“A STUDY ON NON-PERFORMING

ASSETS WITH SPECIAL REFERENCE “

TO

Submitted in the partial fulfilment of the degree of

MASTER OF BUSINESS ADMINISTRATION
(FINANCIAL MANAGEMENT)
(2022-2024)
SUBMITTED BY
Name: Anup Mohanty
Roll no: 22MBA(FM)033
P.G. DEPARTMENT OF COMMERCE, UTKAL UNIVERSITY

Under the Guidance of

INTERNAL GUIDE EXTERNAL GUIDE

Dr. Maheswar Sahu Mr. Upendra Kumar Moharana
Professor Faculty, ACSTI
P.G. Department of Commerce Odisha State Co-Operative Bank
University, Vani Vihar Bhubaneswar.
Bhubaneswar
 CERTIFICATE OF EXTERNAL GUIDE

This is to certify that the training reports entitled "A STUDY ON NON- PERFORMING
ASSETS WITH SPECIAL REFERENCE TO OSCB" submitted to the P.G Department of
commerce, Utkal University, Bhubaneswar, as a component of the MBA (FINANCIAL
MANAGEMENT) educational plan, in partial fulfilment of the requirements for the award
of degree of Master of Business Administration is a record of original research work done
by Anup Mohanty during the period of his study, under the supervision and guidance of
MR. UPENDRA KUMAR MOHARANA and that the training report is not formed on the
basis of the award of any other similar titles.

I considered that the project has reached the standard and fulfilling the
requirements and regulations related to the nature of trainee. His work is satisfactory.

Wishing him good luck for a successful career and all future endeavours.

DATE:
PLACE: OSCB, BHUBANESWAR

SHREE U.K MOHARANA

FACULTY, ACSTI OF OSCB
BHUBANESWAR.
 CERTIFICATE OF INTERNAL GUIDE

Mentor/Guide Name: Dr. Maheswar Sahu

Designation: Professor, MBA(FM)

This is to certify that the project report entitled "Non-Performing Assets" has been
prepared by Mr. Anup Mohanty under my supervision and guidance for the fulfilment of
Master in Business Administration (Financial Management). His field work is satisfactory.

Date : Dr. Maheswar Sahu

M.Com, M. Phil, L.L.B, FDPM, Ph.D.
Marketing & Financial Services
P.G. Department of Commerce
Utkal University, Bhubaneshwar
 PREFACE

I am presenting a project report on the topic of "A STUDY ON NON-

PERFORMING ASSETS WITH SPECIAL REFERENCE TO OSCB". I have tried to give all the
important points regarding this topic. I am thankful to everyone who has supported me
to complete this project on time.

I am equally thankful to my teacher who gave me a moral support and guided

me to complete this project on time. They also guided me in different matters regarding
this project. While doing this project, I came to know many things which are completely
new for me.

Last but not the least, I would like to thank my parents who helped me a lot.

Anup Mohanty
Roll No.:22MBA(FM)033
 ACKNOWLEDGEMENT

In the present world, there is a race of existence in which those who are having will
to come forward succeed. Project is like a bridge between theoretical and practical
working with this willing I joined this particular project.

First of all, I would like to thank the supreme power the GOD who is obviously the
one who has always guided me to work on the right path of life without his grace this
project could not become a reality.

I convey my sincere thanks to Dr. Maheswar Sahu whose guidance and

suggestions inspired me in shaping my project.

I would like to convey my profound thanks to my external guide to Mr. U.K

Moharana for his constant encouragement and guidance without which this project
would not be possible. I would like to thank all the respondents whom I interacted during
my project and all the employees for their cooperation without which I may not able to
complete it successfully.

Anup Mohanty
Roll No.: 22MBA(FM)033
 DECLARATION

This is to declare that this project report on the study of NON-PERFORMING

ASSETS WITH SPECIAL REFERENCE TO OSCB is a record of genuine work done by me
under the guidance of Dr. Maheswar sahu. I declare that this project report is original and
not submitted to any other university before. And this is completely true and
interpretation therein are based on materials collected by myself.

Anup Mohanty
 contents

Page
Chapter No. Particulars
No.
1 1.0. Introduction 2
1.1. NPA 3
1.2. Types of NPA 3
1.3 Principle of Lending 4
1.4 Causes of NPA 4-5
1.5. Reasons for NPA 5-7
1.6 Impact of NPA 7-8
1.7 Early Symptoms of NPA 8-9
1.8 Objectives of the Study 9
1.9 Scope of the Study 9-10

1.2 Literature Review 10-11

Research and Time Gap 11

1.3 1.3.0 Research Methodology 11

1.3.1 Methodology of Study 11-12
1.3.2 General Methods of management of NPAs 12-14
1.3.3 Legal Remedies Methods of Management of NPA 14-15

2 2.0 Company Profile 17

2.1 History of OSCB 17-18
2.3 Mission & Vision of OSCB 18-19

3 3.1 Data Analysis & Interpretation 21

3.2 OSCB Gross NPA Ratio 21-22
4 4.0 Summary & Conclusion 23
4.1 Findings 24
4.2 Limitations 24
4.3 Recommendations 24-25
4.4 Suggestions 25
4.5 Conclusions 25-26
4.6 Bibliography 26

1|Pag e
 CHAPTER – 1
INTRODUCTION

2|Pag e
1.1 NPA
The three letters NPA strike terror in banking sector and business circle
today. NPA is short form of “Non performing” asset”. The dreaded NPA rule says
simple this : when interest or other due to a bank remains unpaid for more than
90 days, the entire bank loan automatically turns a non-performing asset. The
recovery of loan has always been problems for banks and financial institutions.
To come out of these first we need to think is it possible to avoid NPA. No cannot
be then left is to look after the after the factor responsible for it and managing
those factors.

Definitions :
An asset including a leased asset becomes non-performing when it ceases
to generate income for the bank. A “non-performing assets”(NPA) was defined
as a credit facility in respect of which the interest and / or instalment principal
has remained ‘past due’ for a specified 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;
I. Interest and/or instalment of principal remain overdue for a period of more
than 90 days In respect of term loan.
II. The account remains ‘out of order’ for a period of more than 90 days, in
respect of an Overdraft / cash credit (OD/CC)
III. The bill remains overdue for a period of more than 90 days in the case of bills
purchased and discounted.
IV. Interest and / or instalment of principal remains overdue for two harvest
seasons but for a period not exceeding two half years in the case in the
case of an advance granted for agricultural purposes and any amount to
be received remains overdue for a period of more than 90 days in respect
of other accounts.

1.2 TYPES OF NPA

3|Pag e
 The NPAs can broadly classified into two types namely :
I. Gross NPAs
II. Net NPAs
1. GROSS NPAs are the sum of loan assets that are classified as NPA as per
RBI guidelines as on balance sheet date. It reflects the quality of loans
made by banks (Gross NPAs Ratio = Gross NPAs / Gross Advances).
2. Net NPAs are those types of NPAAs in which the banks deduct the
provisions regarding NPAs. It shows the actual burden of banks (Net NPAs
= Gross NPAs – Provision/Gross Advance-provisions).

1.3 principle of lending

Lending of funds constituents mainly traders, business and industrial
enterprise constituents the main business of a banking company. The major
portion of a banks fund is employed by way of loans and advances which is the
most profitable employment of its funds. The major part of banks earned from
interest and discount on the funds so lent. The business of lending nevertheless
in not without certain inherent risks. Largely depending on the borrower fund, a
banker cannot afford to take un due risks in lending. While lending his funds, a
banker therefore follows a very cautious policy and conduct his business based
on the well-known principles of sound lending in order to minimize the risk.

1.4 Causes for NPA

Causes for Non-performing Asset (NPA)
Borrower Bank Other
▪ Too ambitious project ▪ Poor credit appraisal ▪ Lack of infrastructure
▪ Heavy borrowing ▪ Non inspection of unit ▪ Lack of
▪ Poor credit collection ▪ Defective Governmentsupport
▪ Poor lendingprocess ▪ Government policies
qualitymanagement ▪ Lack of trained staff ▪ Changes related
▪ Wilful defects ▪ System overloaded tobanking amendments
▪ Depend on ▪ Lack of commitment ▪ Natural calamities
singlecustomer torecovery ▪ Recession and
▪ Fall to bring required ▪ Lack of variationin economic
fund technicalsupport conditions
▪ Lack of ▪ Inefficient
properplanning recoverysystem

4|Pag e
Willful defects :
There are borrows who are able to pay back loans but are intentionally
withdrawing it. These groups of people should be identified and proper measure
should be taken order to get the money extended to them as advances and
loans.
Natural Calamities :
This is the major factor which is creating alarming rise in NPAs of the PSBs,
every new and India is hit by major natural calamities thus making borrowers
unable to pay back their loans. Thus the bank has to make large amount of
provision in order compensate those loans hence end up the fiscal with a
reduced profit.
Industrial Sickness :
Improper project handling, ineffective management, lack of adequate
resources, lack of advance technology, day to day changing government policies
give birth to industrial sickness. Hence, the banks that finance those industries
ultimately end up with a low recovery of their loans reducing their profit and
liquidity.
Lack of Demand :
Entrepreneurs in India could not foresee their product demand and start
production which ultimately piles up their products thus making them unable to
pay back the money they borrow to operate these activities. The banks recover
the amount by selling of their assets which covers a minimum label. Thus the
bank non-recovered part as NPAs and has to make provision for it.
Change the government policies :
With every new government banking sector gets new policies for its
operation. Thus, it has to cope with the changing principle and policies for the
regulation of the rising of NPAs.

1.5 REASON FOR NPA :

Reason can be divided into broad categories:

5|Pag e
A. Internal factor
B. External factor
A. Internal Factor: Internal Factor are those which are internal to the bank
are controlled by banks. It includes:-

1. Defective Lending Process : There are cardinal principles of

banking lending that have followed by the commercial banks since
long.
 Principle of Safety
 Principle of Liquidity
 Principle of Profitability

2. Inappropriate Technology : Due to inappropriate technology and

management information system, market driven decision on real
time basis cannot be taken. Proper MIS and financial accounting
system in not implemented in the banks, which leads to poor
credit collection. Thus NPAs all branches of the bank should be
computerised.
3. Poor credit Appraisal system : Poor credit appraisal is another
factor for the rise in NPAs. Due to poor credit appraisal the bank
gives advances to those who are not able to repay it back. They
should use good credit appraisal to decrease the NPAs.
4. Managerial Deficiencies : The banker should always select the
borrower very carefully and should take tangible assets as security
to safeguard its interests.
When accepting securities banks should consider the followings :

 Marketability
 Acceptability
 Safety
 Transferability

5. Absence of Regular industrial visit : The irregularities in spot visit

also increases the NPAs. Absence of regularly visit of banks officials
to the customer point decreases the collection of interest and
principals on the loan. The NPAs due to wilful default can be
collected by regular visit.

6|Pag e
 B. External factors : External factors are those which are external to banks
they are not controllable by banks.

 Socio political pressure

 Change in industry environment
 Endangers macroeconomic disturbance
 Labour problems of borrowed firm
 Product obstacle

1.6 Impact of NPA :

 Profitability :-
NPA means booking of money in terms of bad asset which occurred
due to wrong choice of client. Because of the money getting blocked the
prodigality of bank decreases not only by the amount of NPA but NPA lead
to opportunity cost also as that much of profit invested in some return
earning project/asset. So NPA does affect current profit but also future
stream of profit which may lead to loss of some long-term beneficial
opportunity. Another impact of reduction in profitability is low ROI
(Return on investment) which adversely affect current earning of bank.

 Liquidity :
Money is getting blocked, decreased profit leads to lack of enough
cash at hand which leads borrowing money for short period of time which
leads to additional cost to company. Difficulty In operating the functions
of bank is another cause of NPA due to lack of money. Routine payments
and dues.

 Involvement of Management :
Time and efforts of management is another indirect cost which
bank has to bear due to NPA. Time and efforts of management at handling
and managing NPA would have diverted to some fruitful activities which
would have given good returns. Now days banks have special employees
to deal and handle NPAs which is additional cost to the banks.

 Credit Loss :

7|Pag e
 Bank is facing problem of NPA then it adversely affects the value
of bank in terms of market credit. It will lose its goodwill and brand image
and credit which have negative impact to the people who are putting their
money in the banks.

1.7 symptoms to recognize performing assets turning

into non-performing assets :
There are four categories of early symptoms :
1. Financial :
❖ Non-payment of the very first instalment in case of term
loan.
❖ Bouncing of cheque due to insufficient balance in the
accounts.
❖ Irregularity in instalment.
❖ Irregularity of operations in the accounts.
❖ Unpaid overdue bills.
❖ Declining current ratio.
❖ Payment which does not cover the interest and principal
amount of that instalment.
❖ While monitoring the accounts it is found that partial amount
is diverted to sister concern or parent company.

2. Operational & Physical :

❖ If information is received that the borrower has either

initiated the process of winding up or are not doing the
business.
❖ Overdue receivables.
❖ Stock statement not submitted on time.
❖ External non-controllable factor like natural calamities in the
city where borrower conduct his business.
❖ Frequent change in plan.
❖ Non-payment of wages.

3. Additional changes :

8|Pag e
 ❖ Use for personal comfort, stock and shares by borrower.
❖ Avoidance of contact with bank.
❖ Problem between parents.

4. Others :

❖ Changes in Government Policies.

❖ Death of Borrower.
❖ Competition in the market.

1.8 objective of the study :

The study aims to achieve the following objectives :
i. To understand the concept of Non-performing assets (NPA).
ii. To study the general reasons for assets to become Non-performing
assets.
iii. To study the impact of NPA on banks.
iv. To analyse financial performance of bank at different level of NPA in
different years.
v. To evaluate profitability position of banks relate to banking.
vi. To ensure timely and transparent mechanism for restructure of
corporate debts if viable entities facing problems for the benefit of
all concerned.
vii. To know the various reasons that are responsible for the growth of
non-performing assets.
viii. To know the recovery of NPAs through various channels.

1.9 Scope of the study :

The study has the following scopes :
i. The study could suggest measures for the banks to avoid future NPAs
and to reduce existing NPAs.
ii. A high of NPAs suggests high probability of a large number of credit
defaults that affects the profitability and net worth of banks and also
erodes the value of the asset.

9|Pag e
 iii. NPAs affects the liquidity and profitability in addition to posing
threat on quality of assets and survival of banks.
iv. The study may help the government in creating and implementing
new strategies to central NPAs.
v. the study will help to select appropriate techniques suited to
manage the NPAs and a time bound action plan to check the growth
of NPAs.

1.2. literature review:

A number of studies have been done on NPAs in India banking sector
by academicians and researches. The literature reviewed in this part is
obtained from the research studies and article of researchers
published in various journal

2.0 S. N. Bidani (2002) Non-performing Assets are the smoking gun

threatening the very stability of Indian banks. NPAs wreck a bank
profitability both through a loss of interest income and write off of the
principal loan amount itself. This is definitive book which tackles the
subject of managing bank NPAs in its entirely starting right from the
stage of their identification till the recovery dues in such accounts.
2.1 Choudhury & Sharma (2011) made an attempts to measure the
performance of public and private sector banks in context reducing the
level of NPAs. Authors recommended that banks should develop
efficient management information system to get free from NPA
problem.
2.2 Kavitha N (2012) emphasized on the assessment of non- performing
assets on profitability its magnitude and impact. Credit of total
advance was in the form of doubtful assets in the past and has an
advance impact on profitability of all public sector banks affects at very
large extent when non-performing assets work with other banking and
also affect productivity and efficiency of the banking group. The study
observed that there is increase in advances over the study.
2.3 Rathore and et al (2016) finds that because of mis-management in
banks, there is a positive relation between total advances, net profits
and NPAs of bank which is not good. They found that the positive
relation between NPA and profit are due to wrong choice of clients.
There is an adverse effect on the liquidity of bank as the banks are

10 | P a g e
 unable to give loans to new customers due to lack of funds. They
suggested the banks to do proper pre sanction evaluation and forced
disbursement control to reduce in NPAS.
2.4 Vivek Raj Bahadur Singh (2016) analysed that the number of NPA cases
referred to SARFAESI Act increased during the period 2008 to 14. He
has interpreted that this increase is due to the efficiency of the Act in
recovering the NPAs of commercial banks. According to him this Act
has emerged as a blessing is in disguise for the commercial banks as
they are using this Act largely in recovering their NPAs in order to
increase their profitability.
2.5 Veena & pathi (2008) analysed that the post-merger performance of
NPAs is more and increasing compared to pre-merger performance of
gross and net NPAs. They examined that every year NPAs has been
increasing leading to adverse effect on profitability of the bank and
suggested that the government should make provisions for faster
settlement of pending cases to solve the problem of NPAs.
2.6 Nithia Mary Aisac et al (2018) used regression model and paired
sample testing to analyse that there is a significant relationship
between NPAs and Gross Domestic Product (GDP). The outcome of the
test was that there is a significant relationship between NPAs and GDP
of India.

Research & Time Gap Literature :

The different aspect of literature related to non-performing assets of
researchers over the years have been collected and used for this study but there
is a huge time gap existing for the comprehensive research on quality aspects of
non-performing assets. Most of the research and studies are being done on
cause impact and management aspects of NPAs.

1.3.0 Research Methodology :

Sources of data :
The data collected is mainly secondary in nature. The sources of data for
this include the literature published by Odisha State Cooperative Banks various
magazines, journals, books dealing with the current banking scenario and
research papers.

11 | P a g e
1.3.1 Methodology of Study :
For this study, I have considered Non-performing Assets whit special
references to Odisha state cooperative Banks which are listed are listed in the
second schedule of the Reserve Bank of India Act, 1934. This study is based on
secondary data. The paper discusses the conceptual framework of NPA and it
also highlights the trends, status and impact of NPA on bank. Several reputed
research journal including research paper and articles have been used by the
researches. Moreover, RBI Report on Trend and Progress of Banking in India for
various years, websites and a book on banking has been referred during the
study.

1.3.2 General Methods of management of NPAs :

A multiplicity of factors is responsible for increasing size of NPAs in banks.
A few prominent reasons are as under :

❖ Poor credit appraisal system

❖ Lack of proper monitoring
❖ Reckless advances to achieve the budgetary targets
❖ There is no or lack corporate culture in the bank. In adequate legal
provisions on foreclosure and bankruptcy.
❖ Change in economic policies
❖ No transparent accounting policies and auditing practices
❖ Lack of coordination between banks.
❖ Directed lending to certain sectors
❖ Failure on the part of the promoters bring their portion of equity
from their own source of public due to market turning lukewarm.

The management of NPAs is the difficult task in practice.

Management of NPAs means how to settle the NPAs account in the
book. In simple it focuses on the methods of settlement of NPAs
account. The methods are differing from bank. The following
paragraph explains some general methods of management of NPAs
by the banks. These are described as per the below chart

 COMPROMISE
 LEGAL REMIDES

12 | P a g e
  REULAR TREAINING PROGRAMMES
 RECOVVERY CAMPS
 WRITE-OFFS
 SPOT VISIT
 REHABILITATION OF POTENITIALLY VALYE
 OTHER METHODS

COMPROMISE :
As per the directory compromise means the settlement of disputes reached
by mutual concession. Following are the detailed guidelines for compromise
settlement of NPAs
 The compromise should be negotiated settlement under which the bank
should ensure recovery of its dues to the maximum extent possible of
minimum expenses.
 Proper distinction should be made between wilful defaulters and
borrowers defaulting in repayments due to circumstances beyond their
control.
 Where security is available for assessing the realizable value, proper
weight age should be given to the location, condition, marketable title and
possession of sub-security.
 An advantage in settlement cases is that banks can promptly recycle the
funds instead of resorting proceedings spread over a long period of time
 All compromise proposal approved by an functionary should be promptly
reported to the next higher authority for post facto scrutiny.
 Proposal for write-off should be first by a committee of senior executives
of the bank.
 Special recovery cells should be set-up at all regional levels.

LEGAL REMIDIES :
The legal remedies are one of the methods of management of NPAs. The
banks observed that the borrowers are making wilful default. No more time
should be lost instituting appropriate recovery proceeding. The legal remedies
are filing of civil suits.

Regular Training Programme :

13 | P a g e
 The all levels of executives are compelling to undergrowth the regular
training programme on credit and NPAs management. It is very useful and
helpful to the executives for dealing the NPAs in banks.

RECOVERY CAMPS :
The banks should conduct the regular or periodical recovery camps in the
bank premises or some other common places, such types or recovery camps
reduces the level of NPAs in the banks.

WRITE OFF :
Write offs is also one of the methods of management of NPAs. The assets
are treated as loss assets when the banks write off the balances. The ultimate
aim of write off is to clean the balance sheet.

Spot visit :
Banks officials should visit to the borrowers business place regularly
periodically. It is also helpful to the bank to control or reduce NPAs limit.

REHABILATION OF POTENTIAL VALUE UNITS :

The unit is sick due to technical obsolescence of inefficient
management or financial irregularities. When the bank settles the dues of such
companies through the compromise or through legal actions the better is to be
followed.

OTHER METHODS :
 PERSISENT PHONE CALLS
 MEDIA ANNOUNCEMENT
1.3.3 Legal Remedies Methods of Management of NPA:
NPA reduces the yield on evidences but also reduces the profitability of
OSCB. The effect of NPAs can be classified into two categories i.e. (1) impact on
internal factors and (2) impact on external factors.

Impact on Internal Factors:

14 | P a g e
 NPA affect the bank the following are impact of internal factors :
 NPAs increase the total expenditure.
 The overall expenses of the bank continued to rise for several reason. The
provision for doubtful accounts that cause the dramatic increase in total
expenses. The size of provision for doubtful accounts varies from year to
year because of the different in the level of risk anticipated.
 NPAs reduce the earning capacity.
 The NPA affects the earning capacity of the bank. In general, various cause
reduce the profitability performance of the other bank. The provision for
doubtful debt is one among the most important cause for reducing
profitability of the bank.

Impact On External Factors :

 Regulatory and credit rating agencies are also not happy with the
level of NPA.
 Regulatory and credit rating agencies abroad also not comfortable
with the high level NPA.
 Indifferent attitude developed in the mind of bank customers.
 Image of the bank in the minds of public will go down.

15 | P a g e
 Chapter – 2
COMPANY PROFILE

16 | P a g e
2.1 Company profile:
The Odisha State Cooperative Bank (OSCB) is one of the scheduled state
Cooperative Banks incorporated under the Orissa Cooperative societies Act on
2nd April 1948. Since its inception, the bank has been playing a pivotal role in
transforming the agrarian economy of the state by creating to the credit
requirement of the farm families. The bank leads the Short Term Cooperative
Credit Structure (STCCS) in Odisha comprising 2708 PACS(including 212 LAMPS
and FSS) at the middle tier. The bank has facilitated enrolment of 53.63 lakh
agricultural families form out of about 55 lakh agricultural families in the state
covering 97.6% of the families. As a state partnered bank, the OSCB has been
implementing various plan and programmes of the State Government meant for
agriculture production and productivity with rural development. The bank has a
network of 14 branches spread across the state and it has been supporting the
Central Cooperative Banks with its PACS are also being transformed as One Stop
Shop to provide all the requirements of the farm families under one roof. The
bank has also facilitated organization and credit linkage of Self-Help Group
(SHGs) and joint Liability Group (JJLGs) to meet the credit requirements of the
sharecroppers and tenant farming.
The bank has firm commitment to the prosperity of the state by way of
providing credit for capital formation through Medium Term and Long Term
loans for agriculture. Keeping in view, the credit requirement of the large
number of handloom weavers, rural artisans, adequate credit have been
sanctioned in favour of the Primary Weavers Cooperative Societies and artisan
the members PACS of the bank has established a State of the Art Core Banking
Data Management Centre in its Head Office premises and linked all the Branches
of DCCBs to the Data Centre along with its functional units as a part of the core
Banking Solution (CBS) being assisted by the state Government. The bank has
been earning profit since its inception.

2.2 History of OSCB :

With growth of central banks, the need for loans and advances and cash
credit at a reasonable rate of interest grew for central banks to enable them to
make adequate finance available to the societies. So in April 1914, Bihar and
Odisha provincial Cooperative Bank was formed.

17 | P a g e
 The early 40’s witnessed to introduce the provincial in all British Indian
provides and what was paramount important was the rebirth of “Odisha
Province” on 1st April 1963. The Odisha Provincial Cooperative Bank is one of
manifestation of the great history identity of Odia People.
A few months after the formation of the separate Odisha Cooperative
Bank was registered on 15th august 1963 and a sum of Rs. 10520 was collected
towards share capital of the bank. The main objectives of the bank were :
 To finance the Cooperative bank societies.
 To act as a balancing centre for surplus funds of the societies in Odisha.
 To carry on banking business.
The central bank and unions of Odisha applied for the bifurcation of Bihar
and Odisha provincial Cooperative Bank. The 13 Cooperative Banks in 1938
and their net liability to the bank was taken over by Odisha Government on
21st April 1948. The Odisha Cooperative Act 935, 22 members were enrolled
and 100 shares were issued and share capital of Rs. 10000 was collected. So
it was a twice born of banks.
The name of the “Odisha Provincial Cooperative Bank” was changed to
“Odisha State Cooperative Bank” om year 1951-1952. The Institutional rural
credit delivery system of agriculture comprises of :
 Short Term Cooperative Credit Structure.
 Long Term Cooperative Credit Structure.
 Regional Rural Banks.
 NABARD

2.3 Mission and Vision of OSCB:

Vision:
To usher in a vibrant cooperative movement in the state with all
financially strong. Self-reliant. Democratic autonomous and member driven so
as to fulfil the basic objective of promotion of social and economic interest of
the individual in accordance with cooperative principles.

Mission :
An independent, self-reliant, spontaneous, strong and vibrant
cooperative movement concerned for the community in general and the weak
in particular.
18 | P a g e
 Inspiring mutual help and cooperatives values with honesty, dignity, pro-
activities, responsiveness, commitment and professionalization for
regularization of sustained and planned economic growth and socio-cultural
upliftment of the people of Odisha.
 Providing easy access to credit through Kisan Credit Card issued to the
Farmers.

19 | P a g e
 CHAPTER – 3
DATA ANALYSIS & INTERPRETATION

20 | P a g e
3.1 Data Analysis & Interpretation:
The study is purely based on the secondary data. The data required for
the study are collection from the RBI circular, journals and annual report of OSCB
NPA management, the RBI suggest a NPA management for measuring the
efficiency of a banking management , the RBI has set certain benchmark which
are compared with that of the previous year to know the improvement of
deterioration in the quality of NPA management adopted by the bankers :

Particulars 31.03.201 31.03.202 31.03.202 31.03.2022

9 0 1
1 2 3 4 5
1. Gross Advance 590754.8 727912.1 799198.3 883381.4
2. Gross NPAs as 3.76 2.85 2.42 2.11
percentageto gross advance
3. Gross NPAs 22209.62 20735.76 19351.14 18611.44
4. Total NPA provision 14144 15044 19632.26 21201.85
held(including BDDR)
5. Net Advances (1-4-5) 576610.8 712868.1 779566.1 862179.6
6. Net NPAs (2-4-5) 8065.62 5691.76 -281.12 -2590.41
7. Net NPAs are percentage 1.4 0.8 -0.03 -0.3
ofNet Advances

3.2 OCSB GROSS NPA RATIO:

Particul 31.03.20 31.03.202

ars 21 2
1 2 3
1. Gross Advances 799198.3 883381.4
2. Gross NPAs 19351.14 18611.44
3. Gross NPAs as percentage 2.42 2.11

21 | P a g e
 OSCB GROSS NPA RATIO

900000

800000

700000

600000

500000

400000

300000

200000
Gross Gross Npas Gross Npas as
Advances Percentage
Series 1 Series 2 series
3

22 | P a g e
 CHAPTER – 4
SUMMARY &CONCLUSION

23 | P a g e
4.1 FINDINGS :

1. The findings from the study are that the trend of GNPA ration on 2021 was
2.42% and 2022 was 2.11% respectively.
2. The OSCB are performing better than other cooperative societies if that is
indicated by low NPA percent in their banks.
3. The NPA lends are very high in rural cooperative banks compared to
OSCBs.
4. There is also an improvement in the overall position of the NPA in OSCBs
and increase in the provisioning coverage ration which indicated
improvement in the banking management and assets quality.

4.2 LIMITATIONS :
The important limitations are as follows :
1. The study of Non-performing Assets of SCBs is limited to 4 years
only i.e. 2019 to o2023.
2. The basis for identifying non-performing assets is taken from the
Reserve Bank of India publications.
3. There is stipulated short span of time for survey.
4. NPAs are changing with the time. The study is done in present
environment without forecasting future developments.

4.3 RECOMMENDATIONS :
1. RBI should revise existing credit appraisals and monitoring systems
2. Banks should improved upon and strength the loan recovery
methods.
3. Credit appraisals and post-lean monitoring are crucial steps which
need to concentrating by all the public sector banks.
4. There must be regular follow-up with the customers and it is the
duty of banker to ensure that there is no diversification of funds.
This process can be taken up at regular intervals.
5. Personal visits should be made after sanction and disbursal of
credit and further close monitoring of the operation of the
accounts of borrowed units should be done periodically.
6. Managers under credit monitoring and recovery department
should have dynamism in their work. Many managers say that “we

24 | P a g e
 do not fear to negotiate but we do not negotiate out of fear”. Such
fear leads to arbitrary negotiation which fails.
7. Frequent discussions with the staff in the branch and taking their
suggestions for recovery of dues.
8. Assisting the borrowers in developing his/her entrepreneurial skill
will not only establish a good relation between the borrowers but
also help the bankers to keep a track of their funds.
9. RBI may initiate actions against defaulter like publishing names of
defaulters in newspapers, broadcasting media which is helpful to
other banks and financial institutions.
10. As a part of curative measures, bankers may resort to compromise
settlement or one time settlement. Lok Adalats and Debt Recovery
Tribunals are other ways for the recovery of dues. It has been
observed that banks these days are highly resorting to SARFAESI
for the management of NPA.
11. If the delinquencies are due to reasons beyond the borrower
which are namely droughts, floods or other natural calamities. The
banker should suitably restructure the loans talking into account
the genuine difficulty of the borrowers.

4.4 SUGGESTION FOR THE STUDY :

There are some suggestion regarding the study :
1. The cause of increasing NPA is because of poor evaluation of assets
and the creditworthiness of the borrower.
2. Poor credit rationing and valuation of assets lending of loans is
much needed.
3. The banks have to check the borrower’s creditworthiness and also
the capacity to repay the loan before lending.
4. The insolvency and bankruptcy code should be strengthened so
that banks can take quick decisions regarding bad debts. There is
an urgent need to strengthen the NPA recovery tribunals.
5. The management level efficiency to handle political pressure and
red-tape should be imported so that managers can take quick
decisions regarding the provisions of loans and advances.

4.5 CONCLUSION FOR THE STUDY :

25 | P a g e
The Non-performing Assets have always creates a big problem for the banks in
India. It is just not only problem for the banks but for the economy too. The
money looked up In NPAs has a direct on profitability of the banks as banks are
highly dependent on income from interest on funds lent.
This report has made an attempt the growth of NPA in Odisha State
Cooperative Banks through growth mode and also through a comparative
analysis between urban and rural cooperative banks where it is found that NPA
in OSCB is decreasing every year which is a sign of improvement is asset quality
and management. The study also found that the status of OSCB is better than
the level of NPA in other cooperative banks.
The regulating authorities have to make sure that the improvement in the
status of NPA is maintained. The performance rations indicating the health of
the OSCBs, also reveal the improvement in the efficiency of banks which is also
a necessity to maintain for the future.

4.6 BIBLIOGRAPHY :
1. Animal Report of OSCB.
2. NPA Circular.
3. RBI Master Circulars Prudential norms and provisioning on NPA.
4. Various Internet sites.

26 | P a g e