NON PERFORMING ASSETS w.r.

t ICICI BANK

BY- RAVI KANT SARAF

OBJECTIVE


The main objective of the research is to understand the concept of non-performing assets. What is the definition of non-performing assets? Why they are increasing? What are the causes of NPAs? How we can control this thing? Through this project we can also analyses the banking industry. What type of challenges this industry is facing. I also include Basel committee report in my project which tells about the risk management in the banks.

The transformation of the Indian banking sector



The financial sector reforms in the country were initiated in the beginning of the 1990s.The reforms have brought about a sea change in the profile of the banking sector. Our implementation of the reforms process has had several unique features. Our financial sector reforms were undertaken early in the reform cycle.

National Electronic Fund Transfer



As we are aware, the NEFT was launched by the RBI in November 2005 as a more secure, nationwide retail electronic payment system to facilitate funds transfer by the bank customers, between the networked bank branches in the country.

ATM Networks


As many of us might know, the National Financial Switch (NFS) network started its operations on August 27, 2004 and is owned and operated by Institute for Development and Research in Banking Technology (IDRBT), Hyderabad.

NON PERFORMING ASSETS (NPA)



Action for enforcement of security interest can be initiated only if the secured asset is classified as Nonperforming asset. Non-performing asset means an asset or account of borrower, which has been classified by bank or financial institution as sub standard , doubtful or loss asset, in accordance with the direction or guidelines relating to assets classification issued by RBI .

FACTORS FOR RISE IN NPAs



The banking sector has been facing the serious problems of the rising NPAs. But the problem of NPAs is more in public sector banks when compared to private sector banks and foreign banks. A strong banking sector is important for a flourishing economy. The failure of the banking sector may have an adverse impact on other sectors.

What changed the scenario of NPAs after 1995?

 

 

Introduction of competition Guidelines on NPAs, income recognition, capital adequacy. Separation of control. Improvement of the legal recourse mechanism . Capital infusion .

Conclusion and Suggestions



Undoubtedly the world economy has slowed down, recession is at its peak, globally stock markets have tumbled and business itself is getting hard to do. The Indian economy has been much affected due to high fiscal deficit, poor infrastructure facilities, sticky legal system, cutting of exposures to emerging markets by FIIs, etc. Further, international rating agencies like, Standard & Poor have lowered India's credit rating to sub-investment grade. Such negative aspects have often outweighed positives such as increasing forex reserves and a manageable inflation rate.

Suggestion


After all these points, I just want to say that NPA is a big problem of banks. Due to this crisis the NPA are also increased. Thats why all the banks are facing problems and ICICI bank is top most in those banks, ICICI banks has a big exposure in that crisis as compare to other banks. So banks have to take care of those banks. My recommendations are:

Strengthening provision norms and loan classification standards based on forward looking criteria (like future cash flows) were implemented. Through securitization they can reduce NPA

Suggestion

Speed of action- the speedy containment of systematic risk and the domestic credit crunch problem with the injection of large public fund for bank recapitalization are critical steps towards normalizing the financial system. Strengthening legal system Maintain required capital adequacy ratio as per basel 2 norms. That means now the provision for NPL will be more. This may look a conservative approach. But it should be implemented to reduce risk. Modification in accounting system Use the concept of credit derivative