Page 51 - Banking Finance October 2015
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ARTICLE
It is observed from the table -1 that the C/D ratio of the ity, risk, variable interest rate risk, market play risk, op-
bank reached 86.76 per cent by the end of 31st March. erational risks, credit risk etc. which can adversely affect
2014. The ratio of SBI had been increasing from 77.5 per its profitability and financial health. Risk management has
cent in 2008-09 to 86.93 per cent in 2012-13 and slightly thus emerged as a new and challenging area in banking.
fall to 86.26 per cent in the year 2013-14.
The risk management is a complex function and it requires
7. Management of NPA's - NPA's An specialized skills and expertise. Banks have been moving
towards the use of sophisticated models for measuring
Analysis and managing risks. Large banks and those operating in
international markets should develop internal risk
The concept of NPAs evolved through the Narasimham management models to be able to compete effectively
Committee Report, 1991 has a wider impact on profit as- with their competitors.
certainment of banks. Payment of interest in time was
taken as the criteria for treating a loan as performing or As the domestic market integrates with the international
non-performing. All those assets which generate periodical markets, the banks should have necessary expertise and
income are called as Performing Assets (NPA), while all skill in managing various types of risks in a scientific man-
those assets which do not generate periodical income are ner. At a more sophisticated level, the core staff at Head
called as Non-Performing Assets (NPAs). If the customers do Offices should be trained in risk modeling and analytical
not repay principal amount and interest for a certain pe- tools. It should, therefore, be the endeavour of all banks
riod of time then such loans become Non-Performing As- to upgrade the skills of staff. In the changing banking
sets. Gross and Net NPAs of SBI are depicted in table - 2. scenario, the SBI is one of the leading public sector banks
which welcomed the radical changes and make the orga-
Table - 2 nization fit for the changes without much difficulty.
Trends in Gross and Net NPAs during the
References
period from 2008-09 to 2013-14
1. Clipa, M.L. "Commercial Banking Development in In-
(Rs. in crores) dia" Print well Publishers, Jaipur 1987.
Year Gross % increase/ Net % increase/ 2. Krishna A. Goyal, "Risk Management in India Banks:
NPAs decrease NPAs decrease Some Emerging Issues", International Journal of Eco-
2008-09 nomics Research, Vol.1. Issue 1, March, 2010.
2009-10 15589 - 9710.80 -
2010-11 3. Raghavan, R.S., "Risk Management in Banks," Manage-
2011-12 19535 25.31 10868.92 11.93 ment Interactional Journal on Research in Commerce
2012-13 and Management, Vol.3, Issue, February, 2003.
2013-14 25326 29.64 12334.52 13.48
4. Ammannaya .K.K, Indian banking - Value- Adding Per-
39676 56.66 15789.94 28.01 formance and Banking at its Best Through Best Prac-
tices, Southern Economist, Vol. 51, No. 13, November
51189 29.02 21957.94 39.06 2012.
61605 20.35 - - 5. Mohan Reddy. P, Emerging Trends in Financial Services
by Commercial Banks: A Study, National Seminar on
Source: Figures compiled from the annual records of SBI. Emerging Trends in Financial Services: Challenges and
Opportunities, SPMVV, Tirupati, August, 2011.
It is apparent from the table that NPA both gross and net
fluctuated widely during the study period. This is alarm- 6. Annual reports of State Bank of India during the period
ing that SBI should initiate steps to curb NPAs vigorously. from 2008-09 to 2013-14.
8. Conclusion 7. www.sbi.co.in
8. www.rbi.org.in
To conclude, risk is an opportunity as well as a threat and 9. www.moneymarket.com
has different meanings for different users. The banking 10. www.indiainfoline.com
industry is exposed to different risks such as forex volatil-
BANKING FINANCE | OCTOBER | 2015 | 51
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