National Institute of Bank Management, Pune

(An Autonomous Apex Institute Established by RBI & Banks)

( Registered as a Society under the Indian Societies Registration Act 1860
Recognized as a scientific and Industrial Research Organization by Department of Scientific
and Industrial Research, Ministry of Science and Technology, Government of India )

Latest Issue Highlights

Vinimaya Vol. XLI  No. 3 October-December  2020

Articles

  •  Management of Non-Performing Assets of Indian Banking Sector and Recent Pandemic Impact
    - Rajeev Kumar

The objective of the article is to explain the concept of Non-Performing Asset in Indian context for complete understanding of the subject. The development of different phases in regard to Income Recognition and Asset Classification (IRAC) norms in India, especially after liberalization and implementation of Narsimham committee report. It also discusses about present deep routed problem of NPAs in Indian banking industry and more particularly in nationalized banks. It also gives an analytical view on the adverse impact likely to happen due to COVIDS 19 on asset/portfolio quality, as per research/study done by India Rating & Research recently and preventive/remedial actions to be taken to curb this menace.

  •   Estimating Probability of Default                                                                      
    - Ragesh M

Estimation of Probability of Default (PD) of borrowers is important for all key credit decisions viz. sanction, pricing and provisioning. In this article, the author presents statistical models based on logit and probit regression to predict default using 10 ratios (Revenue Growth, EBITDA Margin, Net Margin, Return on Equity, Debt Equity Ratio, Inventory Turnover, Debtors Turnover, Payables, Cash Conversion Cycle and Sales to Net Fixed Assets) popularly used for credit appraisal. The results of both models indicate that EBITDA Margin, Net Margin, Debt to Equity Ratio and Return on Equity have a larger say in determining whether an obligor defaults or not than other ratios studied. On applying the models, if the user gets 1 or close to 1, the borrower has high probability of default and when it is zero or close to zero the borrower has low probability of default. The models need to be recalibrated for using in pricing and provisioning decisions.

  • Rising NPAs and Sinking Indian Banking Sector
    - Ruchi Mehrotra, Simran Saluja & Kavya Maheshwari

A banking sector is a centralized financial system under the central bank regulatory framework. Banking sector in an economy performs multitasking functions in terms of maturity, liquidity and risk management. A non-performing asset (NPA) is a credit facility for which principal and/or interest has remained outstanding for more than a 90 day period and is used as a tool to measure the financial health of the bank. The study is qualitative as well as quantitative descriptive analysis which has data sourcing from secondary sources like Reserve Bank of India and other 12 banks websites. The paper takes into account the measures taken by the Government under the ''Aatmanirbhar Bharat Abhiyaan' and Reserve Bank of India under the 'COVID-19 Regulatory Package' in order to make Indian economy fight against the COVID-19 pandemic situation. The paper discusses measures taken by Parliamentary committee in 2015 which proposed stringent actions for NPA and recovery mechanisms after covering the NPA data fact sheet of RBI for the decade from 2009-2019 of both public and private sector banks. Five public sector banks, viz, SBI, Canara, Bank of Baroda (BoB), Bank of India (BIO) and IDBI Bank have been studied along with five private sector leading banks viz. HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and Yes Bank. data of Gross NPA, Net NPA and CAR – Capital adequacy ratio have been studied by specially looking at pre/post-merger scenario of ING Vyasa Bank with Kotak Mahindra Bank. The paper in the end tries to render suggestions to overcome this problematic situation of rising NPAs from a macro-level perspective.

  • Examining the Potato Cold Storage Finance: A Banker's Perspective             
    - Neeraj Yadav

Cold storage is an essential element in the preservation of potato crop, which is an integral part of the daily diet in an Indian household and a source of livelihood for millions of farmers in India. Entrepreneurs desirous of setting up cold storage require term loan for part financing their CAPEX requirement. The cold storages for potato crop have a unique business model, and hence bank officials dealing in credit need to understand, it to make an informed decision. The article explores the need for cold storages and discusses various parameters necessary to be examined while financing cold storage. It addresses risk associated with the business and mitigations available to the bankers.

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