ratio
12.27
15
10 5.38
3.24
5
0
2008-09 2009-10 2010-11 2011-12 2012-13
YEARS

Analysis & Interpretation: From table 4.2 found that, the Gross NPA ratio of agriculture
sector to total advances showed decreasing trend from the financial year 2008-09 to 2011-
12 and again it is increased to 15.26 per cent in the year 2012-13. It is identified that bank is
effectively reduced NPA from 48.62 per cent to 15.26 per cent during the study period.
Trend percentage of Gross Advances recorded continuous increasing trend from 100 per

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Management and Social Sciences Impact Factor: 4.400

cent to 895.96 per cent from the year 2008-09 to 2012-13. Trend percentage of Gross NPA
sowed decreasing trend till 2011-12 later it skipped to very high level in the year 2012-13.
Table 4.3: Showing Total Education Sector Gross Advances and Gross NPA
Total Gross Total Gross Trend Percentage Trend Gross
Years Advances NPA of Gross Percentage of NPA
( Rs in lakhs) (Rs in lakhs) Advances Gross NPA Ratio
2008-09 13.70 0 100 0.00
2009-10 22.86 1.20 166.86 100.00 5.25
2010-11 35.21 1.83 257.01 152.50 5.20
2011-12 43.36 5.94 316.50 495.00 13.69
2012-13 120.84 40.79 882.04 3399.17 33.75
(Source: SBI Bank Reports of Chintamani Branch)
(Base Year for Gross Advances: 2008-09)
(Base Year for Gross NPA: 2009-10)
Graph -4

Total Gross NPAs to Total Gross Advances Ratio

40 33.75
30
RATIO

20 13.69
10 5.25 5.2
0 Gross NPA Ratio
0
2008-09 2009-10 2010-11 2011-12 2012-13
YEARS

Graph -5

Ternd Precentage of Total Gross Advaces and NPAs

4500
3399.17
TREND PRECENTAGE

4000
3500
3000
2500 Trend Percentage of
2000 Gross NPA
1500 Trend Percentage of
1000 495 882.04 Gross Advances
500 152.5 316.5
100
0 100
166.86 257.01
0
2008-09 2009-10 2010-11 2011-12 2012-13
YEARS

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Analysis & Interpretation:From table 4.3 found that, the percentage of total NPA in
Education loan sector to total advances was nil in the year 2008-09 later it showed
increasing trend with an increasing rate during the study period and reached to 33.75 per
cent in 2012-13. It shows that bank is failed to recover the loans early to control NPA. Trend
percentage of Gross Advances recorded continuous increasing trend from 100 per cent to
882.04 per cent from the year 2008-09 to 2012-13. Trend percentage of Gross NPA sowed
increasing trend till 2011-12 later it skipped to very high level in the year 2012-13. Bank has
to implement best strategies to control over NPA in education because in 2012-13 it
increased more than 20 per cent of the total credit given has become NPA. Through this
table we can understand that the inherent quality of bank’s credit appraisal to sanction
education loan and the strategies applied to recover was very week.
Table 4.4: Shows Total Housing Sector Gross Advances and Gross NPA
Total Gross Total Gross Trend Trend Gross
Years Advances NPA Percentage of Percentage of NPA
(Rs in lakhs) (Rs in lakhs) Gross Advances Gross NPA Ratio
2008-09 493.51 0.21 100.00 100 0.04
2009-10 499.88 56.56 101.29 26933.33 11.31
2010-11 570.97 14.70 115.70 7000 2.57
2011-12 636.50 12.91 128.97 6147.61 2.03
2012-13 639.75 3.60 129.63 1714.28 0.56
(Source: SBI Bank Reports of Chintamani Branch)
(Base Year: 2008-09)
Graph - 6
Total Gross NPAs to Total Gross Advances
Ratio
12 11.31
10
RATIO

8
6
4
2.57 Gross NPA Ratio
2 0.04 2.03
0 0.56

YEARS

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Analysis & Interpretation: From table 4.4 the ratio of Total NPA in Housing sector recorded
highest ratio 11.31 in the year 2009-10. Later it decreased continuously from 2010-11 to
2012-13. It shows that bank was successful to control NPA in housing sector loans. Above
table showed that, the trend percentage was continually increasing from financial year
2008-09 to 2012-13 by 100 per cent to 1714.28 per cent gradually increasing. The above
chart shows the housing sector loans was gradually increasing during the study period.
Table 4.5: Shows Total Non-Priority Sector Gross Advances and Gross NPA
Trend Trend
Total gross Total Gross
Percentage of Percentage Gross NPA
Years Advances NPA
Gross of Gross Ratio
( Rs in lakhs) (Rs in lakhs)
Advances NPA
2008-09 NA NA - - -
2009-10 NA NA - - -
2010-11 441.55 11.97 100 100.00 2.71
2011-12 467.62 4.35 105.90 36.34 0.93
2012-13 396.05 10.44 89.69 87.22 2.64
(Source: SBI Bank Reports of Chintamani Branch)
(NA: Not Available) (Base Year: 2010-11)
Analysis & Interpretation:From the above table 4.5 shows the percentage of total non-
priority sector NPA to advances. It showed overall decreasing trend from the financial year
2010-11 to 2012-13. i.e. it is 2.71 per cent to 2.64 per cent. It shows that an effort has been
taken to control the NPA. The graph 4.11 showed that, the trend percentage of advances
and NPAs recorded overall declining trend during the study period.
Table 4.6: Shows Gross Profit and Net Profits Trend Percentage
Trend Trend
Gross profit Net profit
Year Percentage of Percentage of
(Rs in lakhs) ( Rs in lakhs)
Gross Profit Net Profit
2008-09 125.07 52.57 100.00 100.00
2009-10 164.35 84.20 131.41 160.17
2010-11 247.08 126.28 197.55 240.21
2011-12 329.68 90.30 263.60 171.77
2012-13 323.95 104.74 259.01 199.24
(Source: SBI Bank Reports of Chintamani Branch)
(Base Year: 2010-11)
Analysis & Interpretation:The above table 4.6 shows the Gross Profit and Net Profit of bank
from the financial year 2008-09 to 2012-13. The Gross Profit was increased from Rs 125.07
lakhs to Rs 323.95 lakhs during the study period. The Net Profit was increased from Rs 52.57
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lakhs to Rs 104.74 lakhs during the study period with fluctuations. It showed that, the bank
used effective strategies to earn more profit and to maintain overall increasing rate during
last five years. The trend percentage of gross profit recorded continuous increasing trend
from 100 per cent to 259.01 per cent and in net profit from 100 per cent to 199.24 per cent
net profit during the financial year 2008-09 to 2012-13.
Table – 4.7 Shows Priority Sector NPAS and Non Priority Sector NPAS
(Amount in Rs Lakhs)
Priority Sector NPAs Non-Priority Sector NPAs Total NPAs
Year Amount Amount Amount
Percentage Percentage Percentage
in Lakhs in Lakhs in Lakhs
2008-09 97.96 0 NA 97.96 100
2009-10 153.85 0 NA 153.63 100
2010-11 82.08 15.67 441.55 84.32 523.63 100
2011-12 67.2 12.56 467.62 87.43 534.82 100
2012-13 320.19 44.70 396.05 55.29 716.24 100
(Source: SBI Bank Reports of Chintamani Branch)
Analysis & Interpretation: The table 4.7 shows the distribution of NPAs of State Bank of
India in different sectors for the period of 2008-09 to 2012-13. As far as the banks are
concerned, 30% of nonperforming assets belong to the priority sector lending. Non priority
sector accounts for 70% of the total NPAs in SBI bank. It is observed that priority sector
NPAs had increased from Rs 97.96 lakhs in the year 2008-09 to Rs 320.19 lakhs in the year
2012-13 and non-priority sector NPAs also increased from Rs 441.55 lakhs in the year 2010-
11 to Rs 467.62 lakhs in the year 2011-12 and again it decreased to 396.05 lakhs in the year
2012-13. Total NPAs had increased by 638.39 % from Rs 97.96 lakhs in the year 2008-09 to
Rs 716.24 lakhs in the year 2012-13. The reason behind this is banks are subjected to
provide more loans, which results in higher non-performing assets.
Table – 4.8 Shows Priority Sector NPA Ratio
(Rs in Lakhs)
Total
Total Priority
Agriculture Education Housing Priority Net
Priority Sector
Years Sector Sector Sector Sector NPA
Sector NPA
NPAs NPAs NPAs Gross ratio
NPAs Ratio
Advances
2008- 97.75 Nil 0.21 97.96
708.24 13.83 9.84
09 99.78% 0.21% 100%
2009- 96.09 1.20 56.56 153.85 1,305.74 11.78 10.28

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10 62.45% 0.77% 36.76% 100%

2010- 65.55 1.83 14.70 82.08
1,824.42 4.49 5.52
11 79.86% 2.23% 17.91% 100%
2011- 48.35 5.94 12.91 67.2
2,170.72 3.09 3.54
12 71.95% 8.34% 19.21% 100%
2012- 274.80 40.79 3.60 320.19
2,561.76 12.49 15.36
13 71.95% 12.74% 1.12% 100%
(Source: SBI Bank Reports of Chintamani Branch)
Analysis & Interpretation:The table 4.8 exhibits the priority sector advances and NPAs in
priority sector by SBI bank in chintamani during period study. Total priority sector credit of
bank have raised from Rs 708.24 lakhs to Rs 2561.76 lakhs. The total priority sector NPAs of
bank have raised from 97.96 lakhs at the end of March, 2008 to Rs 320.19 lakhs at the end
of March, 2013. It is clear that from table that, the NPAs of the bank by agriculture credit
were around 70% during the study period except during the year 2010-11 to 2012-13. The
NPAs incurred by bank out of lending to education & housing ranges between 5% and 25%,
it is observed that there was an decrease in credit and NPAs in absolute terms. Priority
sector NPAs ratio sowed decline trend till 2011-12 during the study period i.e., from 13.83
to 3.09 later it jumped to 12.49 in the year 2012-13. It is understood from the above table
the bank had recovered the priority sector credit in time and they managed the priority
sector lending’s effectively till 2011-12 but they failed to recover agricultural loans which
resulted hike in Priority sector NPAs.
HYPOTHESIS-1
Null Hypothesis: There is no significant relationship between Net NPA Ratio and Priority
sector NPA ratio of SBI bank in Chintamanni branch during study period.
Alternative Hypothesis: There is a significant relationship between Net NPA Ratio and
Priority Sector NPA Ratio of SBI bank in Chintamani branch during the study period.
Interpretation: APPENDIX-1 Exhibits the observed mean difference is 0.22960 since the
value of t is .196 at p < 0.854, the mean difference (0.22960) between Net NPA ratio and
Priority Sector NPA ratio is statistically not significance. According to the significance of .854
(which is more than 0.05), the null hypothesis is accepted. Therefore, it can be inferred that
there is no significant relationship between Net NPA ratio and Priority Sector NPA ratio of
SBI bank in chintamani during the study period.

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HYPOTHESIS-2
Null Hypothesis: There is no actual correlation between Priority Sector NPAs and Non
priority Sector NPAs in contribution of Total NPAs of SBI bank in Chintamani branch during
the study period.
Alternative Hypothesis: There is actual correlation between Priority Sector NPAs and Non
priority Sector NPAs in contribution of Total NPAs of SBI bank in Chintamani branch during
the study period.
Interpretation: Note: if p value is less than 0.05 accept null hypothesis and reject alternative
[Link]-2Exhibits correlation between priority sector NPAs and non-priority
sector NPAs. Null hypothesis is not accepted as Pearson correlation is -.951, and p = 0.201 (p
> 0.05) at confidence level of 0.01. Since p>0.05, there is negative correlation between
Priority Sector NPAs and Non-Priority Sector NPAs in contribution to Total NPAs of SBI in
chintamani
HYPOTHESIS-3
Null Hypothesis: There is no significant impact of Priority Sector Advances on Total NPAs of
SBI bank in Chintamani branch during the study period.
Alternative Hypothesis: There is a significant impact of Priority Sector Advances on Total
NPAs of SBI bank in Chintamani branch during the study period.
Interpretation: APPENDIX-3 provides the R and R2value. The R value is .444, which
represents the simple correlation. It indicates positive correlation between priority sector
advances and total NPAs. Since R2 value IS 19.7 per cent approximately for priority sector
advances, it shows that total NPAs are affected by 19.7 per cent and remaining 80.3 per cent
by some other factor. ANOVA table indicates that the remaining model predicts the
outcome variable significantly well, p < .454, which is greater than 0.05, and we can say that,
there no significance impact of priority sector advances on total NPAs of SBI bank by not
rejecting the null hypothesis. Coefficient table provides us with information on each
predictor variable. So the regression equation can be framed as:
Total NPA = 240.230 + 1.144 (Priority Sector Advances)
HYPOTHESIS -4
Null Hypothesis: There is no significant impact of Non Priority Sector Advances on Total
NPAs of SBI bank in Chintamani branch during the study period.

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Alternative Hypothesis: There is a significant impact of Non Priority Sector Advances on

Total NPAs of SBI bank in Chintamani branch during the study period.
Interpretation: APPENDIX-4 provides the R and R2vaue. The R value is .913, which
represents the simple correlation. It indicates positive correlation between non-priority
sector advances and total NPAs. Since R2 value is 83.4 per cent approximately for priority
sector advances, it shows that total NPAs are affected by 83.4 per cent and remaining 16.6
per cent by some other factor. ANOVA table 4.17 indicates that the remaining model
predicts the outcome variable significantly well, p <.267, which is greater than 0.05, and we
can say that, there no significance impact of non-priority sector advances on total NPAs of
SBI bank by not rejecting the null hypothesis. Coefficient table 4.18 provides us with
information on each predictor variable. So the regression equation can be framed as:
Total NPA = 1777.394 -2.726 (Non-Priority Sector Advances)
7) FINDINGS:
There was a gradual decrease in the percentage of NPA during the last four year, and again
2012-13 is increased. This is achieved by adopting the various strict recovery measures by
bank.
 The Gross NPA ratio of agriculture sector to total advances showed decreasing trend
from the financial year 2008-09 to 2011-12 and again it is increased to 15.26 per cent
in the year 2012-13.
 The percentage of total NPA in Education loan sector to total advances was nil in the
year 2008-09 later it showed increasing trend with an increasing rate during the
study period and reached to 33.75 per cent in 2012-13.
 Trend percentage of Gross Advances recorded continuous increasing trend from 100
per cent to 882.04 per cent from the year 2008-09 to 2012-13. Trend percentage of
Gross NPA sowed increasing trend till 2011-12 later it skipped to very high level in
the year 2012-13.
 The ratio of Total NPA in Housing sector recorded highest ratio 11.31 in the year
2009-10. Later it decreased continuously from 2010-11 to 2012-13.
 The trend percentage was continually increasing from financial year 2008-09 to
2012-13 by 100 per cent to 1714.28 per cent gradually increasing.

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 The distribution of NPAs of State Bank of India in different sectors for the period of
2008-09 to 2012-13. As far as the banks are concerned, 30% of nonperforming assets
belong to the priority sector lending. Non priority sector accounts for 70% of the
total NPAs in SBI bank.
 The total priority sector NPAs of bank have raised from 97.96 lakhs at the end of
March, 2008 to Rs 320.19 lakhs at the end of March, 2013. It is clear that from table
that NPAs of the bank by agriculture credit were around 70% during the study period
except during the year 2010-11 to 2012-13.
 There is a significant relationship between Net NPA Ratio and Priority Sector NPA
Ratio of SBI bank in Chintamani branch during the study period.
 There is actual correlation between Priority Sector NPAs and Non priority Sector
NPAs in contribution of Total NPAs of SBI bank in Chintamani branch during the
study period.
 There is a significant impact of Priority Sector Advances on Total NPAs of SBI bank in
Chintamani branch during the study period.
 There is a significant impact of Non Priority Sector Advances on Total NPAs of SBI
bank in Chintamani branch during the study period.
8) SUGGESTIONS:
 The bank has to take care of recovery management in agriculture sector with proper
execution and planning.
 The banks concerned should continuously monitor loans to identify accounts that
have potential to become Nonperforming.
 Timely visit by the field staff and making personal contact with the borrowers.
9) CONCLUSION:
The NPAs have always been a big worry for the bank in India. It is just not a problem for the
economy too. The money locked up in NPAs is not available for productive use and adverse
effect on banks profitability is there. The extent of NPAs is comparatively higher in SBI in
chintamani branch to improve the efficiency and profitability the NPAs have to be
scheduled. The bank has to take number steps to reduce & advances, and priority sector of
[Link] has led to decline in SBI bank in chintamani, but a lot more needs to be done it is
highly impossible to have zero percentage NPAs. But at least bank can try competing with

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Management and Social Sciences Impact Factor: 4.400

other branches to maintain standard level fact that a part of the reduction in NPAs is due to
the writing off bad loans by the banks.
10) BIBLIOGRAPHY
BOOKS:
1. Shekar&shekar (2011): “Banking Theory and Practice” Vikas publishing house, 20th
Edition.
2. Padmalatha& Justin Paul (2010): “Management of Banking and Financial services”
Pearson, 2nd Edition.
3. Gordon &natarajan (2011): “Banking Theory, Law and Practice” Himalaya publishing
house, 22nd Edition.
4. Kothari C R (2011): “An Introduction to Operation Research” Vikas publishing house,
3rd Edition.
ARTICLES/JOURNALS:
1. Sambha. V. Garg, Priya Jindal and Dr. Bhavet (2013) “Management of Non-
Performing Assets: A Comparative Study of Public and Private Sector Banks”,
International Journal of Research in Commerce, Economics & Management, Vol. 3,
No. 1, pp. 146-151.
2. Suresh Patidar and AshwiniKataria (2012) “An Analysis of NPA in Priority Sector
Lending: A Comparative Study between Public Sector Banks and Private Sector Banks
of India”, EISSN, Vol. 3, No. 1, pp. 54-69.
3. Veerakumar .K (2012) “Non-Performing Assets in Priority Sector: A Threat to Indian
Scheduled Commercial Banks” International Research Journal of Finance and
Economics, Issue 93, pp. 6-23.
WEBSITES:
 [Link]
 [Link]
 [Link]
REPORTS:
 Annual reports of the SBI bank of Chintamani branch (2008-09 to 2012-13)
 Annual reports of the SBI bank 2012-13

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 Arundeep (2005) Annual Report 2004-05, Ministry of Finance, Government of India,

New Delhi, pp. 2-5.

APPENDIX-1
Paired Samples Statistics
Mean N Std. Deviation Std. Error Mean
Priority sector NPA ratio 9.1360 5 4.96017 2.21826
Pair 1
Net NPA ratio 8.9064 5 4.60152 2.05786

Paired Samples Test

Paired Differences
95% Confidence Interval Sig. (2-
Std. Std. Error T df
Mean of the Difference tailed)
Deviation Mean
Lower Upper
Priority sector
Pair
NPA ratio .22960 2.61655 1.17016 -3.01928 3.47848 .196 4 .854
1
& Net NPA ratio

APPENDIX-2
Correlations

Priority Sector NPA Non Priority Sector NPA

Pearson 1 -.951
Priority Sector Correlation
NPA Sig. (2-tailed) .201
N 5 3
Pearson -.951 1
Non Priority Correlation
Sector NPA Sig. (2-tailed) .201
N 3 3

APPENDIX-3
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .444a .197 -.070 276.28145
a. Predictors: (Constant), Priority Sector Gross Advances

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ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 56262.431 1 56262.431 .737 .454b
Residual 228994.327 3 76331.442
Total 285256.758 4
a. Dependent Variable: Total NPA
b. Predictors: (Constant), Priority Sector Advances

Coefficientsa
Unstandardized Standardized
Model Coefficients Coefficients t Sig.
B Std. Error Beta
1 (Constant) 240.230 228.504 1.051 .370
Priority Sector Advances 1.144 1.332 .444 .859 .454

APPENDIX-4
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .913a .834 .668 62.33278
a. Predictors: (Constant), Non Priority Sector Advances

ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 19493.640 1 19493.640 5.017 .267b
Residual 3885.375 1 3885.375
Total 23379.015 2
a. Dependent Variable: Total NPA
b. Predictors: (Constant), Non Priority Sector Advances

Coefficientsa
Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) 1777.394 530.632 3.350 .185
1
Non priority sector advances -2.726 1.217 -.913 -2.240 .267

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