A Study on Recovery Management With Reference to the Federal Bank Limited
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Date
2016-09-07T12:37:03Z
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Abstract
This project entitled “A Study on Recovery Management with reference to Federal Bank Limited” involved understanding the various recovery procedures of the bank to avoid assets of the bank converting to NPA. The primary objective of the project was to ascertain how effective the recovery procedures of the bank are by understanding the movement of NPA over the last 5 financial years (2011-2015).
The economic progress of a nation and development of banking is invariably interrelated. Maintaining asset quality and profitability are critical for banks survival and growth. A major threat to banking sector is prevalence of Non-Performing Assets (NPAs).
As per guidelines issued by the RBI, banks should classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter. The major implication of NPA on the bank is that it will effectively have lesser funds to advance i.e. the funds on which the bank can potentially earn interest income. And also high level NPA will require greater provisioning which will affect the profitability of the bank. Hence it is very important to take various measures against an advance converting to NPA.
The study was an analytical study based on financial statements provided by the bank. The tools used for analysis were ratio analysis and trend analysis. The study shows that Federal Bank’s Gross NPA has reduced over the last 5 years and also the Net NPA has decreased due to the increase in provision to cover for the NPA. Suggestions have been made to improve the recovery of the loans by prudent lending procedures and early recognition of loans slipping into NPA which will help in taking timely action.
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Devarapu Srilakshmi, A Study on Recovery Management With Reference to the Federal Bank Limited, 13VFC24031