Summer Internship Project Report on

“A Study on Non-Performing Assets (NPA) Analysis of Private

Sector Banks in India”

Submitted to

3+
Institute code : 839
Institute Name: Graduate School of Management Studies,
Ahmedabad

Under the Guidance of

Dr. Radhika Gandhi

Assistant Professor
GSMS,GTU.

Offered by
Gujarat Technological
University Ahmedabad

Prepared by
Limbasiya Keval
1|Page
 Enrol. no.:208390593013

MBA (semester – III).

Oct 2021.

2|Page
Industry Certificate
 Student Declaration

I hereby declare that the summer internship project report titled “A study on Non-
Performing Assets analysis of private sector bank in India ” is a result of my own work and
my indebtedness to other work publications, references, if any, have been duly
acknowledge. If I found guilty of coping from any other report or published information
and showing as my original work, or extending plagiarism limit, I understand that I shall be
liable and punishable by the university, which may include failing me in examination or
any other punishment that university may deem fit.

Enrollment Name Signature

number
208390593013 Limbasiya Keval

Place: Ahmedabad Date:25.10.2021

This is to certify that project work embodied in this report “A Study on Non-Performing Assets (NPA)
Analysis of Private Sector Banks in India” was carried out by Keval Limbasiya (208390593013) of
Graduate School of Management Studies.

The Report is approved/ not approved.

Comments of External Examiner:

This report is for the partial fulfilment of the requirement of the award of the degree of master of business
administration offered by Gujarat technological university.

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

(Examiner’s Sign)

Name of Examiner:-

Institute Name :-

Institute Code:-
Institute Certificate
Plagiarism Report
 Preface
As a part of the professional course, live exposure to industry is a must. It is very important to understand
how our studies is applied in real life. Being in management students, we need to understand how industry
analysis is done.

The main motive for Summer Internship Project of MBA (IB) students is to work in the corporate office
and they can learn how to work in a team and take responsibility of their actions. Beyond that, it also helps
in further academics. With this, we brush up on our technical skills of Microsoft Word, PowerPoint and
Excel.

Education builds power of knowledge but to win the competitive field, one must gain practical knowledge.
This helps us as a student to develop a sense of awareness around us to keep the details of the industry and
also useful for career development.

I feel that the banks are the pillars of financial system. This industry is also one of the major contributors of
the services industry in India and the largest in the financial sector. So this project helped me in gaining
exposure in this field.
 Acknowledgement
I feel great pleasure in submitting this project report as appraisal part of practical study. This project report
is based on the training taken at "ESVEE FINSERVE"

This report is the result of not only my hard work but also the encouragement and help of many people. I
would like to express my gratitude to all of them who helped me in preparing this project.

I would also thank my institute Graduate School of Management Studies and Dr.Radhika Gandhi, faculty
guide for this opportunity.

On the final note, I would like to express my gratitude to all the people who have helped me directly or
indirectly in this internship and preparing the report.
 Index

Sr. Title Page No.

No.

1 Introduction to Industry
I. Basic Introduction
 Definition
11-12
 Objectives of Banks
 Classification of Banks 13
II. Private Sector Banks 14
 List of private sector banks
 Advancement of pvt. sector banks in
India 15
 Classification of pvt. sector banks 16
 Fall in the nos. of banks over the years 17-18
III. Major Players 19
IV. Total Income over last 5 years
V. Working & Regulations of pvt. sector banks 20-21
22
23-24

2 Basics of Non- performing Assets

I. Introduction
25
 Definition
26
 Classification of loans and advances
27-28
as per RBI norms
 Categories of NPAs
 NPA Provisioning 29
II. Data of Gross NPAs over last 5 years. 30
31

3 Literature Review 32-34

4 Research Methodology
I. Basic Theory of Research
II. Research Objectives 35-36
37
III. Types of Research
38-39
IV. Types of Data
40-41
V. Limitations
42

5 Data Analysis 43-49

6 Findings and suggestions 50-51

7 Conclusion 52

8 References and Bibliography 53

 INTRODUCTION TO INDUSTRY

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I:-Basic Introduction

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 Definition:
A Bank is financial institution which accepts deposits, pays interest on pre-defined rates,
makes loans, and often acts as an intermediary in financial transactions. It also provides other
financial services to its customers.
Banking can be defined as the business activity of accepting and safeguarding money
owned by other individuals and entities, and then lending out this money in order to earn
a profit. However, with the passage of time, the activities covered by banking business
have widened and now various other services are also offered by banks. The banking
services these days include issuance of debit and credit cards, providing safe custody of
valuable items, lockers, ATM services and online transfer of funds across the country /
world.
The banking sector is an industry and a section of the economy devotedto the holding of
financial assets for others and investing those financial assets as a leveraged way to
create more wealth.
Banking firms are highly regulated and supervised financial operations, making them
safe, pleasant and rewarding places to work. These careers offer integrity and stability.
There are many opportunities to widen your knowledge and skills at a bank.
 Objectives of Banks:

• Making profits.
• Providing services.
• Currency issue.
• Creation of transaction media.
• Receiving deposit.
• Making loan.
Business • Ensuring safety.
• Investment.
Objectives

• Creating savings.
• Capital formation.
• Industrialization.
• Employment.
• Developing living standard.
• Economic development.
Social
Objectives
 Classification of Banks:
 II: Private Sector Banks
Private Sector Banks are those banks in which the majority of the stake is held by
shareholders of the bank and not by the government.

 List of Private Banks in India (2021)

Sr. No Name of the Bank Branches Establishment

1 Axis Bank 4528 1993
2 Bandhan Bank 670+ 2015
3 CSB Bank 417 1920
4 City Union Bank 700+ 1904
5 DCB Bank 334 1930
6 Dhanlaxmi Bank 270+ 1927
7 Federal Bank 1284 1931
8 HDFC Bank 5430 1994
9 ICICI Bank 5288 1994
10 IDBI Bank 1892 1964
11 IDFC FIRST Bank 260 2015
12 IndusInd Bank 2000 1994
13 J&K Bank 1038 1938
14 Karnataka Bank 857 1924
15 Karur Vysya Bank 779 1916
16 Kotak Mahindra Bank 1500+ 2003
17 Nainital Bank 150 1922
18 RBL Bank 398 1943
19 South Indian Bank 876 1929
20 Tamilnad Mercantile Bank 509 1921
21 YES Bank 1000+ 2004
 Advancement of Private Sector Bank in India:

Initially, the Indian bank sector was dominated by the Public Sector banks, but after the
1990s, private sector banks came into existence and have grown immensely.

The reason for their quick growth was because they used the latest technology, used new
monetary tools, and provided contemporary innovations.

The New Generation Private Sector Banks are experiencing the positive change in their work
and performance. This change is welcome by the customers of the banks. Quick decisions,
paperless transactions, Electronic media for transactions, core banking system are some of the
areas which make private sector banking more relevant to the changing era of globalization.

Apart from various modern technologies used, the private sector banks are approaching for
debit and credit cards, wise product range, suitable for customers (need base
products),infrastructure and other facilities are thus available. The E-Banking facilities are
provided by the banks. Although there is phenomenal improvement in the services offered
by these banks there is abnormal growth in transaction cost.

As compared to public sector banks where staff recruitment process is rigid and the structured
framework is complex, private sector banks have an advantage to recruit skill & technically
sound personnel. So the private sector banks can get efficient and good quality human
resources for them. However, they are to face the problem of sustaining the quality human
resources in their banks for longer time.
 Classification of Private Banks

In India, private sector banks are classified into two divisions:

Old Private sector banks (these banks New Private sector banks banks
emerged before 1968) (these banks emerged after the
1990s)

Old Private Sector Banks:

Old private sector banks are those which existed in India at the time of nationalization of
major banks but were not nationalized due to their small size or some other reason. After the
banking reforms, these banks got license to continue and have existed in India along with
new private banks and government banks. India could be one of the few countries whose
banks having this nomenclature. When the government nationalized 21 banks (including the
State Bank of India) in 1969 and 1980, a few private banks remained.

In 1969, there were 50 private banks and by 1991 it declined to 25. The Narasimham Committee
proposed opening the banking space for new players leading the Reserve Bank of India to give
10 licences to new banks. These new private banks were termed as NPSBs and the existing ones
were classified as OPSBs.

The number of OPSBs currently is at 12. It is remarkable that youngest of these banks is
RBL Bank which is 77 years old. Three have completed 100 years and six of these,
including the LVB and the DB, are in their nineties. They managed to keep their private
status despite pressures of nationalization in 1960s and 1980s, and avoided merger with
stronger banks.
New Private Sector Banks:
NPBs were supposed to be trendsetters in the banking industry. NPB is a terminology used
to describe private banks which were given banking licences in the mid-1990s with a
precondition that all their operations will be fully automated.
The idea was to create a set of banks which will anchor infusion of technology in the Indian
banking system. In the early 1990s, when economic reforms were initiated, liberal entry
norms for foreign banks were also mooted. It was thought that domestic banks will not be
able to compete with the foreign banks given their technological prowess.

To encourage technology orientation in the Indian banking system it was conceived to

promote a few private banks with technology driving their operations. The intention was to
encourage technology adoption in PSBs as well by showcasing the benefits.
 Fall in the numbers of banks over the years:
In 1951, there were 566 private commercial banks in India with 4,151 branches. Bank
failures in India were rampant before Independence in the absence of comprehensive
banking legislation and structured supervision mechanism for the banks.
During 1913 to 1936, 481 banks failed in India. The situation did not improve in the post-
Independence period even after the promulgation of the Banking Regulation Act in 1949.
On an average 40 banks failed in India during each year between 1947 and 1955. During the
period 1954 to 1959 as many as 106 banks were liquidated. Of these, 73 banks went into
voluntary liquidation and 33 into compulsory liquidation. To protect public savings, it was
considered better to wind up insolvent banks or amalgamate them with stronger banks.
In 1960, the RBI was given formal powers to amalgamate banks. Between 1960 and 1966,
217 banks were amalgamated. Thus, liquidation and amalgamation of the private banks to
protect depositors' interest has brought down their numbers.
Further, some of the bigger private banks were nationalized in two tranches in 1969 and
1980 to promote inclusive banking. Thus, the number of private banks has significantly
reduced over time.
III:-Major Players (Private Sector Banks)

1. Housing Development Finance Corporation Ltd. (HDFC)

2. Industrial Credit and Investment Corporation of India (ICICI)

3. Axis Bank
4. Kotak Mahindra Bank Ltd.

5. Yes Bank
IV:-Total Income of private sector banks across India over last 5
years (From F.Y. 2017 to 2021)

Source: https://www.statista.com/statistics/1068802/india-total- income-of-

private-sector-banks/
V: Working & Regulations of Private Sector Banks:

Under the Banking Regulation Act, 1949, the RBI has been entrusted with the full
responsibility of supervising and regulating private sector banks in India. Under Section
22 of the Banking Regulation Act, private banks are required to obtain a license from the
RBI to carry on banking business in India. According to the Reserve Bank’s Guidelines
on Ownership and Governance in private sector banks, every entity would be required to
satisfy the ‘fit and proper’ criteria for acquisition of shareholding in a private bank beyond
5 percent and no non-promoter single entity or group of related entities, would have direct
or indirect shareholding or control in any bank in excess of 10 percent of the paid-up
capital.

According to Section 12B of the Banking Regulation Act, prior approval of RBI in
accordance with its guidelines will be required for acquisition of shares/voting rights of 5
percent or more. In the beginning, the promoters are required to hold a minimum of 40%
of the paid-up capital for a lock-in period of 5 years. Further, within 15 years of
commencement of operations, the promoters of already existing private sector banks, are
required to dilute their shareholding to 15 percent. For establishment of new private sector
banks, the promoters will have 12 years to dilute their holdings.

Private sector banks mainly target corporate salaried individuals as their consumer base
for their salary accounts and credit cards. In terms of loans and deposits, Private banks
appeal to the younger generation and foreign nationals because of their online application
processes, ease of approval, better management, faster processing, doorstep delivery and
quality customer service. Owing to the monthly targets and sales goals, their performance
as a business is much more reliable as compared to public sector banks. However, higher
processing fees, elevated interest levels on loans and pre- payment clauses with lock-in
periods and penalties make them an unapproachable option for consumers on a budget.
However, with respect to financial performance in terms of most parameters like net
interest margins and non-performing assets (NPA), in spite of occupying a much smaller
portion of the industry as compared to Public Sector Banks (PSBs), private sector banks
are much better placed.
 2:- BASICS OF NON PERFORMING ASSETS

I. Introduction:

Increase in Non-Performing Assets (NPAs) has emerged as one of the biggest challenge in
front of Indian banking industry and for Indian economy.

Banks play a role of intermediator to collect money from excess money holder (depositor)
and provide to finance seeker (creditors), this process increase growth, and development in
an economy. Banks generate major part of their revenue by net interest margin (leading
and borrowing interest rate differences) and create assets for themselves which further lead
to increase nation assets by the way of contribution in gross domestic production (GDP).
Banks sustain if they get back their loan with interest, but if banks are not able to get back
their loans with interest the functioning will disturb and the situation become even worse
when banks not able to get their principal amount from their borrowers. If the situation
keeps going on then, one stage come where bank not able to repay back the money of their
depositor, and the bank may default. Collapse of even a single bank give a spillover effect
to other banks and same time to whole economy. Therefore, it is very necessary to have an
early warning system in banking system to detect such problem at very early stage, it helps
bank to take corrective action.

Non-performing assets (NPAs) or bad loans of banks have declined by Rs 61,180 crore to
Rs 8.34 lakh crore at the end of March 31, 2021, as result of various steps taken by the
government.
  Definition

A non performing asset (NPA) is a loan or advance for which the principal or interest
payment remained overdue for a period of 90 days.

A loan is classified as a non-performing asset when it is not being repaid by the borrower.
It results in the asset no longer generating income for the lender or bank because the
interest is not being paid by the borrower. In such a case, the loan is considered “in
arrears.”
  Classification of Loans and Advances as per RBI Prudential
Norms:

Standard assets: Loan accounts which do not show any sign of irregularity and all
repayments of installments and interest are being received on time.

Non Performing Assets: An asset becomes NPA when it ceases to generate income for
the bank. A non-performing asset (NPA) is a loan or an advance where,

i. Interest and/or installment of principal remain overdue for a

period of morethan 90 days in respect of a Term loan.
ii. The account remains ‘out of order’ in respect of an
Overdraft/cash credit(OD/CC).
iii. The bills remains overdue for a period of more than 90 days in the case ofbills
purchased and discounted.
iv. The installment of principal or interest thereon remains overdue for two cropseasons
for short duration crops (Agricultural Loans).
v. The installment of principal or interest thereon remains overdue for one cropseason for
long duration crops.

Out of order :-An account should be treated as ‘out of order’ if

i. the outstanding balance remains continuously in excess of sanctioned limit/
drawing power or
ii. In cases where the outstanding balance in the principal operating account is less
than the sanctioned limit/drawing power, but there are no credits continuously for
90 days as on the date of balance sheet; or
iii. Credits are there but are not enough to cover the interest debited during the same
period, these accounts should be treated as ‘out of order’.

Overdue :- Any amount due to the bank under any credit facility is ‘overdue’if it is not
paid on the due date fixed by the bank.
  Categories of NPAs

1. Substandard assets: Assets which has remained NPA for a period less than or
equal to 12 months.

2. Doubtful assets: An asset would be classified as doubtful if it has remained in

substandard category for a period of 12 months.

3. Loss assets: As per RBI, “Loss assets is considered uncollectible and ofsuch little
value that its continuance as a bankable assets is not warranted, although there may
be some salvage or recovery value.”

A loss assets is one where loss has been identified by the bank or internal or
external auditors or the RBI inspection but the amount has not been written off
wholly.
 NPA Provisioning
Keeping aside the technical definition, provisioning means an amount that the banks set aside from
their profits or income in a particular quarter for non-performing assets; such assets that may turn
into losses in the future. It is a method by which banks provide for bad assets and to maintain a
healthy book of accounts.
Provisioning is done according to which category the asset belongs to. Not only the type of asset,
but provisioning also depends on the type of bank. Like, Tier-I banks and Tier-II banks have
different provisioning norms.
 II:- Gross non-performing assets of private banks across India
between financial year 2017 and 2021

Source: https://www.statista.com/statistics/1063340/india-gross-npa- value-private-banks/

In fiscal year 2021, the value of gross non-performing assets of private banks across India
amounted to over two trillion Indian rupees. In fiscal year 2020, for the first time the value of
gross NPA reached more than two trillion Indian rupees. Non-performing assets have posed a
big problem for banks in India and experts point that this crisis had been long in the making.
Since more banks are facing a problem of risky or non-performing assets, the profitability and
solvency of banks has gone down.
 3. Literature review on NPAs

The issue of NPAs has been a major area of concern for the lenders and the policymakers.
Various research studies have been made to understand the causes contributing to the rise
in NPAs, measures that should be taken to resolve the issue in its nascent stage and
reforms that have come into effect to reduce the piling up of NPAs.

 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 of suitable credit assessment and risk management methods is the key to
solve the problem of NPA accumulation.

 Rajeev and Mahesh (2010), in their article deal with the issue of NPAs after the
global financial crisis. They suggest that mere recognition of the problem and self-
monitoring can help to manage the NPA problem to a great extent. Self-help groups can
also play an important role in the recovery of the loans.

 Barge (2012) examines that early monitoring and management of lent funds is the
necessity of the hour. The study suggests several measures like better supervision of end
use of funds, information about the credit history of the borrower and assisting the
borrowers
 to develop entrepreneurial skills to ensure that the asset does not convert into a non-performing
asset.

 Singh (2013) in the investigation on the position of Indian commercial banks with
regard to NPAs finds that these poor quality loans are a major problem for the public
sector banks, which show a consistent rise over the years. The main contribution comes
from the loans directed at the micro sector and for poverty alleviation programmes.

 Singh (2016) in another recent study on NPAs and recovery status find that the problem
is more severe for the public sector banks compared to the private sector banks. The
academic review points to the need to have strict lending policies for speedy recovery of
loans.

 Meher(2017) in the post-demonetisation period looks into the impact of the

government’s notebandi decision on the NPA of Indian Banks. The researcher finds both
positives and negatives of the event on the banking industry.

 Sengupta and Vardhan (2017) have compared the two banking crisis episodes
post-liberalisation- one that took place in the late 1990s and the other that commenced
after the 2008 global financial crisis that raised the issue of NPAs. The authors are of the
view that strong governance, proactive banking regulations and a strong legal framework
for resolution of NPAs would assist in solving the problem of NPAs. On the other hand,
regulatory forbearance would adversely affect the banking crisis.

 Bhawna Mittal (2019) identified the effect of increasing NPA in India and stated
that the NPA has increased in the last decade. It means that a large proportion of bank
assets has been ceased to generate income for the bank, which in turn, lowers the
profitability and ability of bank to generate further credits. The decline in banks
profitability is causing adverse economic shock as well as putting consumers deposits at
risk.
 Vivek Rajbahadur Singh (2016) finds that NPA level of Indian banks is higher
compared to foreign banks. The problem of recovery is not with small borrowers but with
large borrowers. The government should make provisions for faster settlement of pending
cases and it should reduce the mandatory lending to priority sector.

 Namita Rajput and Anil Kumar Goyal (2019) analysed the stability of the banking
sector for the period 2015 to 18 using the five dimensions of banking stability map. The
dimensions are soundness, asset quality, profitability, liquidity and efficiency. According to
them, the soundness which is measured by capital adequacy ratio and a leverage ratio has
improved due to the implementation of capital conservation buffer. The asset quality measured
by different ratios has deteriorated. Profitability which is the third measure of stability in
banking system has declined due to increase in NPAs and fall in return on assets. The fourth
parameter i.e., liquidating is quite satisfactory except the minor change in 2016 due to
demonetization. The last pillar of checking the financial stability is efficiency which is
satisfactory but needs improvement to perform better.
 4:- RESEARCH METHODOLOGY

I:- Basic Theory of Research

Research is defined as careful consideration of study regarding a particular concern or

problem using scientific methods.
According to the American sociologist Earl Robert Babbie, “research is a systematic
inquiry to describe, explain, predict, and control the observed phenomenon. It involves
inductive and deductive methods.”
Research is defined as the creation of knowledge and the use of existing knowledge in a
new and creative way so as to generate new concepts, methodologies and
understandings. It includes analysis of previous research to the extent that it leads to new
and creative outcomes.

Research is conducted with a purpose to:

 Identify potential and new customers
 Understand existing customers
 Set pragmatic goals
 Develop productive market strategies
 Address business challenges
 Put together a business expansion plan
 Identify new business opportunities

Research methodology simply refers to the practical “how” of any given piece of research.
More specifically, it’s about how a researcher systematically designs a study to ensure valid
and reliable results that address the research aims and objectives.
In this study a survey is conducted on banking sector to comparative analysis of NPA
and its impact on profitability of private sector banks in India.
II:- Research Objectives
The present research work has been undertaken keeping in view the following objectives.

1. Main Object :

To analyze the NPA and its impact on profitability of selected private sector banks
in India.

2. Secondary Objectives :

 To study the banking industries in India.

 To study the difficulties in the Non Performing Assets(NPAs) management
among private sector banks (PSBs) in India.
 To study the concept of Non Performing Assets (NPAs) on banks.
 To study the reason for Non Performing Assets (NPAs) on banks
 To study the impact of Non Performing Assets (NPAs) on banks.
 To give suggestions to overcome the problem of NPA.
 III:- Types of Researches

1. Quantitative Research
2. Qualitative Research
3. Descriptive Research
4. Analytical Research
5. Applied Research
6. Fundamental Research
7. Exploratory Research
8. Conclusive Research

1. Quantitative Research
As the name suggests, quantitative refers to the numbers where data is collected based on
numbers, and a summary is taken from these numbers. Graphs help to quantify the results
in quantitative research.

2. Qualitative Research
Qualitative refers to the non- numerical elements in the research. When the information or
data cannot be grasped in terms of numbers, qualitative research comes for the rescue.
Though not reliable as much as quantitative, qualitative research helps to form a better
summary in terms of theories in the data.

3. Descriptive Research
Facts are considered in descriptive methods and surveys and case studies are done to
clarify the facts. These help to determine and explain with examples, the facts, and they are
not rejected. Many variables can be used in descriptive research to explain the facts.

4. Analytical Research
Analytical research uses the facts that have been confirmed already to form the basis for
the research and critical evaluation of the material is carried out in this method. Analytical
methods make use of quantitative methods as well.
5. Applied Research
Applied research is action research where only one domain is considered and mostly the
facts are generalized. Variables are considered constant and forecasting is done so that the
methods can be found out easily in applied research. The technical language is used in the
research and the summary is based on technical facts.

6. Fundamental Research
Fundamental research is the basic or pure research done to find out an element or a theory
that has never been in the world yet. Several domains are connected and the aim is to find
out how traditional things can be changed or something new can be developed. The
summary is purely in common language and logical findings are applied in the research.

7. Exploratory Research
Exploratory studies are based on the theories and their explanation and it does not provide
any conclusion for the research topic. The structure is not proper and the methods offer a
flexible and investigative approach for the study. The hypothesis is not tested and the
result will not be of much help to the outside world. The findings will be topic related that
helps in improving the research more.

8. Conclusive Research
Conclusive Research aims at providing an answer to the research topic and has a proper
design in the methodology. A well-designed structure helps in formulating and solving the
hypotheses and give the results. The results will be generic and help the outside world.
Researchers will have an inner pleasure to solve the problems and to help society in
general.
IV:- Types of Data
Primary Data :-
Primary data is an original and unique data, which is directly collected by the
researcher from a source according to his requirements.

It is the data collected by the investigator himself or herself for a specific purpose.

Data gathered by finding out first-hand the attitudes of a community towards health
services, ascertaining the health needs of a community, evaluating a social program,
determining the job satisfaction of the employees of an organization, and
ascertaining the quality of service provided by a worker are the examples of
primary data.

Secondary Data:-
Secondary data refers to the data which has already been collected for a certain
purpose and documented somewhere else.

Data collected by someone else for some other purpose (but being utilized by the
investigator for another purpose) is secondary data.

Gathering information with the use of census data to obtain information on the age-
sex structure of a population, the use of hospital records to find out the morbidity
and mortality patterns of a community, the use of an organization’s records to
ascertain its activities, and the collection of data from sources such as articles,
journals, magazines, books and periodicals to obtain historical and other types of
information, are examples of secondary data.

In my research, I used “Secondary Data” to study on NPA analysis of private sector

bank in India.
V :- Limitations

 Primary data is time consuming.

 Compared to secondary data research, primary data is very expensive.
 Secondary data is not authentic like primary data.
 Result of this research are limited to the selected private sector banks.
 5:- Data Analysis

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NPA (%) of Private Sector Banks for the period of 2016 to 2021

(In %)
Year HDFC ICICI Axis Kotak Yes
Mahindra
2017 1.05 7.89 5.04 2.59 1.52
2018 1.30 8.84 6.77 2.22 1.28
2019 1.36 6.70 5.26 2.14 3.22
2020 1.26 5.53 4.86 2.25 16.80
2021 1.32 4.96 3.70 3.25 15.41
(Source: moneycontrol.com)

The above table shows NPAs in percentage of total Gross Advances by banks. Among
private sector banks, ICICI has the highest average NPAs and HDFC has the lowest
average NPAs.

18

16 16.8
15.41
14

12

10

8 8.84
7.89
6 6.77 6.7
5.26 5.53
4 5.04 4.96
4.86
3.7
2 3.22 3.25
2.59 2.221.2 2.25
1.05 1.36 2.14 1.26 1.32
1.52 1.3 8
0
2017 2018 2019 2020 2021

HDFCICICIAxisKotak MahindraYes
 Year – 2021

Bank NPA (%)

HDFC 1.32%
ICICI 4.96%
Axis 3.70%
Kotak Mahindra 3.25%
Yes 15.41%

18.00%

16.00% 15.41%

14.00%

12.00%

10.00%

8.00%

6.00% 4.96%
3.70%
4.00% 3.25%

2.00% 1.32%

0.00%
HDFC ICICI Axis Kotak Mahindra Yes

Interpretation:-
In year 2021 it can be seen that HDFC has the Lowest NPAs and Yes Bank has the highest NPAs
 Year – 2020

Bank NPA (%)

HDFC 1.26%
ICICI 5.53%
Axis 4.86%
Kotak Mahindra 2.25%
Yes 16.80%

18.00%
16.80%

16.00%

14.00%

12.00%

10.00%

8.00%

5.53%
6.00% 4.86%

4.00%
2.25%
2.00% 1.26%

0.00%
HDFC ICICI Axis Kotak Mahindra Yes

Interpretation:-
In year 2020 it can be seen that HDFC has the Lowest NPAs and Yes Bank has the highest NPAs
 Year – 2019

Bank NPA (%)

HDFC 1.36%
ICICI 6.70%
Axis 5.26%
Kotak Mahindra 2.14%
Yes 3.22%

8.00%

7.00% 6.70%

6.00%
5.26%

5.00%

4.00%
3.22%

3.00%
2.14%
2.00%
1.36%

1.00%

0.00%
HDFC ICICI Axis Kotak Mahindra Yes

Interpretation:-
In year 2019 it can be seen that HDFC has the Lowest NPAs and ICICI Bank has the highest
NPAs
 Year – 2018

Bank NPA (%)

HDFC 1.30%
ICICI 8.84%
Axis 6.67%
Kotak Mahindra 2.22%
Yes 1.28%

10.00%
8.84%
9.00%

8.00%

7.00% 6.67%

6.00%

5.00%

4.00%

3.00%
2.22%
2.00%
1.30% 1.28%

1.00%

0.00%
HDFC ICICI Axis Kotak Mahindra Yes

Interpretation:-
In year 2018 it can be seen that HDFC has the Lowest NPAs and Yes Bank has the highest NPAs
 Year – 2017

Bank NPA (%)

HDFC 1.05%
ICICI 7.89%
Axis 5.04%
Kotak Mahindra 2.59%
Yes 1.52%

9.00%

7.89%
8.00%

7.00%

6.00%
5.04%
5.00%

4.00%

3.00% 2.59%

2.00% 1.52%
1.05%
1.00%

0.00%
HDFC ICICI Axis Kotak Mahindra Yes

Interpretation:-
In year 2017 it can be seen that HDFC has the Lowest NPAs and Yes Bank has the highest NPAs
 6. Finding & Suggestions

From the above NPA analysis of private sector banks in India, the
major findings are:

 In the year 2020 the Overall NPA rate was highest as compared to other years.
 From data analysis, comparing to all five private sector banks HDFC Bank has lowest
average NPAs while Yes Bank has highest average NPAs.
 Some of the High NPA risks sectors identified by majority of respondent bankers of
survey include tourism,hospitality,aviation,restaurants and MSME
 As per the observation “legal action against the borrowers” and “persuaded through
personal follow up” were the most effective technique for recovering NPA.
Overall “Mismanagement of Fund” is the main cause of NPA in case of Yes Bank.
 Suggestions

From the above analysis of secondary data of NPA analysis of private sector banks in India, the
useful suggestions are:

 Bank should reformulate their credit appraisal techniques (credit monitoring)

 The elimination of political interference in disbursement of loan to priority sectors

as well as industrialists.

 Take strict action against large NPAs.

 Proper evaluation of loan application helps in detecting the invalid project.

 The information about industry, its financial position, management and other
information like financial stake, annual accounts, etc. should be collected prior to
sanction of a loan.

 The banks are to develop compromise strategies like establishment of recovery

teams at district, village level and satellite branch level.

The above suggestions may be considered, which would go a long way infurther
reducing the level of NPAs.
 7:- Conclusion

Today banking sector is one of the biggest service sectors in India. The rising NPAs
could severely affect the bank’s profitability and lending capacity. With increased
defaults, banks will need to be re- capitalized i.e., more money will have to be invested
in them to keep them going. Besides recapitalization a prudent credit risk management
can help banks to reduce NPAs and enable growth in the banking sector. It is the need of
the hour for the management of banks to avoid the creation of new NPAs.
A study was done on 5 private sector banks i.e. HDFC, ICICI, Axis, KMB & Yes Bank,
based on secondary data from the annual reports of 5 years starting from 2017 to 2021 with
the help of bar graphs and line charts. Among the public sector banks, ICICI has the highest
average NPAs and HDFC has the lowest average NPAs.
 8:- Refrences

During my Research Report of the “study of NPA analysis of private sector banks in India”, I have
made my report on the basis of

Secondary Data
Annual average NPAs of selected private sector banks.

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