Professional Documents
Culture Documents
SUBMITTED BY
Shivangi Singh
PRN-15020441239
Roll no.D-51
(Batch 2015-2017)
(Legal Officer)
JULY 2016
COMPLETION CERTIFICATE
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DECLARATION
I hereby declare that the project entitled “Recovery of loans(NPA Management) and Debt
Recovery Tribunal” submitted for the MBA Degree is my original work and the project has
not formed the basis for the award of any degree, associateship, fellowship or any other
similar titles.
Place: Pune
CERTIFICATE
This is to certify that Miss Shivangi Singh, PRN No. 15020441239 has completed her
project report on the topic “Recovery of loans(NPA Management) and Debt Recovery
Tribunal” under my guidance.
Signature:
Date:
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ACKNOWLEDGEMENT
I would like to thank Prof. Rahul Dhaigude for all the help and support extended by him at
every stage during my CPS as my faculty guide.
I would also like to express my gratitude to Bank of Baroda, Miss JyotiAgarwal (Legal
Officer) my project mentor, for giving me the opportunity to do this research project, for
guiding me through this project and for teaching me the functioning of the recovery
department .
I would also like to extend my sincere gratitude towards Symbiosis Institute of Management
Studies for giving me the opportunity to do the CPS project with Bank of Baroda which
added value by being a great learning experience.
Shivangi Singh
PRN-15020441239
D-51
TABLE OF CONTENTS
8. Methodology 17
9. Increasing NPAs 19
12. Performance 24
14. My learning 35
15. Bibliography 36
EXECUTIVE SUMMARY
Increasing bad loans negatively impacts the ability of banks to continue their business as
usual. The problem is particularly severe with public sector banks. Results for the December
quarter show their financial position in poor light. Not only this almost all public banks have
been reporting higher level of non -performing assets as result of which banks have to make
larger provisions against possible loan losses this results in not only profits of banks getting
affected but also increased provisioning ties up their capital.
In Bank of Baroda recovery of loans( NPA management) is one of the key policies.Bank aims
at maximizing recovery of loans through effective monitoring and follow up and taking
various legal and other actions for the same. Recovery of loans (NPA management) in Bank
of Baroda is a broad topic and there is a systematic process to deal with the same.
This organization uses Debt recovery tribunals, compromise ,SARFAESI act ,follow up etc
as its tools for recovery of loans.Also apart from that greater importance is given to
preventing an account becoming NPA rather than using remedial measures once that account
turns NPA.The basic approach for recovery is pragmatic and unbiased.
The project assigned to me was recovery of loans(NPA management) and DRT.As the name
suggests during my internship I was required to understand the functioning of recovery
department and help bank in recovery of loans.Also I worked in regional office where nature
of work is different from branch office.Regional of Bank of Baroda was involved more in
controlling and monitoring branch.
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COMPANY PROFILE
COMPANY OVERVIEW
Bank of Baroda has earned name and fame in banking industry not only in India but also
abroad.It has its presence in over 20 countries across the globe.and it is also considered as
India’s international bank.I worked in regional office where nature of work is different from
branch office.Regional Office of Bank of Baroda was involved more in controlling and
monitoring branches.It controls over 120 branches in Pune.Also it is considered as the second
best bank in India after State Bank of India(SBI) on the basis of market capitalization.The
bank comes in the list of all those banks which are more than 100 years old in India.
Long term aspiration of the organization is to be a best ranking national bank ofglobal
standards.Also being committed to its stakeholders and having concern and care for
shareholders,employees and customer’s needs.Apart from that bank wants to play vital role in
increasing trade, commerce, art and industries.
HISTORY
Bank was established in the year 1908.It was founded by late Maharaja of Baroda Sir
SatajiRao Gaikwad-3 .he gave silver plate with gold coins as first deposit for Bank of
Baroda.Bank’s first overseas branch was opened in Kenya in the year 1953.After that a
committee in the year 1955 advised that 10 state run banks, which included Bank of Baroda,
should go for amalgamationwith State Bank of India. But Bank of Baroda denied since it
had already expanded not only in India but abroad.Also bank was nationalized in the year
1969.
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LOGO
The logo is unique in itself .It signifies the bank as rising sun.Its rays lightens and illumnates
everything and everywhere it reaches.It consists of dual “B” letter form which has sunrays.It
also indicates that bank’s reach is far.
PRODUCTS
Banks like Bank of Baroda have a very significant personalised service capability.Apart
from conventional products services offered by this bank like All General Banking Services
it also offers unique products and services like Baroda-e trade .
Treasury
Bank has also launched card to card fund transfer in association with National Payments
Corporation of India(NPCI).It is basically a instant fund transfer facility using “debit card
number “of the beneficiary .It is a simple ,convenient ,secured and safe method of
transferring funds 24 x 7.
The international banking services of Bank of Baroda at its branches in abroad are provided
for to serve its Indian customers, customers who are localite, NRI's, subsidiaries and joint
ventures of Indian corporations operating outside India, foreign companies, multinational
corporations, financial institutions banks as well as customers around the world.
e)It also arranges/ participates in the syndicated loans of Indian corporations as well as rated
multinational corporations.
g)NRI Services
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From the above table it can be observed that ,that Pune region of B.O.B has shown year
YOY% growth higher than that of the Bank on major parameters,which is noteworthy.
OBJECTIVES
INTRODUCTION
An asset including leased asset becomes a non performing asset once it stops to generate any
kind of income for bank.
A NPA for a bank is loan or advance where installment of principal or interest remain
overdue for a period of more than 90 days in case of term loan.
In case of an overdraft or cash credit(CC) facility ,if the account remains out of order
as on date of balance sheet for reasons as following: If the outstanding balance
remains continuously in excess of the sanctioned limit/drawing power for 90 days.
Credits are not enough to recover the interest debited during that period.
Non-performing assets (NPAs) have become the new scare term for the Indian capital
markets and for the economy. A global and domestic slowdown has resulted in decreasing
demand across many industries like construction,power,steel . As a result, cash inflows have
slowed down too. Banks are lenders to most of these businesses and when cash flows slow
down, the interest payments to banks can suffer. As a result, bank profitability suffers.
These are the same banks in which public hold their savings accounts or a fixed deposits. So
what happens when a bank doesn’t receive money from its assets.It directly or indirectly
impacts bank’s ability to pay for its liabilities (money from depositors).
The rise in NPA levels is a cause for worry because unless a bank has good assets (loans and
advances), which pay up on time, it might face trouble in paying its lenders or deposit
holders. The focus is largely on public sector banks because traditionally they have had heavy
corporate loan books. However, large private sector banks with exposure to corporate loans
are also affected. Stock prices of private and PSU banks in this category have corrected 30-
60% in the last one year. Hence, it’s not ownership that matters, rather it is asset quality.
METHODOLOGY
PART -A
PART-B
The banking scenario in India presents a scary picture because of rising NPAs of banks.The
rise in NPA is because of few specific problem caseswhich include a steel manufacturer, a
large power company, a textiles manufacturer and others in the commodity business .
As we can see from the graph above increasing NPAs are not only affecting the profitability
of the banks because they have to create provisions for the same but it also results in drop in
share prices of bank.
Once an asset seizes to generate income for a certain duration it is classified into various
categories and accordingly provisioning is done.Here it should be noted that provisioning is
done to meet the known liability. It is a charge against profit and as such reduces the profits
of the year in which it is created.
Doubtful:
As per RBI before an account becomes NPA it is compulsory for banks to identify incipient
stress by creating a category of accounts called SMA(SPECIAL MENTION ACCOUNTS)
MEASURES OF RECOVERY
The measures for recovery of loans are divided into two broad categories:-
As informed above about the measures of recovery of loans.I was a part of recovery task
force of Bank of Baroda .Recovery taskforce is a team of employees who are expected to
reduce NPA by using measures of recovery upto a particular target.
It is a tribunal established by Indian government .The main purpose of DRT is to help banks
in speedy recovery of their debts.Thus banks and other financial institutions approach DRT
for recovery of debts.It should be noted that only those cases which involves Rs 10 lakhs or
above can be filled in DRT.
The task given to me was to form a list of all the DRT cases Bank of Baroda has filed against
its customers from whom it has to recover money as the bank gave loan to the same.This list
was created with the help DRT website as it contains the list of all the cases which any bank
has filed against its customers.
Once this is done I was supposed to match it with the list of cases which bank has and update
it accordingly.
COMPROMISE SETTLEMENT
One of the main measures for recovery of loans followed by Bank of Baroda is compromise
settlement. It basically refers to an agreement which bank and borrower enters into .In this
borrower agrees to pay amount of loan and bank agrees to accepts the repayment from
borrower by receiving a little lesser amount.
WHEN TO GO FOR WHEN NOT TO GO
COMPROMISE FOR COMPROMISE
SETTLEMENT SETTLEMENT
Here my job was verification of compromise proposal .Branches of Bank of Baroda sends all
compromise proposal to regional office for it to get sanction and approval from higher
officials and that is why first compromise proposal are verified and then approved.
Main contents of compromise proposal which I was supposed to verify were as following:-
Total Contractual dues-This amount includes interest, legal expenses and other charges
Total notional dues-This amount includes outstanding balance as per books of accounts
including interest unapplied .Unapplied interest refers to interest which should have been
ideally applied but since account has turned NPA its not applied.It should be noted that once
an account turns NPA no interest is applicable on that.
Sacrifice-This amount refers to amount which bank has sacrificed.It includes write off
amount and waiver.It should be noted that only interest is waived by bank. And write off is
calculated by deducting compromise amount from total notional dues.
SACRIFICE AMOUNT
Task given to me was to call all the branches ask them whether SARFESI notices which have
to be issued to borrowers have been issued or not and if its issued all those branches have to
send copy of those notices to regional offices and at the same time maintaining the data base
of the same.and also asking branches to provide our office copies of all action taken under
SARFAESI and information about all accounts eligible under SARFAESI.It should be noted
that SARFAESI act is applicable to cases above Rs 1lakh.
A list of NPA accounts was given to me where I was suppose to use Finacle and check in
those accounts if any amount is credited so that account will no more be considered as NPA
and then I have to update it manually in the sheet provided to me.
This is a report generated by finacle which shows list of accounts to which loan is given
beyond a particular limit . My task was to generate this report using finacle and write letters
to those branches of bank of baroda asking why loan is given beyond sanction limit with that
report being attached.
Daily a report is prepared which determines how much amount is recovered everyday with
regard to NPA and on the basis of this report monthly report is prepared. I was supposed to
prepare daily report.
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Bank of Baroda uses finacle for all generating reports and also for enquiry of accounts
Apart from that bank also has separate message box which can accessed only by its
employees.
Also it has separate mail box other than gmail which can be accessed by employees of
bank only.
MY LEARNINGS
From this internship I got to learn lot of things.I learnt not only about how loan recovery
process is executed but also about the significance of NPA management.I also got to
understand the implications of increasing NPAs on banks as health of bank deteriorates
because of increase in NPA.Apart from that one of the important thing to mention is that I got
to know that If top borrowers of bank default it increases chances of banking capital getting
wiped out.
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BIBLIOGRAPHY
www.economictimes.com
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TURNITIN REPORT