© 2019 JETIR May 2019, Volume 6, Issue 5 www.jetir.

org (ISSN-2349-5162)

A Study of Non Performing Assets of

Co-operative banks with special reference to
Hyderabad Karnataka region.
V
Dr.JAGADISH BIRADAR
Assistant Professor
Department of MBA
Veerappa Nisty Engineering College Shorapur

 loan in the banking system. They also cater to

Abstract— Cooperative Banks in India have become an services like loans, deposits, and other banking
integral part of the success of Indian Financial Inclusion related activities like Universal banks but widely
story. They have achieved many landmarks since their differ in their values and governance structures.
creation and have helped a normal rural Indian to feel To ensure this timely financial assistance and
empowered and secure. The story has not been smooth and services to the agriculturist is very important.
has its share of procedural glitches and woes placed at But at the same time due to natural calamities
various pockets. They are giving timely assistance to rural and low rate of crops they are not in a position to
peoples by way of giving loans and other amenities to repay the loan in time this leads to Non-
agriculturist. But any default in repayment of loan, will affect Performing assets.
operational efficiency and financial health of the bank. So 2. A. Non-Performing assets
that management of loans is very important in primary
3. An asset becomes non- performing assets
agricultural Co-operative bank. This paper attempted to
when it ceases to generate income for the
study the movement of Nonperforming Assets in selected
bank. Such an asset is known as
cooperative banks with special reference to Hyderabad
non-performing assets. This is due to several
Karnataka Region.
reasons. A borrower fails to repay the
principal along with interest to the bank it is
Index Terms— Co-operative Bank, Non-Performing Asset,
called as non-performing assets.
Financial Inclusion
4. B. Classification of Bank Advances

1. Introduction: 5. 1. Standard Assets: Standard assets are those

which do not disclose any problems and
Co-operative banks in India provide play an
which do not carry more than normal risk
important role in the rural areas, providing
attached to the business. Such assets are not
timely credit and other support for uplifting the
NPA 2. Sub- standard Assets: These assets
economic conditions of farming community.
are those which have been classified as NPA
Cooperative Banks have a portfolio of loans and
for a period not exceeding 12
advances that are highly tilted toward
months.
Agriculture and that too short term agriculture
3.Doubtful Assets: Doubtful assets are those
[crop loaning]. Both Government of India and
which have remained NPA for a period
State Governments (many) are giving interest
exceeding 12 months. In the case of term loans,
subvention on crop loans issued through the
those where instalments of principal have
cooperative sector, which make it the cheapest
remained overdue for a period exceeding 18
months should be treated as doubtful. An asset is

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© 2019 JETIR May 2019, Volume 6, Issue 5 www.jetir.org (ISSN-2349-5162)
classified as non- performing assets under the banking norms would attract penal actions from the law
following record of performance of recovery In enforcing authorities. On the one side, CBs are expected to
respect of term loan, if interest and/or instalment act as a financing bank for the primaries, which are in
of principal remain overdue for a period of more majority of the cases managed by untrained work force. On
than 90 days to assess the current status of the other side, CBs are expected to follow the banking norms
Co-Operative banks. as well as implement the State Governments schemes and
• To study the movement of NPA. programmes for the development of the state. Most CBs that
• To analyse the trend and cause of NPA in Bank fail seem to do so because of problems in their loan portfolio.
Scope of the study Non-performing loans grow to such extent that revenues fall
Non-Performing Assets are an important off and loan expenses as well as operating costs absorb all the
parameter in the analyses of financial earnings that remain. The bad loan situations usually arise
performance of Primary Agricultural and from combination of factors. In this regard, it is pertinent to
Rural Development Banks. The study how these banks mobilize the resources and deploy
geographical area of this study is only in them. Hence funds management of the Cbs is an important
primary Co-operative Agricultural and issue and their financial performance is to be studied with
Rural Development Bank, Belthangady, their impact on NPA’s in CBs. In this context, the questions
Dakshina Kannada District.an attempt has apt to arise are:
been made to analyse six year financial Whether the financial performances of the banks are in
performance of Primary Co-operative satisfactory manner in terms of NPA’s?
Agricultural and Rural Development Bank, To find out the answer to these questions, an analytical study
Belthangady, Dakshina Kannada District for had to be undertaken. The results of such studies will help to
studying NPA. find out the problem, difficulties, impacts etc., and to frame
financial policies by the CBs for the benefits of the farmers,
2.STATEMENT OF THE PROBLEM the community and other stakeholders.
CBs occupy a place of significance in the cooperative credit 3.RESEARCH METHEDOLOGY
delivery system. They act as a spokesperson of the Wellspring of information accumulation:
cooperative movement at district level. The success or In order to collect the data essential information and
otherwise of the cooperatives in a district level largely auxiliary information has been gathered.
depends upon the efficiency of the functioning of CBs. The 1. Primary Data
founders of the movement envisioned the role of DCCBs 2. Secondary Data
beyond the boundaries of mere financing bank. CBs are 4.REVIEW OF LITERATURE
expected to serve as a financing bank for the primaries in a Several individual researchers had studied a few facets of
district, guide them in their day to day operations, supply of NPA’s of selected CBs in selected areas. To know how far the
necessary manpower and technology wherever it is required, ground is already prepared and to identify the gaps therein
voicing on behalf of primaries at policy level etc,. Because of and to spell out the issues which need further intensive and
this integrated role, DCCBs are strategically located and comprehensive analysis, an attempt is made to review the
integrated with the cooperative system.Hence, they are not related literature.
only acting as financing banks but also act as development 1 Gowthaman A. and Srinivasan T, (2010) in their article
banks for the cooperatives at district level. To do these entitled, “Effective Funds Management by the Kumbakonam
multifarious functions CBs should have a well-defined Central Cooperative Bank” has presented the DCCBs are
management system. In the total management of the CBs, modal centres of financial institution in the cooperative
financial management occupies a place of importance as the sector in a district.
functions of these institutions are also governed by the
Banking Regulation Act. Even a minor deviation from

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in Tamilnadu is found decreased. In this paper an attempt is Introduction of Prudential Norms In order to reflect Bank's
made to analyse the funds management of the bank for the actual financial health in its balance sheet, RBI had
period of 1998-99 to 2007-08. introduced prudential norms for Income Recognition, Asset
2 Surya Rao K, (2007) in his study, “Performance of Classification and Provisioning norms for the advances and
Cooperative Banking. A study of DCCB - Eluru, Andhra investment portfolio of all banks, including Cooperative
Pradesh”, applied ratio such as profitability analysis, Banks. The policy of income recognition is based on the
productivity analysis, solvency position, and operational record of recovery.
efficiency and SWOT analysis. 6.Developments in Co-operative Banking
3 Fulbag Singh and Balwinder Singh, (2006) in their study
The consolidated balance sheet of urban co-operative banks
“Profitability of the Central Cooperative Banks in Punjab- A
(UCBs) moderated in 2017-18 as the impact of the
decomposition Analysis”, they analysed the profitability
demonetisation-induced expansion in deposits in the
position of the Central Cooperative Bank in Punjab. Two
preceding year waned. Asset quality improved, although
different years have been studied with the help of a frame
overall profitability moderated. Among rural co-operatives,
work of Return on Equity (ROE) model. The sample of bank
state co-operative banks (StCBs) improved their NPA ratios
with high business volume and those with low business
and profitability, but in other segments – district central
volume had been tested separately.
co-operative banks (DCCBs), state co-operative agriculture
4 Raja. S, (2005) in his study, “Performance Evolution of
and rural development banks (SCARDBs) and primary
MDDCB Ltd- an Application of Structural and Growth
co-operative agriculture and rural development banks
Analysis”, analysed the pattern of each component of the
(PCARDBs) – losses mounted alongside a rise in loan
financial statements such as balance sheet and profit and loss
delinquency.
account over a period of time. The study found out that
Co-operative institutions play a significant role in credit
performance of the Madurai District Central Cooperative
delivery to unbanked segments of the population and
Bank (MDCCB) using structural and growth analysis.
financial inclusion within the multi-agency approach
5.Co-operative Credit Structure in India
adopted in India in this context. They consisted of 1,551
As per the data given in Reports on trends and Progress in
urban co-operative banks (UCBs) at end-March 2018 and
banking 2015-16 by Reserve Bank Of India, as at end-March
96,612 rural co-operative banks at end-March 2017, with the
2016, India’s co-operative banking sector comprised of 1,574
latter accounting for 65.8 per cent of the total asset size of all
urban cooperative banks (UCBs) and 93,913 rural

co-operatives taken together.

While UCBs strive to deliver institutional credit at affordable
co-operative credit institutions, including short-term and costs in urban and semi-urban areas, rural co-operatives
long-term credit institutions (Chart). provide financial services in villages and small towns by
Table I Cooperative Credit Structure in India [position as leveraging on their geographical and demographic outreach.
on 31.03.2016 The growth of co-operative institutions has not, however,
[Source: Reports on trends and Progress in banking been commensurate with the overall growth of the banking
2017-18 sector – at the end of March 2017, they accounted for only 11
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per cent of the total assets of scheduled commercial banks CONCLUSION:
(SCBs) in comparison to 19 per cent share in 2004-05. While
Developing NPAs in one of the most concerning issues the
remedial measures initiated by the Reserve Bank have
Indian Banks are confronting today. In the event that true
resulted in consolidation in the UCB sector, weaknesses in
blue association of the NPAs is not got a handle on it would
the rural co-operative segment persist, reflecting operational
back off the feasibility of the banks. In the event that the
and governance-related impediments.
considered NPAs is taken carelessly it would be unsafe for the
RESULTS AND DISSCUSSION
saving money parcel the NPAs beat the present profile and
GROSS NPA RATIO
premium pay and impact the level execution of the reusing of
Gross NPA extent is the extent of Gross NPA to gross
the advantages. Banks moreover reallocate disasters to
advances of the bank. Gross NPA is
various borrowers by charging higher financing costs. Lower
the total of each advancement resource that are arrange
store rates and upper crediting rates curb reserve funds and
according to RBI rules The extent is tallied in the rate (%)
money related markets, which thusly hampers the monetary
and the formula of Gross NPA Ratio is according to the
development of NPAs and take suitable measures to manage
accompanying.
their development.
Showing Gross NPA from 2014-2015 to 2017-2018 of DCB

GROSS Securitization act will without a doubt help banks in

SL.NO YEARS NPA GROSS GROSS diminishment of NPA as it were.

ADVAN  Preventing new stream of NPA as it were.
CE NPA 
 Exchange of credit data among banks would be of
RATIO
(%) monstrous stay away from conceivable NPAs.
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