Final Project Banking law
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Transcript of Final Project Banking law
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Nirma University
Institute of Law
VII Semester B.A.LL.B.(Hons.)Course
Submiss ion of F inal ro!e"t
on t# e $o%i" of
&Criti"al analysis of Non erformin'
Assets an its ana'ement*
In t#e Course of Ban+in' an Insuran"e Law
As a %art o f "ont inuous eva luat ion s"#eme.
Submitte to, s. Ne#a C#o%ra
Submitte by, -u%al i ani (/0BAL/12)
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IN345
Sr. No. arti"ulars a'e No.
1. Ch- I: Introduction
Synopsis
05
06-08
2. Ch II: Defining the term on !erforming "ssets
0#-10
$. Ch III: %&ctors contri'uting to !"
11-12
(. Ch I): !re*enti*e me&sures to !"
1$
5. Ch ): !" +&n&gement- ,esoution
1(-15
6.
Ch )I: Concusion 16
i'iogr&phy 1/
D E C L A R A T I O N
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I Rupali Jani declare the work entitled Critical analysis of Non Performing
Assets and its Management being submitted to Nirma University for the project
in the subject of Banking Law is original and where the text is taken from the
authenticated books, articles or web articles, appropriate reference is given. It
is true in my best of knowledge.
Date : Rupali Jani
Roll No 09 BAL 018
VII Semester, (2012-13)
Institute of Law
Nirma University
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C E R T I F I C A T E
This is to certify that the project entitled Critical analysis of Non Performing
Assets and its Management submitted by Ms. Rupali Janifor the project work
in the subject of Banking Law embodies independent and original research
work carried out by her under my supervision and guidance.
To the best of my knowledge and belief, it is her original work submitted to fulfil
the project assignment for the Semester End Examination of seventh semester
of B.A.LL.B. Programme during the academic year 2012-13.
Date : Ms. Neha Chopra
Asst. Professor in Law,
Institute of Law,
Nirma University
Ahmedabad
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C#a%ter 6 I
Introu"tion
*er the ye&rs Indi&n '&ning industry h&s 'een dogged 'y on-!erforming "ssets
!"s34 the etent of hich *&ries from &nyhere 'eteen ,s.10004 000 to $0004000
crores &s reported 'y *&rious offici& &nd un-offici& sources. 7oe*er4 due to the
in&deu&cy of &ppropri&te eg& fr&meor4 profession& epertise &nd other f&ctors4 the
9enders h&*e not 'een *ery successfu in reco*ery of these funds from corpor&te &nd
other def&uters. on !erforming "sset c&n 'e defined &s & o&n or &n &d*&nce here
Interest or inst&ment of princip& rem&ins o*erdue for & period of more th&n #0 d&ys in
respect of & term o&n.
he Indi&n '&ning system h&s undergone signific&nt
tr&nsform&tion fooing fin&nci& sector reforms. It is &dopting intern&tion& 'est
pr&ctices ith & *ision to strengthen the '&ning sector. he pu'ic sector '&ns domin&te
the Indi&n '&ning system ith &most 82 percent m&ret sh&re in the tot& deposits &nd
&d*&nces of the industry. Se*er& prudenti& &nd pro*isioning norms h&*e 'een
introduced4 &nd these &re pressuri;ing '&ns to impro*e efficiency &nd trim don !"s
to impro*e the fin&nci& he&th in the '&ning system.1
1 www.indianjournals.com
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S7N8SIS,
,ecti*e of the present rese&rch is?
o critic&y e&mine th&t h&t &re the f&ctors contri'uting to !"s.
o critic&y o'ser*e th&t h&t &re the pre*enti*e me&sures to !"s.
7@!7
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,
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-4VI49 8F LI$4-A$U-4
In order to &ccompish the rese&rch or4 the rese&rcher h&s coected the m&teri&
from second&ry sources4 i.e. 'oos4 e'sites.
he or h&s 'een m&iny depended on the &n&ysis of the term !" &nd its
m&n&gent. esides the rese&rcher h&s *isited e'site of m&nup&tr&4 ind&4
heinonine4 in order to m&e &n &uthentic study of the topic.
+oreo*er4 the rese&rcher h&s re&d *&rious &rtices in order to underst&nd the &spect
of !" &nd its m&n&gement.
+oreo*er4 the rese&rcher h&s referred the fooing 'oo4 n&mey?
&ning 9& !r&ctise4 )oume 2 'y ,. . Aupt&4 +odern 9& !u'ic&tions4 2nd
editions.
9& of &ning egoti&'e Instrument4 "n introduction "*t&r Singh4
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C#a%ter 6 II
3efinition of t#e term NA
" !" is & o&n or &n &d*&nce here?
Interest &ndE or inst&ment of princip& rem&in o*erdue for & period of more th&n
#0 d&ys in respect of & term o&n4
he &ccount rem&ins Fout of orderG in respect of &n o*erdr&ftE c&sh credit
he 'i rem&ins o*erdue for & period of more th&n #0 d&ys in the c&se of 'is
purch&sed &nd discounted he inst&ment or interest rem&ins o*erdue for to crop se&sons in c&se of short
dur&tion crops &nd for one crop se&son in c&se of ong dur&tion crops.
C"
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Su'st&nd&rd "ssets 10 on tot& outst&nding '&&nce4 10 on unsecured eposures
identified &s su'-st&nd&rd 100 for unsecured Fdou'tfuG &ssets.
Dou'tfu "ssets 100 to the etent &d*&nce not co*ered 'y re&i;&'e *&ue of security.
In c&se of secured portion4 pro*ision m&y 'e m&de in the r&nge of 20 to 100
depending on the period of &sset rem&ining su'-st&nd&rd
9oss "ssets 100 of the outst&nding$
3 supra
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C#a%ter 6 III
Fa"tors "ontributin' to NA
In the e&ry 1##0s !Ss st&rted suffering from &cute c&pit& in&deu&cy &nd oerE
neg&ti*e profit&'iity. he p&r&meters set for their functioning did not pro>ect the
p&r&mount need for these corpor&te go&s. he '&ns h&d itte freedom to price products4
c&ter products to chosen segments or in*est funds in their 'est interest.
Since 1#/0s4 the SCs functioned &s units cut off from intern&tion& '&ning &nd un&'e
to p&rticip&te in the structur& tr&nsform&tions &nd ne types of ending products.
"udit &nd contro functions ere not independent &nd thus un&'e to correct the effect of
serious f&s in poicies &nd directions.
&ns ere not sufficienty de*eoped in terms of sis &nd epertise to regu&te the
humongous groth in credit &nd m&n&ge the di*erse riss th&t emerged in the process
In&deu&te mech&nism to g&ther &nd dissemin&te credit inform&tion &mongst commerci&'&ns
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In&deu&te Credit ,is +&n&gement
Di*ersion of funds 'y promoters
%unding of non-*i&'e pro>ects
I+!"C % !"S !
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,ee&se of Hifu Def&uterJs 9ist: ,I &so ree&ses & ist of 'orroers ith &ggreg&te
outst&nding of ,s.1 crore &nd &'o*e &g&inst hom '&ns h&*e fied suits for reco*ery of
their funds
,eporting of %r&uds to ,I he fr&uds done 'y the customer c&n 'e reported to
,eser*e &n of Indi& so th&t !" c&n 'e pre*ented 'y ,I.
orms of 9enderJs 9i&'iity fr&ming of %&ir !r&ctices Code ith reg&rd to enderJs
i&'iity to 'e fooed 'y '&ns4 hich indirecty pre*ents &ccounts turning into !"s
on &ccount of '&nJs on f&iure.6
,is &ssessment &nd ,is m&n&gement
,I h&s &d*ised '&ns to e&mine & c&ses of ifu def&ut of ,s.1 crore &nd &'o*e &nd
fie suits in such c&ses. o&rd of Directors &re reuired to re*ie !" &ccounts of ,s.1
crore &nd &'o*e ith speci& reference to fiing of st&ff &ccount&'iity.
,eporting uic mort&ity c&ses
Speci& mention &ccounts for e&ry identific&tion of '&d de'ts. 9o&ns &nd &d*&nces
o*erdue for ess th&n one &nd to u&rters oud come under this c&tegory. 7oe*er4these &ccounts do not need pro*isioning
C#a%ter 6 V
NA ana'ement : -esolution
6 supra
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term o&n. he Indi&n '&ning system h&s undergone signific&nt tr&nsform&tion fooing
fin&nci& sector reforms. It is &dopting intern&tion& 'est pr&ctices ith & *ision to
strengthen the '&ning sector. he pu'ic sector '&ns domin&te the Indi&n '&ning
system ith &most 82 percent m&ret sh&re in the tot& deposits &nd &d*&nces of theindustry. Se*er& prudenti& &nd pro*isioning norms h&*e 'een introduced4 &nd these &re
pressuri;ing '&ns to impro*e efficiency &nd trim don !"s to impro*e the fin&nci&
he&th in the '&ning system.
Biblio'ra%#y
Boo+s ,:
&ning 9& !r&ctise4 )oume 2 'y ,. . Aupt&4 +odern 9& !u'ic&tions4 2nd
editions.
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9& of &ning egoti&'e Instrument4 "n introduction "*t&r Singh4