Npa in Banks

Bank of Baroda is one of the leading commercial and retail banks of India, which increasing presence in foreign markets too.The bank holds a strong position in the Indian banking industry and witnessed a Y-o-Y growth of ~20% in its global business. The bank has been making continuous efforts to diversify its business and focus more on the areas like retail, MSME and agriculture credit. The bank holds a strong capital base too, with current Capital Adequacy Ratio standing at 12.28% under the BASEL III norms. The bank also saw a decline in its NPAs, although it is not quite sure that whether this trend is expected to be continued in future as well or not. Moreover, the bank’s management has stated the bank is going through the last phases of its restructuring programs, indicating that the

I would like to send my appreciation and gratitude to David La Rooy, who has supported my journey in making this dissertation possible to do. I would like to give thanks to all the students who have participated in this dissertation.

of this dissertation. I'm thankful for my supervisor who I have consulted to, John Cross who has

Bringing this dissertation to fruition was a long journey accomplished only because of the contributed efforts of many. I thank my committee—Vance Holliday, Jay Quade, Vic Baker, Barbara Mills, and Jeff Dean—for all their help, guidance, and encouragement. I feel lucky to have worked under the supervision of such an eminent group of researchers. I especially appreciate my advisor Vance Holliday, who was supportive of my decision to pursue an independent and initially unfunded project.

Objectives (Approx 100 words) What are your objectives (more specific detailed points) in undertaking this dissertation? (Objectives should clarify the aim)

I would also like to thank the members of the thesis committee ………… for their encouragement, comments and their

Banks are the most significant players in the Indian financial market. They are the biggest purveyors of credit, and they also attract most of the savings from the population. Dominated by public sector, the banking industry has so far acted as an efficient partner in the growth and the development of the country. Driven by the socialist ideologies and the welfare state concept, public sector banks have long been the supporters of agriculture and other priority sectors. They act as crucial channels of the government in its efforts to ensure equitable economic development.

This introductory chapter will briefly present the orientation, assumptions and methodologies of the dissertation to foreground the subsequent chapters. We start this chapter by introducing rationale and background of the research in Section 1.1 and

India’s banking industry is largely fragmented with more than half of the commercial banks being state-run entities. It has seen one of the biggest mergers of all time in the recent past with Kotak Mahindra taking over ING Vysya. While the Indian banking sector is still facing tough times, Kotak Mahindra’s merger with ING Vysya will help the former to expand their presence across India.

Apart from the reasons mentioned, the money market as well as capital market witnessed the presence of private moneylenders, landlords etc. They have acted as bankers for centuries and have amassed major wealth from people of India that adversely affected capital formation. The need for a better financial institution and credit infrastructure was thus felt necessary by the planning commission when the five-year plans were initiated.

Also, special thanks go out to Mario Ding and Janie LIU, who has been there at important times to bounce around ideas to give me a large number of suggestions and to assist me along this dissertation. She suggested many clear ways to design the structure of this dissertation.

ratios in their financial reports. The CAR is important to shareholders because it is an

The main aim of this report is to identify the key roles played by bank capital in the banking business. This report briefly outlines the main functions of bank capital and takes a brief look at the benefits of bank capital to the bank and the banking industry. It is hoped that from reading this paper a general understanding of the roles of bank capital in the banking business can be gained.

To add to the woos further poor valuations of the public sector bank stocks, are not helping matters either, and raising fresh equity has become difficult altogether. The public sector banks have been reluctant to tap the markets for increasing their capital levels. Hence the underperforming banks are now faced with the even a greater levels of challenge and are now constantly looking at newer ways of meeting their capital needs. Some of these poorly managed banks could any day slide below the minimum regulatory threshold of capital if they don't organize their finances together. A very recent example would be the united bank of India where the CAR dropped to a level of 9%. To avoid this situation the immediate need of the hour for all banks, and more specifically the public sector banks, is that capital must be conserved and utilized as efficiently as possible. 

The Reserve Bank of India (RBI) is India’s central bank. Though public sector bank’s currently dominate the banking industry, numerous private and foreign banks exist. India 's government-owned banks dominate the market. Their performance has been mixed, with a few being consistent profitable. Several public sector banks are being restructured, and in some the government either already has or will reduce its ownership.