Professional Documents
Culture Documents
The Birth
The Birth
INTRODUCTION
A) Company Profile:
The bank was founded by a group of visionaries led by the late Prof.
V.G.Kale and the late Shri. D.K. Sathe and registered as a banking company on
16th September, 1935 at Pune. The authorized capital was Rs.10 lakhs and
issued capital of Rs. 5 lakhs. Their vision was to reach out and serve the
comman man and meet all their working needs. Successive leadership of the
Bank and the employees have Today, Bank of Maharashtra has over 12 million
customers across the length and breadth of the country served through a
network of 1428 branches in 22 states and2 union territories – a truly pan India
bank.
The Birth
1
The Childhood
Known as a common man’s bank since inception, its initial help to small
nationalization in 1969, the bank expanded rapidly. It now has 1428 branches
all over India. The Bank has the largest network of branches by
The bank has fine tuned its services to cater to the needs of the common
Our Logo
The Deepmal
The Pillar
The Diyas
2
The 3 M’s
Symbolising
• Mobilisation of Money
• Motivation of Staff.
Our Aim:
The bank wishes to cater to all types of needs of the entire family, in the
whole country. Its dream is “One Family, One Bank, Bank of Maharashtra”.
The Autonomy
Government.
The bank excels in Social Banking, overlooking the profit aspect; it has a
good share of Priority sector lending having 38% of its branches in rural areas.
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Other Attributes
Bank has a tie up with LIC of India and United India Insurance company
Strengths:
Madhya Pradesh
6. Large retail customer base (Low cost deposits from retail of Bank of
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Weaknesses:
4. No branches abroad.
Opportunities:
Threats:
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PRODUCT
1) Retail financing
e-banking etc
6
PROCESS :
801 branches are connected through Core Banking Solutions while the
History:
The Bank was brought into existence by an ordinance issued on 19th July, by
Bank of Maharashtra Ltd.' was transferred to and vested in the new bank. The
Undertakings) Act, 1969. The Act was declared null and void by the Supreme
7
Undertaking) Act, 1970 which was made effective retrospectively from 19th
July.
- Under the `Lead Bank Scheme' the Bank was allotted 5 districts of
Maharashtra, viz. Pune, Satara, Nasik, Aurangabad (jointly with Central Bank
of India) and Thane. Surveys were carried out in these districts for the
1970 - The Bank opened 39 branches in these five `Lead Bank' districts
out of the total of 47 branches opened. The Bank continued to follow the
scheme in the subsequent years and another district was allotted to it.
1976 - In August, the Bank sponsored a regional rural bank under the
1982 - One more Regional Rural Bank was sponsored on 7th December,
under the name Aurangabad-Jalna Gramin Bank Ltd. In the subsequent years,
another RRB under the Thane Gramin Bank was sponsored by the Bank. These
three RRBs together had 312 branches as at the end of March 1994. 1984 -
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1992 - Rs.3,500 lakhs contributed by Government.
1996 - The bank opened two extension counters at Gogal (Goa) and
Economy Affairs. 1999 - The bank introduced its telebanking service, which is
the first of its kind by any of the nationalised bank in the region.
- The bank has also set up a core credit monitoring cell at its
borrowers (above Rs. 25 lakhs), which would be provided by regional and zonal
centres.
management product.
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- The Export Import Bank of India (Exim Bank) is slated to sign a
its information technology training institute, the first of its kind in banking
(BoM), a public sector (PSU) bank, has formed an equal joint venture with
2011
-Comes out with Rs 230 crore public issue of equity shares (100,000,000
Director resigned from the Directorship of the Bank and she stands relieved
have together unveiled two products, Maha Suraksha Deposit Scheme and
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2017- Bank of Maharashtra has informed that in terms of guidelines of
the RBI vide letter dated December 01, 2008, the Bank has appointed following
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Award & Excellence
recently 2013
2013
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B) Theoretical Background
of which the interestand/or installment of principal has remained ‘past due’ for
of which the interest and/or installment of Bond finance principal has remained
institutions that refer to loans that are in jeopardy of default the so called NPL.
Once the borrower has failed to make interest or principal payments for 90 days
problematic for financial institutions since they depend on interest payments for
income. Troublesome pressure from the economy can lead to a sharp increase
greater transparency, it has been decided to adopt the ‘90 days’ overdue’ norm
for identification of NPA, from the year ending March 31, 2004. Accordingly,
with effect from March 31, 2004, a non-performing asset (NPA)is a loan or an
advance where;
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Interest and/or installment of principal remain overdue for a period of more
The account remains ‘out of order’ for a period of more than 90 days, in
The bill remains overdue for a period of more than 90 days in the case of
seasons but for a period not exceeding two half years in the case of an
payments have not been made for a period of 90 days. While 90 days of
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BREAKING DOWN Non-Performing Asset (NPA)
of interest or principal, which can occur during the term of the loan or at
maturity. For example, if a company with a $10 million loan with interest-only
payments of $50,000 per month fails to make a payment for three consecutive
if a company makes all interest payments but cannot repay the principal at
maturity.
categories according to how long the asset has been non-performing: sub-
standard assets, doubtful assets, and loss assets. A sub-standard asset is an asset
classified as an NPA for less than 12 months. A doubtful asset is an asset that
has been non-performing for more than 12 months. Loss assets are assets with
losses identified by the bank, auditor, or inspector and have not been
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The Effects of NPAs
on the balance sheet places three distinct burdens on lenders. The nonpayment
of interest or principal reduces cash flow for the lender, which can disrupt
budgets and decrease earnings. Loan loss provisions, which are set aside to
cover potential losses, reduce the capital available to provide subsequent loans.
Once the actual losses from defaulted loans are determined, they are written off
against earnings.
Recovering Losses
lenders take proactive steps to restructure loans to maintain cash flow and avoid
borrowers' assets, lenders can take possession of the collateral and sell it to
cover losses.
Lenders can also convert bad loans into equity, which may appreciate to
the point of full recovery of principal lost in the defaulted loan. When bonds are
converted to new equity shares, the value of the original shares is usually
eliminated. As a last resort, banks can sell bad debts at steep discounts to
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companies that specialize in loan collections. Lenders typically sell defaulted
loans that are unsecured or when methods of recovery are not cost-effective.
healthy banking industry. The banking sector acts as the catalyst for the
automobiles, iron and steel, pharmaceuticals, healthcare etc. From the Indian
perspective, the economy was on the upside during the period 2002 to 2008,
which saw a credit growth of around 22% pursuant to by all the banks/FIs
economic slowdown across the globe from 2009 and onwards, which adversely
impacted Business across the globe and the Indian economy was no exception.
Banks/FIs, and the resultant growth in the NPAs of Banks/FIs. Apart from
interest rates etc. The menace of NPAs is ever growing as companies across
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various verticals which have amassed huge debts are not in a position to service
the same.
Preventive Measures:
banks without appropriate credit appraisal of the project and its financial needs
has been one of the significant reasons for the present state of NPAs. The
before the banks proceed to carry out any kind of lending. The banks should
strive to enhance their in-house capabilities for the same and if required should
engage independent experts and professionals in the field for establishing the
techno economic viability of the project. The Banks should also keep a more
based on the expected cash flows of the project rather than on the basis of a
thumb rule which may be applicable to all and sundry. The banks need to come
out of their thought process of `one size fits all’ and accordingly stipulate
realistic repayment schedules. In many cases it has been observed that due to
even before the facility has actually commenced commercial productions which
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itself marks the beginning of stress in the accounts right from inception. In line
with the above perception the Reserve Bank of India in July 2014, introduced a
flexible financing scheme allowing banks to extend long term loans of 20-25
years to match the cash flows of projects while refinancing them every five or
seven years (commonly known as 5-25 scheme). Further during the course of
the company to finance the cost over runs / project delays which may arise in
future. In the absence of such a mechanism it is seen that in many cases, either
there are delays in sanctioning of additional loans to meet the cost over runs or
such loans are not sanctioned and the borrower utilizes the working capital
funds for meeting its long term fund requirements which marks the
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Remedial Measures
being in place, a slippage in the account cannot be ruled out which may be
attributed to several reasons beyond anybody’s control. Once the account starts
affected by external factors and keeping the wilful defaulters at bay, should
actively consider restructuring of the same in order to arrest the slippage and
keep alive the hopes of revival of the account. Till March 2015 the Banks were
available, which is evident from the fact that since March 2015, no accounts
were referred to CDR Cell by Banks. There is an urgent need to bring a change
viable units and minimizing the loss to the stake holders is of larger importance
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2. Corporate Debt Restructuring Mechanism: Presently the
forum (in case of multiple banking and aggregate debt being in excess of
CDR is not very encouraging. The CDR restructurings have only been reduced
to `mere ever greening’ of accounts rather than addressing the real problem.
Equity/Preference Capital or any other debt instruments etc. as such the same
has also not been able to fully accomplish the end for which it was envisaged.
3. Joint Lenders’ Forum and the Corrective Action Plan: The RBI
of Joint Lenders’ Forum (JLFs) for early identification of stressed assets and
formulation of corrective action plan (CAP) to bail out viable units which are
presently under stress and to initiate recovery action against the un-viable ones
in order to arrest any further depletion in value. Exit Route The Banks should
have a clear cut exit policy and should lay down definitive parameters which
may be applied to the various bad loan accounts, which are incapable of being
revived, depending upon the merit of each case. The banks may resort to either
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court driven or out of court measures to ensure the recovery of amounts from
NPAs.
repayment terms in accordance with the RBI guidelines and the respective
bank’s internal settlement policy. The same ensures a legal and dispute free
sets for resolution are decisive. ARCs with ability to aggregate debt of different
loan. ARCs have access to SARFAESI Act to take necessary steps for recovery
and resolution of bad loans acquired from banks. Thus, ARCs with focus and
thereby enhancing the value of stakeholders. Of late the RBI has issued several
overall intent to equip the system to handle the enlarged stress assets base. The
various guidelines issued by the RBI w.r.t. ARCs include an increase in the
minimum threshold investment of ARC in the SRs from the initial level of 5%
to 15%. The increased stake would encourage better due diligence on part of the
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ARCs and more realistic pricing of the debt which in the opinion of the ARC is
actually doable. Further, the limit of FDI investment in an ARC has been raised
from 49% to 74% (under Automatic route) to give further leverage to ARCs to
large asset accounts. The ARCs have also been permitted to convert a portion of
their debt into equity and also acquire a debt from another ARC. The RBI has
entered into a restructuring arrangement with the ARCs post acquisition of their
debts. To improve the financial ability of the ARCs, those ARCs which have
acquired assets worth Rs.500.00 crore and above have been permitted to float a
fund (to be subscribed by QIBs) and utilize up to 25% of the same for
3. Recovery Action If the banks are of the view that the restructuring is
not a viable option with respect to a particular stressed account then they may
initiate recovery proceedings against the defaulting borrower by filing a suit for
recovery before the Debt Recovery Tribunal or the Banks may proceed to take
Possession of the secured assets under the provisions of SARFAESI Act 2002
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Chapter 2
RESEARCH METHODOLOGY
Chandrapur”
NPAs do not just reflect badly in a bank’s account books, they adversely
Maharashtra, Chandrapur. The study will try to know reasons of NPAs in Bank
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Objectives of the Study:
Chandrapur.
Hypothesis:
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REVIEW OF LITERATURE:
The Indian banking sector has been facing serious problems of raising
Non- Performing Assets (NPAs). The NPAs growth has a direct impact on
profitability of banks. Non- performing assets are one of the major concerns for
committee and Verma committee, some steps have been taken to solve the
expressed from every corner that there has rarely been any systematic
probability of a large number of credit defaults that affect the profitability and
net-worth of banks and also erodes the value of the asset. NPAs affect the
survival of banks. The problem of NPAs is not only affecting the banks but also
the whole economy. In fact high level of NPAs in Indian banks is nothing but a
reflection of the state of health of the industry and trade. It is necessary to trim
down NPAs to improve the financial health in the banking system. An attempt
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is made in this paper to understand NPA, the status and trend of NPAs in Indian
various risk, such as credit risk, liquidity risk, interest risk, market risk,
operational risk and management risk. Apart from these risks the very important
risk is loan recovery. The sound financial position of a bank depends upon the
generally gives the impression that banks have strengthened their credit
appraisal processes over the years and growth in NPAs involves the necessity of
provisions, which bring down the overall profitability of banks. The Indian
profitability of banks the NPA need to be reduced and controlled. The bank
seems to have an increasing trend of NPA in last four years. The bank needs be
27
The operation of the bank is wide enough to cater to the needs of broad
should strictly follow all the norms and derivatives given by RBI. Bank needs
However, once NPAs do come into existence, the problem can be solved only if
litigation and court orders to recover stock loans. With long-winded litigation in
India, debt recovery takes a very long time. Even if the bank is taking necessary
measures for recovering the loans, but it needs the support of the system. But it
takes at least one to two years to get permission from the court for physical
ceases to generate income for the bank and is then termed as Non-Performing
Asset (NPA). RBI has defined NPA as a credit facility in respect of which the
interest and / or instalment of principal has remained ‘past due’ for a specified
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RESEARCH DESIGN:
The Study is of empirical in nature. The data will be collected from bank
websites, annual reports, manuals, journals and interview with the company
For the purpose of the study the present researchers has selected Bank of
Research Methodology
guideline and lead to completion of any project work through observation, data
1. Primary data
2. Secondary data
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In this research work only secondary data is used.
1) Secondary Data:
Secondary data will consist of different literatures like books which are
proper way.
The main statistical tools used for the collection and analyses of data in
LIMITATIONS OF STUDY:
Maharashtra, Chandrapur.
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TIME SCHEDULE
The maximum time available for the study will be as per the time table
out problem
VI Total 60 Days
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CHAPTER SCHEME:
Chapter I
This chapter gives an overall view about the theoretical background of the study
Chapter II
Chapter III
Chapter IV
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Chapter 2
A loss asset is one where loss has been identified by the bank or internal
of India inspection but the amount has not been written off, wholly or partly.
little value that its continuance as a bankable asset is not warranted although
2014-15
2015-16
2016-17
2017-18
The above table shows that the percentage of gross NPA to gross
advances has been considerably increased in the year 2014 viz 7.73% and has
successfully gone down in the year 2016 viz 5.23%. The percentage of gross
NPA to gross advances changes from 5.23% to 6.39% which is the result of
increase in the gross advances in the year 2017.There is 1.16% increase in NPA
level in the year 2017. Such increase is not favorable for the bank. Increase in
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the NPA level is unfavorable for bank as it directly affects the profitability and
highest i.e. 67.34% as compared to the year 2014- 2015, 2015-2016 & 2016 -
2017. In the year 2014-2015 NPA in the category of Doubtful assets is highest
i.e. 61.67% as compared to the year 2014- 2015, 2016-2017 & 2017- 2018. In
the year 2015-2016 NPA in the category of Loss assets is highest i.e. 12.98% as
compared to the year 2014-15, 2015-2016 & 2017- 2018. The bank suffer the
losses in spite of the recovery measures taken to reduce NPA. In the year 2015
the bank has more NPA in the category of loss assets as compared to rest of the
years.
Gross NPA is highest in the year 2016 - 17 viz Rs. 203.37 crores which
is unfavourable for Bank. Gross NPA level has been lowest in the year 2014 -
15 viz Rs. 139.92 crores. The above graph shows that the provisions made as
per statutory requirement was unable to cover the loss of bank due to NPA.
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NPA a/cs and NPA amount at Bank of Maharashtra
2014-15
2015-16
2016-17
2017-18
year 2014-15 to 2017-18. The amounts blocked in the NPA were also increases
year by year. The bank has taken the effective measures to recover NPA under
semi-urban &Rural area. Agriculture loan NPA contributes more to the Rural
hailstorm, etc because of this main crops are badly affected throughout the last
3 years.
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Compromise Settlement and One Time Settlement (OTS)
One of the important initiatives taken by bank in tackling the problem of raising
circumstances beyond the control of borrower. Bank has formulated clear cut
bank waives certain portion of the loan and recovers balance amount from the
borrower. Bank has resorted to various model called M0, M1, M2, M3, M4 and
M5 for quick settlement and resolution of loan defaulters. The model rests on
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OTS MODEL M1 (sanction limit upto Rs.10 Lakhs and security value
OTS MODEL M2 (sanction limit upto Rs. 10 lakhs and security value
37
Net NPA Ratio :
Net NPA
Net NPA Ratio = ------------------ x 100
Net Advances
7
6.35
5
4.19
4
2.03
2
0.84
1 0.52
0
2017-18 2016-17 2015-16 2014-15 2013-14
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It can be noticed that Net NPA ratio which was 0.84% in 2013-14 has
reduced to 0.52% which is good sign that the bank is succeeded in making good
provisions against NPA. But in the last three years of study i.e. from 2015-16 to
2017-18, the net NPA has increased and finally reached to 6.35% which
indicates that the bank had failed to make sufficient provisions against NPA in
these years which is not satisfactory. The Management of the Bank has not
taken enough care in granting advances and they are not able to recover from
defaulters.
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Total Provisions Ratio
Total Provisions
Total Provisions Ratio = -------------------- x 100
Gross NPAs
70 62.39 60.92
60
50
40 33.37 35.31
31.45
30
20
10
0
2017-18 2016-17 2015-16 2014-15 2013-14
From the above table it can be interpreted that Bank has not made
enough provisions for their gross NPAs. From the table we can see that of 5
consecutive years under study, in 2014-15 the provisions was the highest i.e.
62.39% but after it is being decreased to 31.45% in the year 2017-18, which is
not a good sign for bank. The bank need to make sufficient provision in order to
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Shareholder’s Risk Ratio
Net NPAs
Shareholder’s Risk Ratio = ------------------------------ x 100
Total Capital & Reserves
90
80 77.75
70
60
51.15
50
40
30 24.53
20
9.94
10 6.14
0
2017-18 2016-17 2015-16 2014-15 2013-14
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From the table given above, we can see the position of Bank. A risk ratio
was low in the year 2013-14. After that it is increasing year by year and reached
to 77.75% which is the highest in the given period. This indicates the bank has
failed in making provisions against NPAs. However, it is not the good sign that
the risk ratio is increasing, the bank has to take some instant actions to lower
down the risk or it can affect the goodwill, market price of the shares and the
competitive market. This signifies that the shareholder’s fund in this bank are
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Doubtful Assets Ratio
Total Doubtful Assets
Doubtful Assets Ratio = ----------------------------- x 100
Gross NPAs
50
43.32
45
40 37.1 36.03
34.19
35
30
25 20.55
20
15
10
5
0
2017-18 2016-17 2015-16 2014-15 2013-14
The doubtful assets ratio of Bank are presented in the above table. Banks
can recover more of the advances through compromise. From the table we
understand that the ratio had been decreasing from the year 2013-14 to 2014-15
which is satisfactory except for the years i.e. 2015-16 & 2016-17. Nevertheless,
the doubtful assets ratio is less than sub-standard assets ratio which is a positive
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Loss Assets Ratio
Total Loss Assets
Loss Assets Ratio = ----------------------- x 100
Gross NPAs
18
16.44
16 14.67
14
12 11.42
10
6 5.24
3.96
4
0
2017-18 2016-17 2015-16 2014-15 2013-14
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Loss assets ratio shows the proportion of loss that the banks are likely to
indicate that the assets to be lost would be lower as compared to gross NPAs.
The loss assets are likely to be recovered at all and so higher ratio would
suggest higher losses. From the above table it is understood that the loss assets
ratio had been very low in the years of study i.e. 2017-18 but it is high for
remaining years and is 16.44% for the year 2016-17. The bank should take its
condition seriously and work out action plans to reduce the loss assets ratio.
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Chapter 4
affect the profit of bank and also the financial health of bank. This NPA have
substantial portion from the profitability of the bank’s balance sheet. The
management of NPA’S is very crucial from the banks point as non performing
assets if not managed with due diligence and sincerity can turn the bank
insolvent. The prudential norms for asset classification, income recognition and
provisioning introduced by the RBI have helped in reflecting the true financial
Bank of Maharashtra has sound credit appraisal system and also sound
they take care of potential NPA. In the year 2015 the bank has more NPA in the
category of loss assets as compared to rest of the years. The amount of NPA
Maharashtra..
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The provisions made as per statutory requirement was unable to cover
the loss of bank due to NPA. Bank should give more emphasis on managing
NPA of agricultural loan because its NPA level is higher than other segments.
the inefficiency and casual approach of bank officials while sanctioning loan as
hailstorm, etc because of this main crop of Nasik District pomegranate and
The bank seems to have an increasing trend of NPA in last four years.
The bank needs be proactive in the selection of clients and customers while
sanctioning of loans. The operation of the bank is wide enough to cater to the
needs of broad spectrum of the society and economy of India at large. Bank of
Maharashtra should strictly follow all the norms and derivatives given by RBI.
Bank needs to have better credit appraisal system so as to prevent NPAs from
occurring. However, once NPAs do come into existence, the problem can be
solved only if there is enabling legal structure, since recovery of NPAs often
requires litigation and court orders to recover stock loans. With long-winded
47
Even if the bank is taking necessary measures for recovering the loans,
but it needs the support of the system. But it takes at least one to two years to
get permission from the court for physical possession of any property, which
Other factors responsible for growths of NPA are poor credit monitoring,
willful default, etc. For the recovery of NPA bank uses tools like Lok Adalat,
DRT, & SARFEASI ACT 2002.One of the important initiatives taken by bank
/compromise.
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Suggestions:
2) Banks should improved upon and strengthen the loan recovery methods
Credit appraisal and post –loan monitoring are crucial steps which need
3) There must be regular follow-up with the customers and it is the duty of
4) Personal visits should be made after sanction and disbursal of credit and
dynamism in their work. Many managers say that “we do not fear to
negotiate but we do not negotiate out of fear. Such fear leads to arbitrary
6) Frequent discussions with the staff in the branch and taking their
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BIBLIOGRAPHY
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PHOTO GALLERY
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