Scheduled Commercial Banks Research Articles

Impact of institutional credit on agricultural productivity in India: A time series analysis

The institutional credit has always been perceived as a critical factor for agricultural development in India through complementing working capital, easing liquidity and investment constraints. The present study has examined the trends and regional variations in institutional credit flow to agriculture in India for the period 1991–92 to 2016–17 using compound annual growth rate. Further, impact of institutional credit on agricultural productivity was also assessed using panel data regression. The study is based on the secondary data collected from various published sources. Results indicated that institutional credit to agriculture in real terms has registered a significant positive growth during the past four decades and the highest annual growth was observed during 2001–02 to 2010–11. Scheduled commercial banks have emerged as the dominant source of agricultural credit. However, cooperative banks are still the major sources of production credit. Regional analysis showed that southern states had access to highest production and investment credit per hectare, while eastern and northeastern states had the least credit outreach per hectare. Panel data regression model testified that institutional credit has a significant and positive impact on agricultural productivity. Therefore, the study has suggested for better access to credit of smallholders especially in eastern, western and north eastern states through simplification of procedures.

AN ANALYSIS OF NON PERFORMING ASSETS OF SCHEDULED COMMERCIAL BANKS IN INDIA

AN ANALYSIS OF NON PERFORMING ASSETS OF SCHEDULED COMMERCIAL BANKS IN INDIA

Efficiency Evaluation of Scheduled Commercial Banks in terms of Lending to Agriculture and Financial Health in Punjab

Efficiency Evaluation of Scheduled Commercial Banks in terms of Lending to Agriculture and Financial Health in Punjab

An Analysis of Non Performing Assets of Scheduled Commercial Banks in India

An Analysis of Non Performing Assets of Scheduled Commercial Banks in India

Sectorial Analysis of Npas in Nainital Bank Ltd, A Local Area Scheduled Commercial Bank in Uttarakhand

Sectorial Analysis of Npas in Nainital Bank Ltd, A Local Area Scheduled Commercial Bank in Uttarakhand

An Economic Analysis of Non-Performing Assets of Banks in India

Banking and Financial Institutions are the strength of any countries economy and which plays an important role to the progress to the country. With an increase in the prerequisite of banking systems in the trade and industry development progression, the major challenge that the Bank and the Financial Institutions are facing an increase in Non-Performing Assets. The Central Bank of India (RBI) instructed all the banks to stringent the loan process to avoid the increase in NPA, which is still peaking high every year. According to the credit rating agency CRISIL, the gross NPA (GNPA) has touched almost Rs. 8,06,412 crore as on 31.3.2019 (provisional data). As per RBI provisional data on comprehensive procedures, as on 31.3.2019, the cumulative amount of unrefined NPAs of PSBs and Scheduled Commercial Banks (SCBs) were Rs. 8,06,412 crore and Rs. 9,49,279 crore correspondingly. Numerous wise accounting norms with a focus to NPA have been introduced by the RBI to diminish the Non-Performing Assets. Consequently, to progress the financial health of a banking system Non-Performing Assets management has become an important assignment of the bank. Over the last five years, Government has engaged wide-ranging phases under its 4R’s approach of recognizing NPAs evidently, undertaking and improving value from strained books, recapitalizing PSBs, and transformations in banks and financial system to guarantee a liable besides spot less structure.

Impact of Camel Variables on Cost Efficiency of Indian Scheduled Commercial Banks

Impact of Camel Variables on Cost Efficiency of Indian Scheduled Commercial Banks

NPAs in Indian Scheduled Commercial Banks: Origination and Impact on Economy

Mounting non-performing assets (NPAs) in the Indian banking sector has been drawing the attention of policymakers, economists, academicians, and other stakeholders. More particularly, during the last ten years, the rise in NPAs of banks has sent the alarming bell both to the Reserve Bank of India and the Government. Per a few studies, one of the root cause for the huge and gigantic rise in NPAs is the 2008 global financial crisis besides lending to Priority sector. The necessity of provisions and high funding costs has also caused an increase in NPAs while bringing down the profitability of banks. Hence, the consequent impact of NPA includes poor recycling of funds due to the weak deployment of credit which potentially could thwart the financial soundness of the credit system. Higher NPAs not only shakes the confidence of investors, depositors, lenders, etc., but also imperil liquidity, solvency position, profitability, capital adequacy ratio, and so on. A few measures that are required for management of NPAs like the establishment of monitoring department, reformulation of banks’ credit appraisal techniques, among others. The paper examines the trends of NPAs and the factors responsible for mounting NPAs in the banking sector from non-identical aspects. The use of secondary sources of data from authentic websites of RBI, Finance Ministry, and Banks has been made.

Liquidity Risk Analysis in Scheduled Commercial Banks

Liquidity risk is the bank’s incompetence to meet the financial obligations on due date at rational cost and without experiencing undesirable losses. It is essential that banks should adhere to prudent liquidity risk management framework to avoid insolvency, bankruptcies and to ensure healthy and stable financial position. It also facilitates the banks to reduce the possibility of adverse situation developing. This study examines the liquidity risk management of scheduled commercial banks by applying stock approach i.e., liquidity ratios. This paper assesses the liquidity risk that the SCBs are exposed to spread over a period from 2005-2015 in order to identify effective measures to mitigate the risk. The findings from the study revealed that SCBs has better liquidity risk management framework in practice.

Financial Performance of Banks in India: Are Banks Sound Enough to be Banked Upon

The seemingly untamable Non-Performing Assets are leading the Indian banks towards a highly unstable environment. The financial soundness of the banks is mandatory for any economy considering it is one of the most significant and a pre-requisite of a stable economy. The present study examines the financial performance parameters of banks with a probable variation among public and private sector banks for a period between 2005 and 2018. The study is divided into three sections. The first section studies the financial performance of the Scheduled Commercial Banks (SCBs), Public & Private Sector Banks in three identified time bands of last thirteen years. The second section assesses the probable variation in asset quality among Private and Public Sector Banks through statistical inferences. The third section finally examines the probability of variations in asset quality in the three time bands identified in the study. The study concludes a very high volatility among the SCBs during the said period and found Private Sector Banks to be more consistent and bore better stability parameters compared to Public Sector Banks. The statistically inferred results through T-test, Welch test and Post-Hoc test support a significant variation among both the sectors along with presence of significant variations in asset quality.

Recovery Of Npas Through Debt Recovery Channels In Indian Banks - An Analysis

Indian Banking industry is grappling with the colossal Non-performing assets in the recent past. The amount of stressed advances was enlarged and the trend of NPA recovery remains sluggish in the Scheduled Commercial Banks (SCBs). According to the RBI’s Report on Trend and Progress of Banking in India (2016), “Annual recovery rate of NPAs of SCBs has been steadily declining for the past 12 years and hit the lowest level of 20.8% during 2016-17”. Existing recovery channels, namely, Debt Recovery Tribunal (DRT), Lok Adalat and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(SARFAESI Act 2002) have witnessed the reduction in their rate of NPA recovery. In this study, an attempt is made to examine the effectiveness these channels in the reduction of NPAs. The effectiveness of the recovery channels is analyzed on the basis of the amount of NPAs recovered during the period of 13 years from 2005 to 2017. To understand the significant difference in the trend of NPA recovery among the existing channels, statistical test of Analysis of Variance (ANOVA) has been used.

Development of Commercial Banks during Pre and Post Globalization Era in India: An Analysis

Banking is an old business and a central pillar of Indian society. Money lending activities in India had traced back to the Vedic period (according to Central Banking Enquiry Committee-1931). The professional banking system existed long ago- Manu Murthy, Kautilya’s Arthashastra- in India. Initial stage growth of Indian banks was very sluggish and also experienced episodic failure between 1913 and 1948. The banking sector in the pre-reform period was experienced poor performance and caught into deep crisis due to excessive loans in comparison to total deposits having a ratio more than 50 per cent consisting of about 90 per cent of all commercial banks which posed a significant threat to the stability and transparency of the financial system. During those days, the public had lesser confidence in the banks. Government at this juncture decided to introduce comprehensive economic reforms. Environmental and regulatory changes have made this sector more competitive and improved the health of the Indian banking sector. The study's main purpose is to analyse the growth of India scheduled commercial banks during pre and post-globalisation period in three phases viz., a)Early Phase of growth of the CBS: 1936-1969, b) Period of Social Control:1967 -1991 and c)Phase of Globalization:1991-2018. The present study is based on, purely, secondary data.

Financial Inclusion and Micro and Small Enterprises Growth

The persons or firms linked with the either way of financial transaction are known as participants of financial inclusion financially included otherwise financially excluded. The normal way of flow of money is routed through banking system, post office, insurance and FBFC channels. The MSE is financially included with operation of saving account, current account or loan account with banks; financial transaction with other government financial agencies as well as some private sector NBFC. Recent initiatives of Government of India and Indian Banking system have accelerated the performance of financial inclusion through various schemes such as MNREGS, Jandhan, Atal Pension Yojna, MUDRA and so forth. The MUDRA scheme, credit scheme for MSE, credit scheme for KVIC & Coir firm, Kishan credit card, General Credit Card are exclusive financial inclusion scheme for MSE credit. Out of total size of MSEs, less than forty percent units are getting benefits from schedule commercial banks; as on 2017–18 only Rs. 1337 billion credit facilities given by the lending institutions. The paper examines the current status and potential prospect of financial inclusion at given numbers of units and employment.

A survey on bankers’ perception of corporate social responsibility in India

PurposeThe purpose of this paper is to understand the perception of the bankers towards an integrated approach to corporate social responsibility (CSR) initiatives in a strategic way of achieving sustainable growth of the banking sector. The paper additionally provides insights into different CSR initiatives and their implementation process in the context of scheduled commercial banks (SCB) of India.Design/methodology/approachThe study is exploratory and endorses the qualitative approach of primary research methodology by adopting a non-random stratified sampling method. The localist approach of the face-to-face interview has been applied to collect the data from 26 elite class respondents from 13 SCBs. The interview method was semi-structured and open-ended. The conformity, trustworthiness, credibility, transferability, dependability test of the study have ensured the quality of the data.FindingsThe study reveals that the bankers perceive CSR as a moral obligation for the benefit of the society, beyond the regular banking operations. Further, the study comprehends that the CSR initiatives play a vital role in establishing the bank's image, brand and reputation, as well as, building a strong bond of trust among the employees and the bank management. Besides, CSR activities facilitate to cultivate a better culture by improvising in the quality of customer service for achieving competitive advantages.Research limitations/implicationsThe findings of the study represent a significant contribution to CSR theory from the interface of banking and society. Significantly, the results confirm that CSR initiatives play a vital role in building trust and minimise the gap between the employees and the management of the bank. The banks can increase its acceptance in the society and achieve competitive advantage by integrating CSR objectives with the business objectives to strengthen the corporate personality and brand.Practical implicationsThe study will help practitioners to develop the social identity of their firm to achieve competitive advantages in long-run. The bankers can channelise their limited resources while planning, designing and the implementation of different CSR activities with the overall goal of the bank in a cost-effective way. The study is confined only to public and private SCBs and limited to the geographical scope of one state in India. Therefore, further exploration may be carried out by considering other banks and geographic regions in India and different cross-cultural settings.Originality/valueThe originality of the study lies with the in-depth analysis and quality check of the data. The results can contribute significant value to the qualitative method of conducting research.

Threshold Effect of Bank-specific Determinants of Non-performing Assets: An Application in Indian Banking

The article investigates role of bank-specific factors on non-performing assets (NPAs) in Indian banking system in a panel threshold framework (Hansen, 1999, Journal of Econometrics, 93(2), 345–368), using an unbalanced panel of 82 scheduled commercial banks over the period of 1995–1996 to 2010–2011. We consider capital to risk-weighted assets ratio (CRAR) and credit growth as alternative threshold variables (and regime dependent) along with relevant bank-specific variables treated as regime independent. Findings reveal that CRAR exerts negative and significant impact on NPAs once it reaches a critical threshold. Possible implication is that banks extend less risky loans in a high CRAR regime than in low CRAR regime that helps reduce NPAs. With credit growth as threshold as well as regime dependent, we observe statistically significant non-linear effect of credit growth on NPAs. Beyond threshold, credit growth exerts significant negative effect on NPAs that may imply that banks extend good quality loans. However, we cannot rule out the possibility of evidence of ‘ever-greening hypothesis’ of bad debts in Indian banking, that is, banks just roll over previous bad debts into fresh performing loans. JEL Classification: G21, G28, C13, C33

Financial Efficiency Evaluation of Indian Scheduled Commercial Banks

The main objective of the article is to analyze and evaluate cost, revenue and profit efficiency scores of Indian scheduled commercial banks (SCBs) in India during 1991–1992 till 2012–2013 by the application of data envelopment analysis (DEA)—a nonparametric approach. The results show that Indian SCBs have profit, revenue and cost efficiency of less than 1 during both the reformatory as well as post-reformatory era depicting that banks are not able to maximize their revenues and minimize their costs simultaneously in order to enhance their net effect. During reformatory and post-reformatory era, SCBs are more efficient in generating revenues and profits rather than in using their resources efficiently reflecting a high level of cost inefficiency. Overall, the results depict that Indian SCBs exhibit higher efficiency scores in reformatory era than in post-reformatory era.

Determinants of The Revenue Efficiency of Indian Scheduled Commercial Banks

Research aim: The purpose of this paper is to investigate the internal (bank-specific) and external (macroeconomic and industry-specific) factors thataffect the revenue efficiency of banks. Design/Methodology/Approach: The paper considers all the Scheduled Commercial Banks operating in India over a period of 22 years from 1991-92 to 2012-13. Due to the non-availability of information for certain variables the sample varies across years. The revenue efficiency of banks is calculated by employing a non-parametric approach, namely, Data Envelopment Analysis (DEA). To determine the factors affecting revenue efficiency, the Panel Data Tobit model, as proposed by James Tobin (1958), is used. It is applied due to the censored nature of the dependent variable, i.e., the efficiency scores, which range from 0 to 1. Research finding: The results indicate that the Capital Adequacy Ratio (CAR), Net Non-Performing Assets to Net Advances (NPANA), Operating Expenses to Total Expenses (OETE), Business per Employee (BPE), Return on Assets (ROA), Size (LNTA), and Inflation (INF) reveal a negative relationship with the revenue efficiency scores. Equity to Total Assets (ETA), Total Loans and advances to Total Deposits (TATD), Total Investments to Total Assets (TITA), Total Expenses to Total Income (TETI), Spread to Total Assets (STA), Non-Interest Income to Total Income (NIITI), Cash Deposit Ratio (CDR), Time Dummy (TD), Public Dummy (PUBD), and Log of Gross Domestic Product (LNGDP) disclose a positive relationship for the revenue efficiency model. Theoretical contribution/Originality: This study is among the few that examine factors affecting the revenue efficiency of Indian Commercial Banks as limited research is available in the Indian Banking Literature. Practitioner/Policy implication: The empirical findings of this article clearly provide assistance to bank managers in understanding the factors that positively or adversely affect the revenue efficiency. It specifically recommends that managers focus on credit risk management and asset liability management. Research limitation/Implication: The present study may be extended by considering other efficiency parameters as dependent variables. Various risks faced by banks and off-balance sheet activities can also be taken into consideration. The impact of other events, such as global financial recession, might also be captured for future research. Keywords: Revenue Efficiency, Bank Specific Variable, Industry Specific Variable, Data Envelopment Analysis, Panel Tobit Regression Analysis, Indian Scheduled Commercial Banks Type of manuscript: Research paper JEL Classification: G2, C24, D61

English

Banking in modern times is the kingpin of all economic activities. It is instrumental in shaping the economic destiny of a country. Banks are considered as the nerve-centres of economics and finance of any nation and the barometer of its economic prospective. Since the banks have stupendous investment potential, they can make a significant contribution in eliminating poverty and problem of unemployment. It can bring about a progressive reduction in inter-regional/ state, inter-sectoral and inter-personal disparities in India. The banking sector is facing the problem of rising NPAs at present. The purpose of the study is to measure the impact of NPAs on the profitability of Indian scheduled commercial banks for the period of ten years. The study discusses the impact of NPA on the profitability in India scheduled commercial banks for the past ten years from 2007-2008 to 2016-2017. The ratio analysis, regression analysis, tests of equality of means, cross correlogram with the help of E-Views 10 software were used to identify the variables pertaining to NPAs on the profitability of the banking sector.  There is an increasing trend of NPAs of Scheduled commercial banks in India.   Key words: Gross NPA, Net NPA, gross advances, net advances, total assets and profitability.

Financial Inclusion and Micro and Small Enterprises Growth

The persons or firms linked with the either way of financial transaction are known as participants of financial inclusion financially included otherwise financially excluded. The normal way of flow of money is routed through banking system, post office, insurance and FBFC channels. The MSE is financially included with operation of saving account, current account or loan account with banks; financial transaction with other government financial agencies as well as some private sector NBFC. Recent initiatives of Government of India and Indian Banking system have accelerated the performance of financial inclusion through various schemes such as MNREGS, Jandhan, Atal Pension Yojna, MUDRA and so forth. The MUDRA scheme, credit scheme for MSE, credit scheme for KVIC & Coir firm, Kishan credit card, General Credit Card are exclusive financial inclusion scheme for MSE credit. Out of total size of MSEs, less than forty percent units are getting benefits from schedule commercial banks; as on 2017-18 only Rs. 1337 billion credit facilities given by the lending institutions. The paper examines the current status and potential prospect of financial inclusion at given numbers of units and employment.

An MDA approach for early identification of firms requiring corporate debt restructuring

When firms fail, their creditors usually suffer losses, so anything which increases the likelihood of corporate failures can heighten the risks faced by banking and financial system. This brunt was faced by banks and financial institutions in the beginning of 2000s when Indian corporates faced increasing challenges in meeting their debt servicing obligations. As high corporate debt overhang poses a risk to banks‘ balance sheets and financial stability due to increasing institutions witnessed an increasing trend. Although, huge amount of debt has been restructured by banks over the years, the data by RBI in 2015 indicated that the assets quality of Scheduled Commercial Banks (SCBs)was continuously deteriorating. Therefore, it makes sense to devise a system so that it is possible to identify firms that will need debt restructuring support due to high risk of being financially distressed in near future and thereby. The objective of this paper is to identify variables that are able to estimate the probability of a company of being financially distressed. The results indicate that profit before interest & taxes to sales, price to book value, debt-equity ratio, current ratio and asset turnover ratio were most significant predictors for firms requiring debt restructuring.