MANAGEMENT OF NON PERFORMING ASSETS IN CO-OPERATIVE AGRICULTURAL BANKS

• A CASE STUDY OF SHRI DHARMASTHALA COOPERATIVE AGRICULTURAL BANK LTD.

Abstract: The management of non-performing asset is a crucial aspect for any banking institution. The banks
cannot have sustenance unless the fund disbursed by it to the clients is recovered and recycled. The management of
NPA's in co-operative banks is a really robust challenge and cumbersome task. Since, the co-operative banks are
mainly based in rural areas the people in rural areas tend to be defaulters. In this background a case study was taken
to study the performance of the co-operative bank and its NPA status by taking into consideration the data for the past
five years. In this particular article, we have made an attempt to show the performance of a co-operative bank in terms
of performing and non performing assets. The article begins with explicating theoretical background for co-operative
society and concept of NPA. Then we have discussed in detail about Shri Dharmasthala co-operative agricultural
bank. The data collected about the bank was analyzed using percentage analysis, mean, standard deviation and
coefficient of correlation. The finding and suggestions were included as the credentials of the study.
Keywords : Non performing assets, performing asset, co-operative bank, standard deviation and coefficient of
correlation.

Introduction : The co-operative societies play a operative banks'. Co-operative banking was started
significant role in the economic development of the in India to remove the poverty of the millions and
country. India is basically an agrarian economy with grant funds for small agriculturists. It was found
majority of population residing in rural areas. that co-operative banking is the most useful weapon
Agricultural sector contributes 22.1 percent of the to meet the financial needs of medium and small
country's gross domestic product and offers farmers, artisans and traders. The co-operative
employment to nearly 65 percent of the rural labour. banks play as substitutes for money lenders to
The two third of the population depend on provide timely and adequate short medium and long
agriculture for livelihood. So growth of agriculture term institutional credit at reasonable rate of
and poverty alleviation is significant objective of interest. The Co-operative banks are working
every co-operative society and bank. Through co- successfully and playing a vital role even today in
operative societies it is possible to reach last man in financing for agricultural and allied activities. Co-
village. They provide finance to agrarians at low operative banks have advanced more credit in the
rates of interest, and thereby relieve them from the Indian agriculture sector than commercial banks.
clutches of the money lender. But the pin problem is They have made an all-around progress and
recovery management. The unrecovered loan which contributed highly towards agricultural sector.
is termed as NPA is a great headache for the banks
especially in rural areas. So, to have a prevalent Co-operative Movement in India: Evolution
picture about how the co-operative banks manage and Structure
the non-performing assets, we have undertaken a The Indian cooperative movement was initiated by
study by referring a well known co-operative the government and presently it has spread
agricultural bank. t h r o u g h o u t t h e country. It h a s undergone
tremendous changes through various phases. The
Co-operative Credit Institution
first phase which began in 1900(till 1930), marked
The term 'Co-operation' means the idea of "living the evolution of co-operative societies in India with
together and working together." Banks established the introduction of co-operative credit society's act
under the Co-operative system are called as 'Co- 1904 and the enactment of co-operative societies act

*Mr. Vishal Pinto • Research Assistant- JRF, SDM College (Autonomous), Ujire.
*Dr. PJV Udayachandra - Head of the Department of Studies & Research in Commerce, Registrar, SDM College (Autonomous) Ujire

Vidyaniketan Journal of Management and Research 58

1912. In t h e second p h a s e (1930-1950), RBI played a were established to promote a n d n u r t u r e co-
pivotal role in popularizing co-operative society by operative societies. In t h e l a s t p h a s e t h a t is from
introducing a separate agricultural credit 1995 till today, co-operative credit s t r u c t u r e h a s
d e p a r t m e n t in RBI act. It s t a r t e d to lend money for witnessed many reforms through various
t h e co-operative societies. In t h e t h i r d p h a s e t h a t is committees. T h u s after m a k i n g a long j o u r n e y it h a s
form 1950 to 1990, t h e co-operative societies became entered into t h e n e w m i l l e n n i u m w i t h lots of hopes
t h e central point of t h e various c e n t r a l a n d s t a t e a n d expectations. T h e p r e s e n t s t r u c t u r e of co-
g o v e r n m e n t a l policies. M a n y government bodies operative society in I n d i a is depicted by below table:

Figure No. 1: Structure of Co-operative Societies in India

Cooperatives
3
Credit N on-Credit

1 1
Ruial Coop Es.nks TJfbatt Coop Rank:; Other:
Producers
Coop. jToitsi a.%.
V
(UiEirici lusuriuce,
' >f TIMI sport,
v. holeialc
Shflirr TVrrr fctnirtiwf Lnr.5 T«rn Fuming.
stofcj and
Primary
stores}
if 'i
^ratc Cccp Banks SwcCoop
Auriculiuiu izvl
Agr. natural ^k>t^-
RMiil Development
(£i£:e Msjfcetmg AgiicuLtiml
'1 Barik (SC ARDB)
Society. District CRtftTe-
District C'eut;-il Coop,
\Lttk£tijii^. Hiiidlu-jjn
BanltsOlCCBh r
•
Soderj:, Milk Wesven'

I
Prmflry A [J Tirt]tn:Hfll
Primary Coop
Agricultural &::d
RLiil Development
supply iociety.

Society)
Societies,
Cot:age
Industrie-?"
PAL'. Bank (?CARDB)

Non-performing Assets

An a s s e t which ceases to g e n e r a t e income for t h e b a n k is called as Non-performing asset. Non-performing a s s e t s are

those w h e n loan given by a b a n k or financial i n s t i t u t i o n a n d t h e borrower delays in p a y m e n t of i n t e r e s t or principle
a m o u n t w i t h in s t i p u l a t e d period. According to t h e guidelines, 'any loan r e p a y m e n t , which is delayed beyond 90
days, h a s to be identified as Non-performing a s s e t s . B a n k s a r e not allowed to book a n y income from Non-performing
assets. They h a v e to m a k e provision for t h e Non-performing a s s e t s or keep money aside'.

An a s s e t is classified as non-performing a s s e t (NPAs) if d u e s in t h e form of principal a n d i n t e r e s t a r e not paid by t h e

borrower for a period of 180 days. W i t h effect from M a r c h 2004, default s t a t u s would be given to a borrower if dues
are not paid for 90 days. If a n y advance or credit facilities g r a n t e d by b a n k to a borrower become non-performing,
t h e n t h e b a n k will h a v e to consider all t h e advances/credit facilities g r a n t e d to t h a t borrower as non-performing
without h a v i n g a n y r e g a r d to certain advances/credit facilities which still h a v e performing s t a t u s . According to
Reserve b a n k of I n d i a guidelines on income recognition, classification of a s s e t s , a n d provisioning, a s s e t s are
classified as

Vidyaniketan Journal of Management and Research 59

A. Performing assets
B. Non-performing asset
Identification of Non-performing Asset:

An asset, including a leased asset, becomes non-performing when it ceases to generate income for the bank.
Non-performing asset (NPA) is a loan or an advance which may take following form;

• Term loan: A term loan will be treated as Non-performing asset if Interest and/ or installment of principal
remain overdue for a period of more than 90 days.

• Cash credit and overdraft: A cash credit or overdraft account will be treated as Non-performing asset if the
account remains out of order for a period of 90 days. It means in balance sheet, there is no credit in the account
for 90 days or credit is less than interest debited or where stock report has not been received for three months
or more.

• Bills purchased and Discounted: The bill purchased and discount account should be treated as Non-
performing asset if bill remains overdue and unpaid for a period of 90 days.

• Agriculture Account: Aloan granted for short duration crops will be treated as Non-performing assets, if the
installment of the principal or interest there on remains unpaid for two crop seasons beyond the due date with
respect to advances granted for agriculture purpose, and a loan granted long duration crops will be treated as
Non-performing assets, if the installment of principal or interest there on remains unpaid for one crop season
beyond the due date.

• Liquidity facility: The amount of liquidity facility remains outstanding for more than 90 days in respect of a
security transaction undertaken.

• Derivative transaction: In respect of derivative transaction, the overdue receivable remains undue for a
period of 90 days from the specified due date for payment.

General or miscellaneous:

a. Government guaranteed a c c o u n t : These are to be treated as performing assets only for the purpose of
income recognition. The overdue may be treated as Non-performing assets only when government repudiates
its guarantee.

b. Advances against Term Deposit, National Saving Certificate, Vikas Patras, Kisan Vikas Patra And
Life Insurance Corporation Policies: These advances need not be treated as Non-performing assets even
though Interest has not been paid for 90 days and no provision is required.

c. Other Account: Any other credit facility should be treated as Non-performing assets if amount in respect of
that remains overdue for a period of more than 90 days.

Overview of Non-performing Assets in Banking Industry

The present status of Non-performing assets in various banks shown as under;

Table No.l: Non-performing in Various banks as on March 2009:

Banks NPAs (%)
Public sector banks 02.97
Private sector banks 02.74
Foreign banks 04.29
UCBs (Urban cooperative banks) 11.80

Vidyaniketan Journal of Management and Research 60

 SCBs (State cooperative banks) 12.00
DCCBs (District central cooperative bank) 18.00
PACS (Primary Agriculture Co-operative banks) 59.20
SCARDBs (State cooperative agriculture and rural development banks) 30.10
PCARDBs (Primary cooperative agriculture and rural development banks) 39.00

Source : Report on Trend and Progress of Banking industry in India 2009-10 (RBI)

Review of literature
Tb build conceptual framework for this study literature survey was conducted.

S. N. Bidani (2002) feels that Non-performing Assets are the smoking gun threatening the very stability of Indian
banks. NPAs wreck a bank's profitability both through the loss of interest, income and write-off of the principal loan
amount itself. In a bid to stem the lurking rot, RBI issued in 1993 guidelines based on recommendations of the
Narasimham Committee that mandated identification and reduction of NPAs and reducing NPAs was treated as a
'national priority'. Dr. Valasamma Antony (2005) found that the Co-operative sector is plagued by many ills, both
man made as well as natural. They are affected by mal-administration, misuse of funds, poor recovery, dual control,
lack of professionalism, limited areas of operation, mounting NPAs etc. In spite that the co-operative bank is the
lifeline of the rural sector, any setback in their liquidity and solvency position would undoubtedly affect agriculture,
the back bone of the economy. Prof. S. K. Kulkarni (2005) found that the co-operative bank was miserably failed to
keep pace with the banking sector reforms. The other banking groups have significantly surpassed the co-operative
banking sector, not only in the performance but also in the market share in the core area so far dominated by the co-
operative banks. If things do not improve, the co-operative banking sector may cease to exist by 2020. The high
amount of NPA's is one major aspect for this failure. Dr. James Mathew (2006) observed that rising over dues
and high level of NPAs among the co-operatives in the country is a matter of serious concern. The politicization of the
recovery management has further vitiated the recovery climate. The growth in over dues has been much higher
than the growth in loans outstanding. For example in Kerala, while the loans outstanding with the PACS in the
state increased by 55% between 1999 and 2003, the loans over dues increased by 113% (The Hindu, 2004). This
alarming situation in over dues has to be seriously addressed.

Gourav Vallabhi, Anoop Bhatio and Saurabh Mishra (2007) explain that the Non-performing assets are
considered an important instrument to judge the efficiency and financial health of banks. The level of Non-
performing assets is one of the factors effecting a financial stability and growth of the banking industry. The authors
made an effort to find the fundamental factors which impact Non-performing assets of banks. It is seen that priority
sector lending is a major cause for Non-performing assets. Avudalammal B and Vasanth G (2009) claimed that
Co-operative banking was started in India to remove the proverbial poverty but Non-Performing Assets is one of the
critical functions of the banks management. They also studied the trend of the Non-performing Assets level in
urban co-operative banks and found that when compared with the percentage of Non-performing Assets of public
sector bank to that of urban banks, the latter enjoy a better position than the former. Indiranil Sen Gupta (2009)
explains in his article that banks frequently indulge in loan restructuring whenever they sense that the borrower is
in stress and account may lead into a bad loan or Non-performing assets. It allowed them to declare a lower Non-
performing assets ratio, the percentage of tricky loans to total loans, and a dead weight in their books. Thanker H
M and Dubule U S (2010) made an effort on the effect to non-performing assets management. Authors suggested
the measures to decrease the Non-performing assets, awareness and training camps should arrange in their area of
operation once in a year and recovery camps should be organized for better recovery. They also suggested that the
training should be given to the selected borrowers at approved training center before releasing finance Nandhini
Mishra (2011) identified sectors of Non-Performing Assets, housing loan and education loan are more responsible
to the increase of Non-performing assets. Real estate is another sector which is in part of which more than 40% of
total Non-performing Assets and 2% of education shows outstanding.

Vidyaniketan Journal of Management and Research 61

Profile of Shri Dharmasthala Co-operative Agriculture Bank Ltd
Shri Dharmasthala Co-operative Agriculture Bank Ltd is one of the Primary Agriculture Credit Co-operative
Societies. This bank is located at Shri Kshetra Dharmasthala, a world famous pilgrimage center of Karnataka
situated in Belthangady Taluk of Dakshina Kannada district. It has its jurisdiction over Dharmasthala and
Puduvettu village with coverage of more than 50,000 populations.
Shri Manjayya Heggade took the first step towards establishment of this cooperative society at the holy place
in 1936. He became the first share holder of this bank by purchasing share of Rs. 2.50 of 10 shares on 25th
September 1936 and then local people joined as founder shareholders. Shri Shrinivasa Shathri became the first
president of this bank. The bank has 74 years of history and was registered on 29 February, 1960 under the Co-
operative Societies Act 1959 section 8, License number -363.

Objective of the Bank

• To provide short term and medium term credit facility to meet variety of financial needs.
• To promote the habit of saving among people in banking coverage area.
• To Supply agriculture implements to their members.
• To provide different facilities to the members like gold loan, retail loan, consumption loan, education loan,
marriage loan and also other different type of loans.
• To provide assistance to self-help groups.
• To arrange different programs which are help in development of the members.
Financial performance of the bank

The financial performance of the bank can be analyzed by using some of the performance indicators.

Advances to Members
The bank has disbursed credit for various purpose based on the various schemes. The bank had total outstanding of
Rs. 858.20, •in the year end of March 2010. It is 13.65 percent more than the last years outstanding. In the year end
of 2008-09, it had outstanding of Rs. 755.14.

Figure No. 2: Advances of Shri Dharmasthala Co-operative Bank:

> Collection of the L o a n : Loans are the assets of banks which are the main source to earn income to the bank.
In the year 2009-10 loan collection ratio of the bank is 94.63 percent. In the year 2008-09 it was 97.81 percent. It was
3.25 percent less than previous year. In the 2007-08 collection ratio was 95.53 percent. In the year 2006-07 was
93.87 percent and in the year 2005-06 was 95 percent. Performance regarding the collection loan given to the
members in different years is given as under;

Vidyaniketan Journal of Management and Research 62

Figure No 3: Loan collection Rate of Shri Dharmasthala Co-operative Bank:

Research Methodology
The research project is descriptive and analytical in nature. The research project is mainly based on secondary
sources. The researchers have used the published data of the Shri Dharmasthala co-operative bank, report and
trends of Reserve Bank of India. The data is also collected from other sources like books, journals etc. All the
secondary sources collected were analyzed using various tools like, percentage analysis, trend analysis etc.

Objectives of the study

S To study management of Non-Performing Assets in co-operative agricultural banks.
S To study the performance of the bank in terms of NPAover five years.
S To study the level of consistency in management of Non-performing assets of a co-operative bank.
S To study the level of outstanding loan assets of the co-operative bank.

Scope of study
The study has been conducted to understand the position of Non-performing Assets and also to study in detail the
management Non-performing assets in co-operative agricultural bank. The entire study depicts the movement of
Non-performing assets for several years. This study is conducted by referring to one of the leading co-operative
agricultural bank in Mangalore called Shri Dharmasthala Cooperative Agriculture Bank Ltd. The study was
restricted to only one co-operative bank and its branches based on its performance and popularity. The research
study can be further extended to major study by taking into many other co-operative banks. Even the comparative
study can be undertaken to have more accurate results.

Source of Data
For the study secondary data has been collected, analyzed and interpreted. The researchers have used the
published data of the Shri Dharmasthala co-operative bank like; Audited financial statements of the bank, annual
reports, audit reports and other relevant documents of the bank. The data is also collected from the annual reports
of reserve bank of India including Reports on Trend and Progress of Bank of India, Master Circular- Prudential
Norms on Income Recognition and Asset Classification and Provisions Pertaining to Advances. The data was also
sourced from various books, journals, newspaper and websites.

Vidyaniketan Journal of Management and Research 63

Tools for Analysis
The collected information is analyzed by utilizing different accounting and statistical techniques such as:
• Percentage Analysis.
• Trend analysis.
• Standard deviation and its coefficient of variation.
The other tools also used to support the study include mean, graphs, ratio and percentage. All these tools aim at the
achievement of objectives of the study.

Limitation of study

o The study is restricted to Shri Dharmasthala Cooperative Bank and its branches.
o This study is restricted to only 5 years performance, from 2005-06 to 2009-10. For better accuracy the data was
restricted to only till 2010.
o This study could not examine cause responsible for the non-performing assets in these banks.

Analysis and interpretation

The analysis and interpretation was carried through various tables and charts. The analysis was mainly done
to know the management of the non performing assets of the co-operative bank and its performance over the years.
> Non-performing assets to total outstanding assets and its trend:
Here Non-performing assets of last five years are taken into consideration. The following table explicates the trend
of outstanding assets and non performing assets.

Table No.2: Analysis of Non-performing assets and its trend:

Non-
Total
performing
Year outstanding
Percentage assets (Rs Percentage
(Rs lakhs)
lakhs)
2005-06 511.27 00 4.93 00

2006-07 583.29 14.08 7.35 49.08

2007-08 555.04 -4,84 8.91 21.22

37.41 191.80
2008-09 762.73 26.00
12.52 77.26
2009-10 858.20 46.09

Mean 654.11 18.66

— 133.18 17.15
Coefficient of
20.36% 91.91%
Variation
Source: Secondary Data
The above table depicts outstanding assets of the bank and corresponding nonperforming assets from total
outstanding assets. The total outstanding assets have increased every year except in the 2007-08. For the year
2008-09 the bank has witnessed greater increase in its outstanding assets which indicates better loan
disbursement. The nonperforming assets have shown rapid increase year after year which is not a good sign for the
bank. The increase was to its peak in the year 2008-09, which indicates poor performance of the bank in its recovery
in spite of loan disbursement growth.

Vidyaniketan Journal of Management and Research 64

Figure No. 4: Non-performing Assets of Shri Dharmasthala Co-operative Bank:

The figure mentioned above shows a mounting tendency in non-performing assets in Shri Dharmasthala Co-
operative Bank from 2005 to 2010. The NPAline begins from 4.93 and was within two digits. But from 2007-08, it
mounts suddenly 26.00 with an increase of 191% and it shows rapid increase. At the top dotted line is much lower as
compared to NPA, which means the increase in non-performing assets is not desirable to the bank.

> Percentage of Non-performing Assets to total Outstanding:

The non-performing assets were analyzed by using percentage as a tool. The trend is as shown below:

Table No. 3: Percentage of Non-performing Assets and its trend movement:

S. C BANK
Year
Percentage of Non -performing assets to total Trend
outstanding Value
2005-06 0.96 0.328
2006-07 1.26 1.425
2007-08 1.61 2.522
2008-09 3.41 3.619
2009-10 5.37 4.716
Mean 2.522 2.522
Standard Deviation ~
1.66
(o)
Coefficient of ~
Variation 65.79%

Source : Secondary Data

The above table manifests the percentage of non-performing assets to the total outstanding assets. In the year 2005-
06, it was just 0.96 and stood within 2 percentage up to 2007-08. But from 2008-09, it was mounted to 3.41 and
finally, stood at 5.37. Thus in the initial year the percentage of non-performing assets were comparatively low but
increased suddenly from 2008-09 which is a bad signal for the bank. The mean average of NPAis 2.52 percent which
depicts better NPA management. The standard deviation (1.66) which is manageable but coefficient variation
(65.79) is much higher and not good for the bank.

igure No 5: Percentage of Non-performing Assets to total Outstanding

Vidyaniketan Journal of Management and Research 65

 Percentage o t N o n - p e r t o r mi rig assets on t o t a l o u t s t a n d i n g (S.C
DANK)

••tf^*"
..007* 0.760

20 • 3-D 6 2006-0" 2007-0G 200fi-C-"t 2000-10

¥car
P er Lent age oT^h o n - p e r f o r m i n g as; sets on Loltd o u t s t a n d i n g (S.C BAMEv)
-^ Tinenr ( P t i t e i i t a ^ e ot'NVm-peiTVniiiiiiii> fiK^et^ i>n tntal rmf standing (H.C TiA"NTC)'l

The above diagram evaluates the trend of non-performing assets of the bank. The bank shows upward trend in
movement of non-performing assets.

Difference in percentage of Non-performing Assets : Difference in percentage performing assets and

difference in percentage of non-performing assets to respective previous years are analyzed as below.

Table No. 4: Difference in percentage of performing assets and non-performing assets than previous:

Percentage of performing assets and non - performing assets

than previous:
Year Percentage of Difference Percentage of Difference
performing nonperforming
assets assets
2005-06
99.04 - 0.96 -
2006-07 98.74 -0.30 1.26 +0.30
2007-08
98.40 -0.34 1.60 +0.34
2008-09
96.59 -1.81 3.41 +1.81
2009-10
94.63 -1.96 5.37 +1.96
Mean 97.47 -1.10 2.52 +1.10
Source: Secondary Data
The above table evaluates the difference in percentage of performing and non-performing assets from 2005-06 to
2009-10. This table clearly explicates the decrease in performing assets from -0.30 tO -1.96. On the other hand, the
non-performing assets are increasing year after year. The difference in 2006-07 was just +0.30 but in 2009-10 the
difference rose to +1.96. So it is clear that the bank's nonperforming assets are increasing year after year
correspondingly reducing its performing assets.

Findings:
Following are the various findings revealed from the study:
• There is an increasing tendency in nonperforming assets over the years, which is not a good sign for the bank.
From the analysis it is shown that trend value of Non-performing Assets to total outstanding assets is
increasing gradually from 0.328 percent in 2005-06 to 4.716 percent in 2009-10 and percentage of
nonperforming assets increased from 0.96 in 2005-06 to 5.37 in 2009-10.

• The bank has witnessed unstable growth in its total outstanding assets. The total outstanding assets have
considerably come down in the year 2007-08 and 2009-10. Thus it is found that there is no consistent growth in
the loan portfolio of the co-operative bank.

Vidyaniketan Journal of Management and Research 66

• The study disclosed that average growth rate of Non-performing assets by considering the difference in the
percentage of growth over the years is +1.10 which is comparatively low and manageable.
• The study found that the co-operative bank is not much consistent in management of Non-performing Assets
as it shows higher coefficient of variation.
• It is found that the bank shows tremendous growth in its banking transactions. The total outstanding loan was
increased to 67.85 percent (From Rs. 511.27 lakhs to Rs. 858.20 lakhs) which is a positive sign.
• From the study it is found that the bank is steadily decreasing its performance assets which should be
effectively catered from deterioration.

Suggestions:
The suggestions are given based on the outcome of the data analyzed. These suggestions are related to the
improvement in the management of NPA.
• Based on the study it is suggested that the bank should keep Non-performing Assets under the track.
• The Co-operative Bank should follow even more stringent measure to tackle problem of non-performing
assets.
• As concern to future feasibility of the banks provision is necessary. It is advisable for the bank to classify the
assets according to the prudential norms of Reserve bank of India and keep aside prescribed amount of
provision as a reserve to future likelihood of bank concern.
• The bank has to maintain strong relationship with the clients and conduct recovery camps for the effective
recovery of loans.
• The bank should provide training and awareness programmes regarding the repayment of loans, effective use
of funds, repercussions of nonpayment etc., for effective utilization of available funds and for smooth recovery.

Conclusion:

Management of non-performing asset is a fundamental challenge for every bank. The banks must see that whatever
the funds disbursed must be recovered with an added effect. If not the banking business will not reach its objective
and will be far away from its sustenance. Apart from commercial banks the co-operative banks usually confront
higher degree of risk in converting the loan assets into performing assets. Since, the cooperative banks are
established in rural areas and where majority of clients are poor, the recovery management becomes a laborious
task and it is proved from the study undertaken to assess the management of nonperforming assets in a co-operative
society.
Shri Dharmasthala co-operative society operates in rural area, in spite that the bank has shown tremendous
growth in its banking transactions. This is the crystal indication that bank has made its efforts to reach the rural
people who do not have access to banking facility. Though the banks NPA's have increased over the years, it is not
much higher when compared to the performing assets. The study has also found that the co-operative society is not
still consistent enough in managing the non performing assets which need to be tackled prudently. Even though the
bank has shown an increasing trend in its nonperforming assets, it is much lower when compared to commercial
banks that operate in urban areas.
Effective management of Non-performing Assets manifests the financial health of the banks. Thus it is advised to
the bank to follow stringent measures to tackle the problem of Non-performing Assets. The bank should see that all
its nonperforming assets are within the controllable mark. The banks need to follow strictly the strong prudential
norms implemented by Reserve Bank of India with regard to disbursement and recovery. This will help the bank to
stop the asset turning into non-performing asset.

Scope for Further Research

The study on "management of nonperforming assets in co-operative Society - a case study of Shri Dharmasthala
Manjunatheshwara co-operative agricultural bank, Dharmasthala" provides enough inputs for further research.

Vidyaniketan Journal of Management and Research 67

The study was conducted to know the status on nonperforming assets in a co-operative bank which is situated in
rural area and to get a fair idea how the agricultural co-operative bank manages its NPA's. The study conducted was
successful in knowing the status of NPA in a co-operative bank. Further, the study can be extended into a major
study with increase in the sample size. A particular research can be made particular district or state to know the
status of NPA in co-operative societies of that region. A comparative study can be made with one or more co-
operative societies and with one or more commercial banks with respect NPA management. The comparative study
can also be made with a rural co-operative society with urban co-operative society. The study can be further
extended to know why people make default in repayment.

References

Books

1. Chakraborty, K C (2006). Management ofNPAS- Trend Challenges, Hyderabad: The ICFAI University Press.

2. Kothari, C R (2006). Research Methodology, Ed-II, New Delhi: New Age International (P) limited Publishers.
3. Mithani (2004). Money Banking International Trade and Finance, Ed-XVI, New Delhi: Himalaya Publishing
House,
4. Singhs, Yogesh Sing (2008). Risk Management in Banks, Ed-1, New Delhi: Excel Books.

5. Toor, N S (2009). AHand of Banking Information, Ed-I, New Delhi: Skylark Publication.

Journals

1. Avudaimmal, B and Vasanth G (2009). "NPAs of Urban co-operative Banks In India", Southern Economist,
Vol. 48, No. 15, pp. 11-12.
2. Naushad, Makbool Mujawar and Rohini, Chintaman Shreshthi (2009). "Management of NPAs in Urban Co-
operative Banks: ACase Study" Southern Economist, Vol. 48, N. 15, pp. 37-40
3. Pandit, Bilamge C and Halemani S S (2011). "Managing Non-Performing Assets in District Cooperative
Banks" Third Concept, Vol. 24, N. 287, pp. 41-44.
4. Thanker, H M and Dubule U S (2010). "Analytical Study of NPA Management in Banks", Southern Economist,
Vol. 49, No. 17, pp. 30-32.

Websites
1. Gourav Vallabhi, Anoop Bhatio, Saurabh Mishra (2007). "Non-Performing Assets of Indian Public, Private
and Foreign Sector Banks: An Empirical Assessment", August 2007, Retrieved on February 28, 2012 from
http://www.iupindia.in/807/IJBM_NonPerforming7.asp
2. Nandhini, Mishra (2011) "Banks NPA and Impact on Indian Economy" Retrieved on March 23, 2012 from
http://www.caclubindia.com/articles/banks-npa-and-impact-on-indian-economy-8146.asp
3. Prashanth K Reddy (2002) "A comparative study of Non-performing assets in India in the Global context-
similarities and dissimilarities, Remedial measures", Retrieved on March 23, 2012 from
http://unpanl.un.org/intradoc/groups/public/documents/apcity/unpan013132.pdf
4. Report on Trend and Progress of Banking in India 2009-10, Available at http://rbidocs.rbi.org.in
/rdocs/Publications/PDFs/RTP081110FL.pdf.
http://www.rbi.org.in/scripts/bs_viewbulletin.aspx.
http://rbi.org.in/scripts/PublicationsView.aspx?id=11910.

Bank Records:
Annual Reports, Audit Reports and Records of Shri Dharmasthala Service Co-operative Bank and Primary Co-
operative Agriculture and Rural Development Bank, Belthangady

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