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Performance of NPA of non-priority and priority sector of public sectors banks in India

Performance of NPA of non-priority and priority sector of public sectors banks in India
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This article considers the part of the NPA of the sector which concerns institutions of financial and the Priority sector in the whole PSB of NPA in India.

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Nội dung Text: Performance of NPA of non-priority and priority sector of public sectors banks in India

  1. International Journal of Management (IJM)
    Volume 10, Issue 6, November-December 2019, pp. 254–260, Article ID: IJM_10_06_025
    Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=10&IType=6
    Journal Impact Factor (2019): 9.6780 (Calculated by GISI) www.jifactor.com
    ISSN Print: 0976-6502 and ISSN Online: 0976-6510
    © IAEME Publication

    PERFORMANCE OF NPA OF NON-PRIORITY
    AND PRIORITY SECTOR OF PUBLIC SECTORS
    BANKS IN INDIA
    Dr. C. Ganesan
    Professor, Department of Commerce, VELS Institute of Science,
    Technology and Advanced Studies, Chennai, Tamilnadu, India

    Dr. M. NirmalDev
    Associate Professor, Department of Commerce, VELS Institute of Science,
    Technology and Advanced Studies, Chennai, Tamilnadu, India

    J. Sherli
    Assistant Professor, Department of Commerce, VELS Institute of Science,
    Technology and Advanced Studies, Chennai, Tamilnadu, India

    ABSTRACT
    Priority sector lending or PSL had been forecasted. So that these sectors get
    institutional loans from PSL were segments are difficult to getting credit. The sector
    concerning institutions of financial are referred to as Non-Priority Sector lending and
    the credit is lending readily. These sectors are exciting until now. Each and every time
    the money is attracted and entire enduring sectors other than PSL are covered by these
    divisions. This article considers the part of the NPA of the sector which concerns
    institutions of financial and the Priority sector in the whole PSB of NPA in India. The
    near research examined both the inclinations in sector-wise NPAs of PBS and the
    significant influence of NPA of the sector which concerns institutions of financial and
    the priority sector over the entire NPAs of PSBs. And also, the achievement of disgusting
    advances over total NPAs of PSBs is discovered. The secondary data is considered in
    this research. The period of the research is 12 years i.e., from 2007 to 2018. The tools
    such as correlation, ratios, Regression, t-test had been employed to analyze the statics
    have been tattered for these analyses.
    Keywords: Public Sector Automotive industry, NPA, Priority sector Advances, Non-
    Priority Sector.
    Cite this Article: Dr. C. Ganesan, Dr. M. NirmalDev and J. Sherli, Performance of
    NPA of Non-Priority and Priority Sector of Public Sectors Banks in India, International
    Journal of Management (IJM), 10 (6), 2019, pp. . 254–260.
    http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=10&IType=6

    http://www.iaeme.com/IJM/index.asp 254 editor@iaeme.com

  2. Dr. C. Ganesan, Dr. M. NirmalDev and J. Sherli

    1. INTRODUCTION
    The automotive industry system is acted towards as an essential part of the progress of a nation’s
    economy. The presentation of the economies had been associated directly and unconditionally
    towards the performance of the automotive industry. The key stakeholders in the development
    of the economy are the commercial automotive industry. The incidence of NPAs has become
    a serious hazard to the division of the automotive industry.
    In common, borrowers repay the dues by their personal due dates to the automotive industry.
    However, some turn obstinate. This is because of the inability and unwillingness of borrowers
    to repay. If such liability is presented as a common liability and interest is accumulated over
    such liability as an ordinary profit, then the balance sheet had been displaying an improper
    depiction of the financial position of the automotive industry. Therefore, strict necessities have
    been laying by RBI regarding the credit of NPA.
    As per RBI, an NPA is a lend or advances where:
    1. Liability – the rate of interest and/or installment of capital amount leftovers late
    for exceeding 90 days.
    2. CC or Overdraft – account is out of commission
    ie
    a) dazzling sense of balance leftovers uninterruptedly in superfluous of the
    withdrawing power or limits sanctioned, or
    b) The remaining balance is within the limits sanctioned or power of
    withdrawing, then there are no continuous credits for 90 days as over the
    balance sheet date, or the credits are inadequate to cover the debited interest
    throughout the same time period.
    3. The purchase and discount of the bill –invoice leftovers late for exceeding 90
    days.
    4. Short term crops (season of the crop is up to a single year) – installment of
    capital or the borrowed money leftovers late for seasons of two crop.
    5. Long term crops – installment of capital or the borrowed money leftovers late
    for season of the crop.

    1.1. Priority Sector Lending
    The PSL is projected to offer institutional investors to those divisions and sections for which it
    is not easy to borrow credit. As per the standards of the priority division, the scheduled retail
    automotive industry had to provide 40% of them lends (estimated regarding ANBC) to the
    recognized priority divisions through the instructions of RBI. The procedures are reviewed
    irregularly through setting limits for subsectors and other qualifications for the recipient groups.
    If these targets are not achieved, automotive industry has to finance the building programs
    implemented by the government for the anxious sectors.

    1.2. Categories under Priority Sector
     Farming
     Small sized entities of MSME
     Export Credit
     Learning
     affordable housing
     Growth of a Social Infrastructure
     sustainable energy
     others

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  3. Performance of NPA of Non-Priority and Priority Sector of Public Sectors Banks in India

    Moreover, domestic automotive industry had been focused to promise that the global
    loaning to non-firm agrarian does not go down under the systematic regular of the past three
    years recital. All hard work should be directed to get to the grade of 13.5 per hundred through
    lending’s to the recipients who established the direct farming industry earlier. The valid
    systematic average outline for compute performance under PSL will be circulated each and
    every single year. The relevant system-wide standard value had been attained as 11.57 percent
    for 2017-16 of FY. The sector concerning institutions of financial are referred to as Non-Priority
    Sector lending and the credit is lending readily These sectors are exciting until now. Each and
    every time the money is attracted.

    2. ANALYSIS OF LITERATURE
    Kohli’s (1997) reveals that in spite of the fact that going to credit a program for PSL is influential
    in India.it is required to hold up to small-scale industries.
    Uppal’s (2011) presumes that the priority sector advance of all the banking groups is
    increasing. Regardless of raising advance, Indian automotive industry does not achieve target
    approximately fixed through Indian automotive industry had been opposing numerous harms
    like transaction cost, high NPAs, low profitable, and so on because of the PSL. It is obligatory
    to discover the answers for these issues otherwise growth of the Indian automotive industry will
    stop.
    Jaynal Ud-din Ahmed’s (2012) shows that the recovery state in agriculture and connected
    behavior in contrast to other urgency sectors is hopeless in three districts under thought. There
    is an improvement in the volume of NPAs through the rise of PSL. However, it cannot argue
    that PSL is the only factor in magnifying the size of NPAs in the area under research, other
    factors like ratio of credit-deposit, the ratio of NPA to advance, the ratio of capital adequacy
    are responsible correspondingly for improved NPAs.
    Dr. G Nagarajan., N. Sathyanarayana, Ali Asif, (2015) deliberate the relationship among
    NPA and recovery. Researchers found that the main reason for the NPA is writing off faulty
    loans and bad loans are superior in the case of PSL in comparison to Non-PSL.
    ShabbirNajmi, MujooRachna, (2015) deliberate the relationship among public and private
    automotive industry NPA. The author deduced that the public automotive industry’ NPA is
    higher than the private-sector automotive industry because the PSL of public is higher when
    compared to the private automotive industry.

    2.1. Objectives of the Proposal
     To examine the inclinations in the NPA of the sector which concerns institutions of financial
    and priority sectors of PSB.
     To discover the major association among the NPA of Priority Sector and entire NPAs of PSB.
     To discover the major association among the NPA of the sector which concerns institutions of
    financial and the entire NPAs of PSB.
     To discover the influence of the gross advances over the entire NPAs of PSB throughout the
    research period.

    2.2. HYPOTHESIS
     Ho1: There is no major association among the entire NPAs and the NPA of Priority Sector.
     Ho2: There is no major association among the entire NPAs and the NPA of the sector which
    concerns institutions of financial.
     Ho3: There is no major dissimilarity in the size of the influence of Gross Advances over the
    entire NPAs.

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  4. Dr. C. Ganesan, Dr. M. NirmalDev and J. Sherli

    3. RESEARCH METHODOLOGY
    The existing research had been directing over the data which is gathered by non-users. These
    are collected from the RBI website for a duration of 12 years, i.e., between 2007 and 2018. the
    package of SPSS had been employed to examine the tools such as correlation, ratios,
    Regression, t-test which are employed to examine the statics.

    3.1. Data Analysis and Interpretation
    Table 1: Priority and Non-Priority Sectors NPAs in Public Sector Automotive Industry in India

    3.2. Objective: 1
    This table exposes the NPA in sector-wise of PSB for 12 years among 2007 and 2018. It
    describes that the percentage of the NPA of priority sector is greater when compared to previous
    among 2007 of FY and 2013 of FY and viewed as a fall in 2014 of FY and it is fixed to go
    down till 2018 of FY. In the case of NPA of the sector which concerns institutions of financial,
    it is continued to fall between 2007 of FY and 2011 and it was detected as stable between 2011
    of FY and 2013 of FY and from 2013 of FY it sustained to rise significantly between 45.85
    in 2013of FY and 76.7 in 2018 of FY.

    3.3. Objective: 2
     Ho1: There is no major association among the entire NPAs and the NPA of Priority Sector.
     H11: There is a major association among the entire NPAs and the NPA of Priority Sector.
    The association among the NPA of Priority Sector and entire NPAs had been discovered as
    0.963. These specify a higher degree of a positive association among the entire NPAs and the
    NPA of Priority Sector. The mean variances among the two variables had been attained as
    1164.834, and the estimated value of t-test had been attained as -2.637. The p-value had been
    attained as 0.023 where p is smaller than 0.05. Later the H0 or null hypothesis had been
    excluded. This result proves a strong association among the two variables. As a result, here is
    a rise in both the entire NPAs. And the NPA of the priority sector.

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  5. Performance of NPA of Non-Priority and Priority Sector of Public Sectors Banks in India

    3.4. Objective: 3
     Ho2: There is no major association among the NPA of the sector which concerns institutions of
    financial and the entire NPAs
     H12: There is an important association among the entire NPAs and the NPA of the sector which
    concerns institutions of financial.
    The correlation among the entire NPAs and the NPA of the sector which concerns
    institutions of financial had been discovered as 0.997 from the statistical test. These specify a
    higher degree of optimistic association among the entire NPAs and sector which concerns
    institutions of financial. The mean variances among the two variables had been attained as
    516.0248 and the estimated values of t-test had been attained as -5.169, and the p-value had
    been attained as 0.000 where p is smaller than 0.05. Later H0 or null hypothesis had been
    excluded. There is a stable association among the two variables. As a result, there is a rising in
    both the entire NPAs and the NPA of the sector which concerns institutions of financial.

    3.5. Objective: 4
    Table 2: Gross Advances and Gross NPAs in Public Sector Automotive Industry in India (Amount In
    ` Billion) As On March 31st

     Ho3: There is no major difference in the size of the force of Gross Advances over the entire
    NPAs.
     H13: There is a major dissimilarity in the size of the influence of gross advances over the entire
    NPAs.
    The numerical test results of association among the entire NPA and Gross Advances had
    been attained as 0.841. These specify a higher degree of a positive association among the entire
    NPA and Gross Advances. As a result, there is a rise in both gross advances and the entire
    NPAs.
    The adj R2 had been attained as 0.679 from the regression test. These specify the weakening
    model which predicts the dependent variable of entire NPA had been described through 68%
    of the gross advances and enduring had been described through other factors. Here p is not

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  6. Dr. C. Ganesan, Dr. M. NirmalDev and J. Sherli

    greater than 0.05. These specify the overall regression model based on statistics significantly
    and forecasts the entire NPAs. Here the H0 or null hypothesis had been rejected. So that there
    is no dissimilarity of size in the size of the influence of gross advances over the entire NPAs of
    PSBs.The regression equation had been expressed as entire NPAs which is equal to -866.637 +
    .071(Gross Advances).

    4. FINDINGS
     The NPA of priority sector of PSB had been raised among Rs 215.36 of billion at the ending of
    2007 March and Rs 1258.09 of billion at the ending of 2018 March. The percentages of NPA
    of the Priority sector of PSB had been declined from 2014.
     The NPA of the sector concerning institutions of financial of PSB had been raised among Rs
    254.94 of billion at the ending of 2007 March and Rs 4141.48 of billion at the ending of 2018
    March. The percentages of NPA of the Priority sector of PSB had been superior since 2014
    when compared to the previous year.
     There is a definite association among the NPA of entire and the Priority Sector and a strong
    relationship among the NPA of entire and sector which concerns institutions of financial.
     Both the NPA of non-Priority and Priority Sector are fundamental entire NPAs of PSB.
     A positive association among the entire NPA and Gross Advances and these are crash
    considerably over the entire NPAs of PSBs.

    5. CONCLUSION
    The major key issue for the system of banking in India is the NPA. The giving of the division
    of priority, NPAs are higher than 50% in entire NPAs until the year 2013. After that, this was
    declined progressively. NPA of the sector which concerns institutions of financial hovers 50%
    approximately after the year 2013.NPA of sector which concerns institutions of financial is
    raised progressively throughout the period. Through the perceptions of these researches, both
    the NPA of the sector which concerns institutions of financial and priority sectors display the
    significant influences over entire NPAs of PSB. But the contribution of NPA of the sector which
    concerns institutions of financial had been discovered as higher when compared to NPA of the
    priority sector of entire NPAs. As a result, the gross advances contain a significant influence
    over the entire NPAs of Indian PSB. In a shorter period, falling whole NPAs is difficult for
    automotive industry. Therefore, automotive industry should recognize which category
    contributes NPAs under non-priority and priority sectors which concern entire NPAs. Hence,
    the government and automotive industry should take efforts to reduce the NPA in sector-wise.

    REFERENCES

    [1] Master Circular –Prudential norms on Income Recognition, Asset Classification and
    provisioning pertaining to Advances, 2017.

    [2] R K Uppal “Priority sector advances Trends, issues and strategy‟, Journal of Accounting
    and Taxation, 1(5), 2011, pp 89.

    [3] R.Shenbagavalli, S.Senthilkumar and Dr.T.Ramachandran, A Strategy to Manage the Npas
    of Public Sector Banks, International Journal of Management (IJM), Volume 4, Issue 3,
    May- June (2013)

    http://www.iaeme.com/IJM/index.asp 259 editor@iaeme.com

  7. Performance of NPA of Non-Priority and Priority Sector of Public Sectors Banks in India

    [4] N. Goyal, R. Agrawal, and Agrawal, “A study of the effect of priority sector lending (sector-
    wise) on Non-Performing Assets of India commercial automotive industry,” International
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    [5] D.Nagarajan, Sathyanarayan, and A. A. Ali, “Non-Performing Asset is a threat to India
    Banking Sector- A comparative study between priority and non-priority sector lending in
    public sector automotive industry”, International Journal of Advanced Research in
    Management and Social Sciences, 2(11), 2015, pp 39.

    [6] Dr. V. Antony Joe Raja and V. Vijayakumar, A Study on Stress Management among the
    Different Type of Working Employees of Banking Sector with Skill Development
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    Management, 8(1), 2017, pp. 13–17.

    [7] B. Pandya, “Impact of priority sector advances on bank profitability: Evidence from
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    [8] Dr. C. Mahadeva Murthy and Prof. S.N. Pathi, An Assessment of Risk Management in
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    http://www.iaeme.com/IJM/index.asp 260 editor@iaeme.com

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