Journal
| Title | A Study on Non-Performing Assets of Indian Bank With Reference to Priority Sector Advances | |
| Author's Name | G. Vadivalagan and B. Selvarajan | |
| ISSN | 0974-7281 | |
| Page(s) | 1-16 | |
| Volume No. | 3 | |
| Issue Month | January 2011 | |
| Keywords | NPA, Agricultural Sector | |
| Abstract | The health of a vibrant economy largely depends upon a healthy banking system which in turn depends upon its effective credit management. Loans or credit portfolio of the banks contributes the major income to the banks. The high level of NPA develops an uncomfortable financial position as it affects the income generation on one side and leaves little funds for recycling on the other side. Indian banks contribute towards economic development of the country by subsidising the business activities undertaken by entrepreneurs in the areas which are considered “Priority Sector” by RBI. The present paper focuses on NPAs in priority sector advances of Indian Bank. Priority sector advances have been studied under three broad headings, viz., • Agricultural sector, • Small Scale industries sector. • Other priority sector. Agricultural Sector forms the single largest and prime component of total priority sector. As per RBI guidelines, the prescribed lending target to agricultural sector is 18 percent of net bank credit. Thus bank credit for agriculture takes a sub-limit of 18 percent within the 40 percent credit target to total priority sector. RBI has not fixed any specific target for banks to grant advances for SSI units, but it is covered under the priority sector target of 40% of net bank credit of the bank. Indian Bank has disbursed more advances under other priority sector for the improvement of activities under ISB (Industries, Services, and Business) sector and for the upliftment of weaker section people. Indian Bank has more NPAs in other priority sector advances. In Indian Bank the reduction of NPAs in agriculture and SSI sector is better when compared to the NPA reduction in other priority sector advances. While the total priority sector advances has increased by 129% in five years, the NPA reduction has been registered as around 64% during the same period. However the Bank has exhibited its utmost control on NPA and has taken excellent steps to contain NPAs. Indian Bank has given priority to the growth of SSI among the segments of priority sector advances. Thus it has disbursed more loans under SSI without reducing the share of advances to agriculture sector. The NPA reduction is more in agriculture and SSI sector. Indian Bank has exercised considerable thrust in the control of NPAs both in agriculture and SSI sector. Similar control is not exhibited in case of NPAs in other |
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