12-11-2012, 12:26 PM
NON-PERFORMING ASSETS WITH REFERENCE TOCAPITAL LOCAL AREA BANK
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CAPITAL LOCAL AREA BANK
Capital bank is the largest local area bank operating in districts of Jalandhar, Hoshiarpur and Kapurthala in Punjab
This bank is known for bringing modern facilities in rural areas at low cost.
There are total 24 branches of the bank.
- 13 are in rural areas
-9 are in Semi urban areas
-2 are in urban areas.
MOTIVES OF THE BANK
To bring banking facilities in rural areas at low cost.
Extension of banking services to unbanked villages.
Contribute towards employment generation.
One stop financial hub in rural and semi urban areas.
NON PERFORMING ASSETS
It means a loan or account of an borrower, which has been classified by the bank as substandard, doubtful or loss asset.
An asset will become NPA, if the borrower fails to pay the dues in the form of principal and interest for a period of 90 days.
The Installment of principal or interest remains overdue for two crop seasons for short duration crops.
The Installment of principal or interest remains overdue for one crop season for long duration crops.
( Overdue- any amount due to the bank is ‘ overdue’ if it is not paid on the due date as fixed by the bank)
TYPES OF NPA
There are 3 types where NPA is classified based on the period for which the asset remained nonperforming:
Sub-standard Assets:- With effect from 31 March 2005, a substandard asset is one which has remained NPA for a period of less than or equal to 12 months For this category bank has made 15% provision of funds from their profit to meet the losses generated from NPA.
Doubtful Assets:- Under doubtful there are three sub categories:
a) Doubtful up to 1 Year- Provision of 25% is created by bank.
b) Doubtful from 1 to 3 years- provision of 40% created.
c) Doubtful for more than three years- 100% provision is created.
STEPS TAKEN BY RBI
The RBI has also taken several constructive steps to reduce NPA:
LOK ADALATS: these have been set up for recovery of debts in doubtful and loss category .
DEBT RECOVERY TRIBUNAL: It is the special court established by central government for the purpose of bank or any financial institutions recovery.
The judges of this court are the retired judges of high court.
In this court only the recovery cases of 10 lakhs and above can be filed.
CDR: it is a non statutory mechanism institutionalized in 2001 to provide timely and transparent system for restructuring corporate debts of Rs 10 crore or above