Arguments For And Against National Minimum Wage

Arguments For And Against National Minimum Wage Supply of labour is elastic and can be moved across the region at the same wage. When minimum wage goes down firms can recruit more labour but as seen in below chart when its go up, it move from E1 to E2. That means at the set new minimum wage firms can only afford E2 number of labours. In UK, demand of skilled labour and supply of skilled labour does not reach equilibrium. Skilled labour from European Countries has been migrated in the UK to fill the gap in between. Over the past couple of decades migrated skilled labours supply increased which result in unemployment. Source: LPC estimates based on ASHE with supplementary information, low-pay weights, UK, April 2006 To get the skilled workforce in action, government has to decide a minimum wage at which they are happy to migrate and work in the UK. As UK is short of skilled labour, government decided fair minimum wage rate which keeps changes every year and increased by some percentages, to get the skilled labour motivated and provide them with the good intensives. Source: http://www.guidance-research.org/future-trends/logistics/info/printAll?lang=en, 25th September 2010 If demand of labour is relatively inelastic as per the above diagram then reduction in employment is less than if demand for labour in terms of employers is elasticity in accordance with the changes in wage level. NATIONAL MINIMUM WAGE In UK national minimum wage set  £ 3.60 in 1999. This law has been aim to remove poverty in long term as a result of that we can see from a graph below, constant growth in the National Minimum Wage. Source: http://www.poverty.org.uk/01/index.shtml, 22nd September 2010 ARGUMENTS FOR THE NATIONAL MINIMUM WAGE Arguments in favour of National Minimum Wage suggest that it may have a more ambiguous effect on employment. Dolado et al (1996) Social Arguments: Government Evidence suggests that the minimum wage has had a small positive impact on public sector finances. Which means more jobs, result in increase employment in various parts like full time, part time and self employed. As it has positive impact on public sector more jobs in full time and part time can be seen in the below table. Source: http://www.guidance-research.org/future-trends/education/printAll?lang=en, 25th September 2010 If the firm is paying National Minimum Wage then it has an incentive to raise productivity of employees. This result in investment rise in personnel. Social injustice and unequal pay distribution among the society is the key reason of the poverty, in order to equally divide income across the society. As income increases, the government gets more income tax and national insurance so that it can spend it for its expenditures. The better trained are the workforce, the higher the reward for everyone. Economic Arguments: To 1.5 million jobs benefited in October 2001 through increase in NMW which as a result increase the aggregate wage bill by upto 0.11%. The following year nearly 1 million people in fewer jobs are benefited. Actually the solid increase in 2001 is supported by small increase in previous year 2000 and another small increase in following year 2002. Over 90,000 jobs secured by 18-21 year olds in October 2001 and labour market is slightly relieve in following couple of years. Below chart shows % of jobs paying at or below national minimum wage and size of the firm. Source: LPC estimates based on ASHE with supplementary information, low-pay weights, UK, April 2006 ARGUMENTS AGAINST THE NATIONAL MINIMUM WAGE Arguments against the National Minimum Wage rely on a neoclassical framework. Card Krueger (1995) Social Arguments: For certain industries, increase in National Minimum Wage NMW means increase in marginal cost so they try to redundant employees and cut the hours of existing employees which results in increase number of unemployed. The higher the national minimum wage is marginal cost for hiring new employee considerably more. Another issue is Pay-leap frogging, mean expert workers in the field command higher wages in order to maintain the difference between their wages and national minimum wage. Cost of living varies from region to region, for example renting 3 bedroom house in London wont cost you same as renting it in outside London. And NMW is set the same across the UK. So cost of living in London is higher and still they are getting paid similar NMW as other parts of the country. In the time of recession company go for recruiting experienced workers rather than recruiting fresher, because fresher requires training and firms try to cut such costs by recruiting experienced workers. Majority firms subject to particular region and if the employees are not happy with their wages then they just move on. According to the economist, High benefits and low pay leads to a culture where people manipulate the system and stay on benefits. As minimum wage increase by  £0.13, many forms choose to have office in the UK and set up manufacturing plant in some other country like Bangladesh or import directly from china. The minimum wage is still less than one can get through the benefits. Everything ends with the consumer and he doesnt have anything to spend then everyone is going in loss. Millions of potential jobs dont exist because of government rules which also includes minimum wage. Get rid of majority of them and as a result, firms start hiring people like anything and the problem of unemployment would go away. Minimum wage is equal for everyone, which means unskilled labour worth of  £2.00 an hour must be paid  £5.93, same as the skilled labour who are worth it. There was a famous example a few months ago in the US. A teacher was complaining about being paid too little but emphasized that she was a teacher for the children and not for the wage. Well, you cant have it both ways. Either you do it for the love of it, or you do it for the wage. When you know the wage is low, you can always choose a different career. Economic Arguments: In 2004, 520 companies were surveyed which shows result that the NMW increase has considerable effect in terms of costs and the most harm done in large firms such as 5 hours cut a week, it means 40 hours full time employee has to work 35 hours a week. As per new minimum wage, working 37.5 hours a week gets you  £11563.50/ year which is after Tax and NI receivable around  £9903.02, which is not good enough to live a standard life. CONCLUSION After discussing arguments in favour and against the national minimum wage, from the social point of view increase in NMW is necessary; for living fairly standard life. The life style here in London and in Bangladesh cannot be compared because the market is totally different here. Thats from the societys point of view but from the business point of view; it is investment in people at the end of the day which motivates labour and increasing the productivity which helps firms to earn more profit. With this conclusion I am in favour of increase in the national minimum wage. REFERENCES: BOOKS Bazen, S. (2000), the impact of regulation of low wages on inequality and Labour market adjustment Lloyd, C., Mason, G., Mayhew, K. (2008) Low wage work in the UK Russell Sage Foundation Manning, A. (2003), Monopsony in Motion Blais, A., Cousineau, J. and McRoberts, K (1989) The determinants of Minimum wage rates, Public Choice Boeri, t. and Burda, M. (2009), Preferences for Collective vs. Individualized Wage Setting, The Economic Journal, forthcoming. Silbermann, J. and Durden, G. (1976) Determinining Legislative Preferences On the Minimum Wage: An Economic Approach, Journal of Political Economy, Vol. 84(2), pp. 217-229. ONLINE http://ivythesis.typepad.com/term_paper_topics/2009/06/the-impact-of-national-minimum-wage-on-uk-labor-market-and-uk-economy.html, 20th September 2010 http://www.suffolkobservatory.info/sda_pdf/workforcedeprivation.asp, 21st September 2010 http://www.guardian.co.uk/money/audio/2010/oct/01/focus-podcast-minimum-wage-audio, 21st September 2010 http://www.lowpayunit.org.uk/minwage/campaign.shtml, 22nd September 2010 http://money.howstuffworks.com/personal-finance/budgeting/minimum-wage.htm/printable, 22nd September 2010 http://news.bbc.co.uk/1/hi/6211250.stm?lsm, 23rd September 2010 http://www.ukbusinessforums.co.uk/forums/showthread.php?t=174645page=3, 23rd September 2010 PART B TREND EXTRAPOLATION Extrapolation can be defined as to conclude the future from the past history, assuming that the technological change is in steady stream and will continue now. Statistical Cure Fitting As name suggests, this method using statistics data for forecasting, such as Indianapolis 500 mile race data as per shown in the below graph: The beginning of the World War 1 Indy race cars have exponentially increased to get pole positions. In the graph above, two technological innovations and ideas are shown quite clearly in the data. One of them cars out of the two was a rear-engine car. The first car of this sort appeared firstly in 1961. The qualifying speeds for Indy race cars were about 150mph which a hard target to achieve. In 1964 a rear-engine car won a pole position for the first time attaining close to 159mph. Limit Analysis All growth has some kind of limitation whether it is recognised or unrecognised. Sooner or later, projections must replicate the improvements that may even get close to the limit but mustnt exceed the limit. The trend of lower temperature is inadequate, of course by an absolute zero. For example, a movement of growing energy conversion efficiency cant exceed to 100%. The trend is presented in the below chart: The trend line looks and analysis aspects of the larger field of development. The trend line attempts to extend the boundaries of the data points beyond their regions in the timeframe. For Example is recently US and China relation, which looks in curve graph like below: Source: http://www.sublimeoblivion.com/2010/08/18/underestimating-china/, 25th September 2010 Some common types of trend: Constant trends  are those where there is no net increase or decrease. Polynomial trends  are those best modeled by a polynomial equation. They may be second-order (quadratic) equations of the formy  =  ax2  +  bx  +  c, resulting in a parabolic shape: Consensus Methods The method is a set of values for significant familys abilities to pay for colleges. From last couple of years, trend line shows decrease in variance in need analysis. The participating corporation believe that the agreed opinion approach, when applied in a consistent manner, serves to decrease or reduce the indifferent results that threaten the long-lasting tradition of awarding help on the basis of need. The desire and the need to serve for the greater good, rather than serve individual academic or institutional needs and capabilities have required some areas to be compromised, but 568 Group strongly believes, the consequential methodology remains true to both the institutional and professional principles and aspects that underlies its co-operative efforts. For example, student wish to study in university, university go through the savings through the applicants family. Lets say the university fee per year is  £30,000 and familys income per year is  £ 50,000. In which parents have to sign the statement that they are going to fund for their childs accommodation, fees, travel and other required expenses. Family need to demonstrate their household expenditure to show that they can spare  £ 30,000 each year plus other expenses comes through the education loan or scholarship from university. In total of all have to be reached  £30,000 a year plus other expenses like travel. Through simple diagram below I can understand consensus method better way.

Lead and Manage a Team Within a Health and Social Care Setting

The features of effective team performance are set out in Brian Tuckman’s phases of team development theory, ‘Forming, Storming, Norming, Performing. ’ This outlines the phases that a team will go through in order to become effective and reach maturity. At the ‘Forming’ stage of team development individual roles and responsibilities are unclear and each member of the team is concerned to avoid conflict with each other. From this point the team will go through the ‘Storming’ phase which is when they start to conflict as individuals put forward ideas which will be challenged by others in a bid to gain power and position over others. After this the ‘Norming’ phase follows and it is at this point that individual roles are defined and accepted and ground rules and conduct are agreed. After each of these stages the team then reaches the ‘Performing’ stage which is where they are all working towards the same shared goal. This theory shows that for all teams to be effective each individual needs to be clear on their role, responsibilities and shared end goal. This is achieved through positive leadership, utilising the skills of the team and addressing weaknesses to make the team more effective. The challenges experienced by developing teams are often due to organisational change. Staff may be resistant to change such as moving to join a new team or working with people they do not know. A health and social care organisation needs to identify the skills and knowledge that are required for the service plan and recruit staff according to this to ensure that the diversity and skill mix needed is met to fulfil the service outcome. Newly appointed staff should complete an induction that ensures they understand and comply with the organisations values and objectives and their role and support systems should be clarified as quickly as possible to ensure they can contribute as quickly and effectively as possible to the team. An established team experiences different challenges to a developing team. They may have more difficulty maintaining staff enthusiasm and momentum. To overcome these challenges the organisation needs to be aware of changes to workload and conflict between individuals to resolve issues quickly before they impact on other staff and then service users. Also feedback should be given to staff in order for them to maintain or improve performance levels and recognition should be expressed for good work to maintain a high level of staff morale. Once momentum is built then it is easier to maintain and helps staff to remain enthusiastic and continue o communicate and trust their colleagues and manage their time efficiently and keeps them orientated to the important work tasks. Challenges to effective team performance can be overcome by the organisation being clear about the values and objectives in relation to staff and service users and communicating these and the time frame in which these are expected to be achieved. Support should be given to those who are capable of sharing the organisations objectives so they can become committed to ensuring that the service outcomes are met. If this is not done then it can be difficult to maintain effective team working. Dawes and Handscomb performed a review on team leadership in 2005 and suggested that these difficulties stemmed from competing professional interests. In different settings they reviewed the relationship between team working and care outcomes and it was found that within a long term care setting the care outcomes required effective team working to be met. It is considered that management styles can be divided into three categories. * Autocratic- characterised by individual control over all decisions and little input from group members. Paternalistic- a type of fatherly managerial style typically employed by dominant males where their organizational power is used to control and protect subordinate staff that are expected to be loyal and obedient. * Democratic- a style in which members of the group take a more participative role in the decision making process. A leader can be anyone who has the ability to influence other members of a team. It is considered that a manager and a leader are different but they are complementary to tasks being carried out. Management styles will change to reflect the stage of development the workforce’s stage of development. When starting a new team a manager will have to be clear about setting goals, establishing rules and assigning responsibility and then taking on the more troublesome tasks of organising resources, motivating and creating a cooperative team. As the team develops then roles can be delegated and appropriate support provided. Doing this enables the team to become more confident and the style of management and leadership changes so team members begin to take on more leadership functions. The primary focus of a leader is to develop and maintain trust between the service user and the staff. The service user will look at the staff to establish with them character and competence. If these two characteristics are met then this develops trust with the service user. Character relates to motive and intent, whether the staff are working towards the same objectives. Competence relates to skills and results, whether the staff are able to care for the service user and meet the objective set by the organisation. Staff that are registered with professional bodies have accountability and are answerable for their actions. They are accountable by law for meeting the standards and objectives that are set out for them. Even when staff are working towards a common goal, conflict can still arise. This can be due to different personalities, communication styles, sense of priorities and changes to workload. Trying to prevent conflict is best practice so a manager should try to build an environment that is supportive, positive and stable to try and reduce the likelihood of conflict developing. If conflict does develop then a manager should try to: * Address it at the earliest opportunity. * Keep the discussions positive. Look at what can be done to resolve the conflict. * Encourage the team to focus on the problem, not the person. Encourage honest dialogue between the team, welcoming different points of view that do not create blame. Each individual should be allowed to voice their point of view and also listen to and respect each other’s views. * Ask each individual to accept ownership of their part of the problem. * Discuss a variety of options before settling on an agreement that is based on o bjective criteria that will resolve the conflict. Conflict does not always necessarily have to be a bad thing, as if it is dealt with constructively, can lead to increased productivity, development of new ideas and personal development of team members.

Research of the Tingunee Essay - 689 Words

Research of the Tingunee Meghan Shmunes Cultural Anthropology Professor Pappas June 9 2013 Shmunes 1 After receiving this grant, I cannot wait to go study the people and culture of Tingunee. Before I embark on this journey to the Tingunee of the lower Quebin river valley though, there are some important things I must make sure I do first. There has been no known visitors to Tingunee or any research conducted on their culture, so I will need to take extra precaution with the basic stages I need to complete. Upon my return, I will hope to be the first person to have a basic understanding of the Tingunee culture. Cultural anthropology is the study of people within a particular culture and†¦show more content†¦I plan to answer questions about subjects including marriage, local government, gender roles, religion/ religious beliefs; more specifically the role females play. I will be figuring these questions out by collecting data within the community and to do so properly, I will need to have an emic approach. An emic approach is how the Tingunee people think, perceive other people, how they behave, and how they imagine and explain things. I decided to take the emic approach over the etic approach because the etic approach would involve me emphasizing what I think is important about a culture after interpreting it and because the Tingunee people have not been studied before, I want other people to know their culture and thought processes without including my opinions. An emic approach will allow me to be a part of the community while taking in information without bias. After being amerc ed in the community with my emic approach, I will be able to determine what distinct cultural characteristics separate this culture from the rest. I plan on interviewing individual people, both male and female, to get different perspectives on everyday life within the tribe and the roles each individual plays in the community. Being a female myself will have advantages when talking to Shmunes 3 the females of the Tingunee tribe. I hope to

12 Literary Quotes for Wedding Speeches

The True Definition Of Leadership Essay - 1641 Words

â€Å"Leaders have been around since the beginning of man,† says the authors of ‘Introduction to Health Care Management.’ (Buchbinder, 2012) As a result, time has taught us the true definition of leadership. For years, the method by which a person has persuaded and motivated others to participate in accomplishing a goal has become monumental. The commitment that great leaders encompass are not defined with a simple definition of leadership. The mutual theme with great leadership is that success is not their ultimate objective. They are leaders, driven by an idea or a vision to achieve a goal, with confidence and determination to generate success. â€Å"To me, consensus seems to be the process of abandoning all beliefs, principles, values and policies. So it is something in which no one believes and too which no one objects.† Margaret Thatcher (Thatcher, n.d.) Margaret Thatcher became the first female British Prime Minister. She was an extraordinary kind of national leader: a person of passionate and unswerving moral and political conviction. (Allen, 2013) In the midst of men, as her peers in her career, Thatcher utilized two leadership theories. In order to be accepted and taken serious, she had to embrace leadership a little differently than normal. Thatcher was breaking barriers and setting trends. As a result, she became, â€Å"a woman with high standards and a short temper, earning her the nickname, ‘Iron Lady.’† (Allen, 2013) The Path-Goal Theory of Leadership whichShow MoreRelatedEthics And Morals That Make For A Good Law Enforcement Officer1625 Words   |  7 Pagesunfamiliar to many of the soldiers. I grew up in a household that used the â€Å"Army† values as a standard for living a good and productive life. The values that the Army stressed will always be my basis f or any type of public service job. 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Death of a Salesman Essay AP English III Free Essays

Death of a Salesman Essay Wily Loan is a symbolic icon of the failing America. He is representing a typical chaser of the American dream in the sass’s. He experiences a tragedy in his life where he was trying to find his place in his own life with his sons leaving, growing old, and an escalating sense of stubbornness. We will write a custom essay sample on Death of a Salesman Essay AP English III or any similar topic only for you Order Now Wily was Just one of many Americans that experienced a great tragedy during this time which was a reason that led up to the great depression in 1929. This makes a symbolic icon of the failing America during this time. Wily Loan had a life most people admired while his sons were still in high school. He had a Job and was very happy at that time. His son Biff was the high school quarterback and was very good at his position. This made Wily extremely proud and hoped he would see his son go off to play football at the college level. He was very content with his life at this point and this symbolizes the booming American economy before the Great Depression. Wily soon got too caught up in the idea of the American Dream, to be hard working and honest among other things. He soon began to get greedy in the idea of the American Dream along with other things that went wrong. His pride soon escalated and prevailed in the worst way. Biff reveals to Wily that he has failed his senior math class and will not have enough credits to graduate high school. This incident highlights and really reveals Willis stubbornness for he Just thinks Biff could just go to summer school and get the credits he needed to graduate. It was not that simple as Wily soon learned. Biff then tells his father he is going to go to an interview or an important high paying Job and Wily is very excited for him to get the Job. Biff ends up not going to the interview because he felt he was not able to get the Job. As he tries to tell his father what happened, Willis stubbornness again shows as he would not even let Biff explain what had happened. Wily keeps talking and interrupting his son saying things as if he got the Job. This causes very high tension between the two and leads to a huge argument at the end of the play that indirectly leads to Wily killing himself. Another incident that escalates to the tragedy that occurs in the play is when Biff catches Wily cheating on his wife. Biff is heartbroken, in shock, and angry all at once and leaves the scene leaving Wily questioning what has become of him and started to realize his life was not what it used to be, but his stubbornness still prevailed. At the end of the play the whole family meets together at their house. A significant argument breaks out mostly between Biff and Wily about how stubborn and blind he really is. Wily ends up telling Biff to get out of his house and Biff says he never wants to come back. The argument was the deciding factor hat led up to Wily getting in his car and killing himself. In the end, Willis stubbornness and pride led to things such as the arguments between him and Biff, him getting fired and refusing to take another Job out of pride, and lack of realization that he was slowly setting the stage for his own demise. Wily was Just another lower middle class American stuck in the idea of the American Dream. Along with many other Americans during the time, he symbolized the failing America of the Great Depression of the sass’s and even the digressing American economy of today. How to cite Death of a Salesman Essay AP English III, Essays

Non Performing Assets (Npa) Essay Example For Students

Non Performing Assets (Npa) Essay INTRODUCTION The core banking business is of mobilizing the deposits and utilizing it for lending to industry. Lending business is generally encouraged because it has the effect of funds being transferred from the system to productive purposes which results into economic growth. The debtor take the funds from the bank in the form of credit and he have to payback the principle amount with the interest to the creditor as a result the creditor (Bank)gets the profit in the form of interest and again this profit is reinvested leading to the growth of the economy. However lending also carries credit risk, which arises from the failure of borrower to fulfill its contractual obligations either during the course of a transaction or on a future obligation. Due to non performance of the fund the financial institutions become bankrupt and failed to provide investors with clearer and more complete information thereby introducing a degree of risk that many investors could neither anticipate nor welcome. The Financial companies and institutions are nowadays facing a major problem of managing the Non Performing Assets (NPA) as these assets are proving to become a major setback for the growth of the economy. Undoubtedly, the world economy has slowed down. Globally stock markets have tumbled and business itself is getting hard to do with the simple reason that the banks (creditor) money in the form of funds get blocked. Under such a situation, it goes without saying that banks are no exception and are bound to face the heat of a global downturn. NON PERFORMING ASSET Non Performing Asset means an asset or account of borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset, in accordance with the directions or guidelines relating to asset classification issued by RBI. An amount due under any credit facility is treated as past due when it has not been paid within 30 days from the due date. Due to the improvement in the payment and settlement systems, recovery climate, up gradation of technology in the banking system, etc. , it was decided to dispense with past due concept, with effect from March 31, 2001. Accordingly, as from that date, a Non performing asset (NPA) shell be an advance where; i. interest and /or installment of principal remain overdue for a period of more than 180 days in respect of a Term Loan, ii. he account remains out of order for a period of more than 180 days, in respect of an overdraft/ cash Credit(OD/CC), iii. the bill remains overdue for a period of more than 180 days in the case of bills purchased and discounted, iv. interest and/ or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purpose, and v. any amount to be received remains overdue for a period of more than 180 days in respect of other accounts. With a view to moving towards international best practices and to ensure greater transparency, it has been decided to adopt the 90 days overdue norm for identification of NPAs, form the year ending March 31, 2004. Accordingly, with effect form March 31, 2004, a non-performing asset (NPA) shell be a loan or an advance where; i. interest and /or installment of principal remain overdue for a period of more than 90 days in respect of a Term Loan, ii. the account remains out of order for a period of more than 90 days, in respect of an overdraft/ cash Credit(OD/CC), iii. he bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, iv. interest and/ or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purpose, and v. any amount to be received remains overdue for a period of more than 90 days in respect of other accounts. Out of order An account should be treated as out of order if the outstanding balance remains continuously in excess of the sanctioned limit/ drawing power. In case where the outstanding balance in the principal operating account is less than the sanctioned limit/ drawing power, but there are no credits continuously for six months as on the date of balance sheet or credits are not enough to cover the interest debited during the same period, these account should be treated as out of order. Overdue Any amount due to the bank under any credit facility is overdue if it is not paid on the due date fixed by the bank. INCOME RECOGNITION 1. Income recognition Policy: The policy of income recognition has to be objective and based on the record of recovery. Internationally income from Non-performing assets (NPA) is not recognized on accrual basis but is booked as income only when it is actually received. Therefore, the banks should not charge and take to income account interest on any NPA. 2. Reversal of Income: a) If any advance, including bills purchased and discounted, becomes NPA as at the close of any year, interest accrued and credited to income account in the correspondence previous year, should be reversed or provided for if the same is not realised. ) In respect of NPAs, Fees, Commission and similar income that have accrued should have ceased to accrue in the current period and should be reversed or provided for with respect to past periods, if uncollected. c) Leased Assets: ? The net lease rentals on the leased asset accrued and credited in income account before he asset became non-performing should be reversed or provided for in the curr ent accounting period. ? The term ‘ net lease rentals’ would mean the amount of finance charge taken in the credit of Profit Loss Account and would be worked out as gross lease rentals adjusted by amount of Statutory Depreciation. 3. Reporting of NPAs : ? Banks are required to furnish a Report on NPAs as on 31st March each year after completion of audit. The NPAs would relate to the bank’s global portfolio, including the advances at the foreign branches. ? While reporting NPA figures to RBI, the amount held in interest suspense account, should be shown as a deduction from gross NPA as well as gross advances while arriving at the net NPAs. ASSET CLASSIFICATION Banks are required to classify Non-performing assets further into the following three categories based on the period for which the asset has remained Non-performing and the realization of dues: a) Sub-standard Assets ) Doubtful Assets c) Loss Assets Figure 1. 1: Classification of Assets a) Sub-standard Assets: A sub standard asset was one, which was classified as NPA for a period not exceeding two years. With effect from 31st March 2001, a sub-standard asset is one, which has remained NPA for a period less than or equal to 18 months. Such assets will have well defined credit weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the banks will sustain some loss, if deficiencies are not corrected. b) Doubtful Assets: A doubtful asset was one, which remained NPA for a period exceeding two years. With effect from 31st March 2001, an asset is to be classified as doubtful, if it has remained NPA for a period exceeding 18 months. With effect from March 31, 2005, an asset would be classified as doubtful if it remained in the sub-standard category for 12 months. c) Loss Assets: A loss asset is one where the Bank or external Auditors or the RBI inspection has identified loss but the amount has not been written off wholly. In other words such an asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted although there may be some salvage or recovery value. GUIDELINES FOR CLASSIFICATION OF ASSETS 1. Classification of Assets: The assets should be classified into above categories taking into account the degree of well defined credit weaknesses and the extent of dependencies on collateral security for realization of dues. 2. Banks should establish appropriate internal systems: The internal systems should be established by banks to eliminate the tendency to delay or postpone the identification of NPAs, especially in respect of high value of accounts. 3. Account with temporary Deficiencies: The classification of an asset as NPA should be based on the record of recovery. Bank should not classify an advance account as NPA merely due to the existence of some deficiencies, which are temporary in nature as such as non-availability of adequate drawing power based on latest stock. 4. Asset classification to be borrower-wise and not facility-wise: It is difficult to envisage a situation when only one facility to a borrower becomes a problem credit and not others. Therefore, all the facilities granted by a bank to a borrower will have to be treated as NPA and not the particular facility or a part thereof, which has become irregular. 5. Advances under consortium arrangements: Asset classified of accounts under consortium should be based on the record of recovery of the individual member banks and other aspects having a bearing on the recoverability of the advances. 6. Accounts where there is erosion in the value of security: Erosion in the value of security can be reckoned as significant when the realizable value of the security is less than 50 percent of the value assessed by the bank or accepted by RBI at the time of last inspection, as the case may be. Such NPAs may be straightaway classified under doubtful category and provisioning should be made as applicable to doubtful assets. . Agricultural advances: a) In respect of advances granted for agricultural purpose where interest and/ or installment of principal remains unpaid after it has become past due for two harvest seasons but for a period not exceeding two half years, such an advance should be treated as NPA. b) Where the natural calamities impair the repaying capacity of agricultural borrowers, b anks may decide on their own as a relief measure-conversion of the short-term production loan into a term or re-schedulement of the repayment period. ) In such cases of conversion or re-schedulement, the term loan as well as fresh short-term loan may be treated as current dues and need not be classified as NPA. 8. Restructuring/ Rescheduling of Loans: A standard asset where the terms of the loan agreement regarding interest and principal have been renegotiated or rescheduled after the commencement of production should be classified as sub-standard and should remain in such category for at least one year of satisfactory performance under the renegotiated or restructured terms. In case of substandard and doubtful assets also, rescheduling does not entitle a bank to upgrade the quality of advances automatically unless there is satisfactory performance under the rescheduled/ renegotiated terms. 9. Exceptions: As trading involves only buying and selling of commodities and the problems associated with manufacturing units such as bottleneck in commercial production, time and cost escalation, etc. are not applicable to them, these guidelines will not be applied to restructuring/ rescheduling of credit facilities extended to traders. IMPORTANT COMMITTEES The Tandon Committee (1973) was the first committee in Indian Banking sector to set a proper quality wise grading system of advance portfolio. This was followed by the Chore Committee (1980) which was recognised the need for close watch on the quality of loan portfolio. Phendarkar Committee (1981) recognised the need for classifying advance into different categories to index the overall quality of asset portfolio. This was the starting point for the introduction of the health coding system of categorizing bank loan portfolio by the RBI in 1985. his 8 band concept of health coding of advance accounts from health code 1 to 8 was followed by a circular from RBI to Banks (1989), specifying the need to redefine the practise of charging the interest on loans and advances by the banks on new prudential criteria in line with international practises by ceasing to charge interest on Non performing advances. Narsihmam Committee submitted its first report on November 1991 an d gave more specific criteria for prudential norms of income recognition, asset classification, Provisioning and capital adequacy norms. Narsihmam Committee gave its second report in 1998. He strongly opposed the merger of strong banks with weak ones as this would cause in a negative impact on the asset quality of the stronger bank because of the contaminated portfolio of the weak banks. The committee has not made any suggestions to deal with the extremely high non-performing assets of Indian banks, but has suggested that the concept of an Asset Reconstruction Fund be considered. ASSET RECONSTRUCTION COMPANY The Government has proposed an initial paid-up capital of Rs 1,400 crore and an authorised capital of Rs 2,000 crore for the ARC. In view of the large equity base, the Government is keen to ensure the participation of the maximum number of institutional shareholders to cobble up the amount. The task of the ARC would be to buy out the bad assets of banks and FIs and make efforts for their recovery while compensating the lenders at a negotiated price for the assets taken over. The Government has been catalysing the setting up of the ARC within the existing legal framework. The Ministry of Finance is simultaneously processing a legislative Bill to provide the required legal backing to the entity in future to ensure its smooth functioning. While seeking multilateral support for the new company, the Government had initially approached all the three agencies — the World Bank, ADB and IFC — to explore their willingness to take an equity stake in what would be the countrys first ARC. PROVISIONING FOR NPAs Taking into account the time lag between account becoming doubtful of recovery, its recognition as such, the realization of the security and the erosion in the value of security over time charged to the banks, it has been advised by RBI that banks should make provisions against sub-standard assets, doubtful assets and loss assets, as under: ? Loss Assets – The entire assets should be written off, if the assets are permitted to remain in the books for many reason, 100% of the outstanding should be provided for. Doubtful Assets – 100%of the extent to which the advance is not covered by the realizable value of the security to which the bank has a valid recourse and the realizable value is estimated on a realistic basis. ? Sub – Standard Assets – A general provision of 10%of total of the outstanding. In terms of RBI guidelines, as and when an asset becomes a NPA, such advances would be first classified as a sub-standard one for a period that should not exceed 18 months and subsequently as doubtful assets. It should be noted that the above classification is only for the purpose of computing the amount of provision that should be made with respect to bank advances and certainly not for the purpose of presentation of advances in the banks balance sheet. The third schedule to the Banking Regulation Act, 1949, solely governs presentation of advances in the balance sheet. Banks have started issuing notices under the Securitization Act, 2002 directing the defaulter to either pay back the dues to the bank or else give the possession of the secured assets mentioned in the notice. However, there is a potential threat to recovery if there is substantial erosion in the value of security by the borrower or if the borrower has committed fraud. Under such a situation it will be prudent to directly classify the advance as a doubtful or loss asset, as appropriate. Reserve Bank of India (RBI) has merely laid down the minimum provisioning requirement that should be complied with by the concerned bank on a mandatory basis. However, where there is a substantial uncertainty to recovery, higher provisioning should be made by the bank concerned. Table 1. 1: Provisioning for NPAs |Sr. No. Categories |Days Past Due |Provisioning Requirements | |1 |Sub standard |   |10% | |2 |Doubtful |i) upto 1 yr |100% of unsecured + 20% of secured portion | |   |   |ii) 1 to 3 yr |100% of unsecured + 30% of secured portion | |   |   |iii) more than 3 yrs |100% of unsecured + 50% of secured portion | |3 |Loss |   |100% | Note: Implementation of the instructions requiring classif ication of substandard account into doubtful category after 12 months and 100 % provisioning for secured portion of doubtful assets of over 3 years would be deferred by three years. As such the banks should build up adequate provisions over this period to facilitate smooth transition. ADVANCES AND GENERAL INSTRUCTION In whatever form bank advances are granted, they are repayable on demand or at the expiry of some fixed period. Bill of exchange discounted are payable on maturity. Overdrafts and Cash Credits are legally repayable on demand, although the bank seldom exercises the right except in circumstances mentioned below. Loans are payable on the expiry of the periods for which they are granted. In case the loan is repayable in installments and default occurs in the payment of any installment, the entire loan usually becomes immediately recoverable at the option of the bank. Recalling of Advances Banks conduct a regular scrutiny of all the advances and ensure that timely action is taken in each case either for the continuance of the facility on the existing terms or with such modifications as may be considered necessary or for the recovery of the amount if it is decided not to continue the facility. Advances are usually called under the following circumstances: ? death of the borrower or the guarantor. ? Insolvency of the borrower or the guarantor. ? Dissolution of the partnership. ? Failure to renew the document sufficiently before the expiry of the period of limitation. ? Failure to adhere to the terms and conditions of the sanction in spite of bank’s repeated requests. Deterioration of the security. ? Deterioration of the financial position of the party. ? Change in the bank’s policy regarding certain types of advances. The bank may at any time decide to restrict against certain commodities because of their overproduction. ? There may also be other reasons fo r withdrawing the facility e. g. the law and order situation in a certain place is such that it may be risky to continue the advance there. In the cases stated above, the bank endeavors to recover the advance by making the formal demand and thereafter, if necessary, by putting pressure on the borrower or his legal representatives, as the case may be, with a threat of legal action. If there is a guarantor he is also called upon to adjust the account or have it adjusted by the principal. Much will however depend on the honesty of the purpose of the borrower and his legal position at that time. If he is already heading towards insolvency, any indulgence shown to him may further complicate matters for the bank. If the threat of litigation does not have the desired effect, the bank may consider filing a suit. It must however be remembered that the legal proceedings entail a good deal of delay and expenses and the results in the long run are generally not satisfactory. CAUSES FOR RISE IN NPA The RBI has summarized the finer factors contributing to higher level of NPAs in the Indian banking sector as: ? Physician-assisted Suicide Essay ThesisAfter the onset of banking sector reform in India, the Reserve Bank of India initiated a system of Prompt Corrective Action (PCA) with various trigger points and mandatory and discretionary responses by the supervising authority on a real time basis. The PCA framework relied on three major indicators of banking sector performance: Net Non Performing Asset (NPA), Capital-To-Risk-Weighted Assets Ratio (CRAR) and Return on Assets (ROA). The present paper seeked to combine the ratio approach adopted by the Reserve Bank of India with the Assurance Region based measure of technical efficiency to find out a composite Data Envelopment Analysis (DEA) based efficiency indicator of 28 observed commercial banks for 2002-03 to 2004-05. The results showed that the observed private sector commercial banks had higher mean technical efficiency score compared to those of the public sector commercial banks. Out of the 28 observed commercial banks considered for the study, six were found to be efficient. A study of the technical efficiency scores across ownership groups revealed that the observed private sector banks had higher mean technical efficiency scores compared to their public sector counterparts. Finally, most of the observed commercial banks exhibit decreasing returns to scale for the period under observation. Toby (2008) studied the Monetary Policy, Capital Adequacy Regulation and Banking System Soundness in Nigeria The purpose of this research was two-fold. First, the study was intended to determine the effects of bank liquidity management practices (monetary policy outcomes) on industry asset quality, measured with the proportion non-performing loans (npls) in the loans portfolio. Second, it investigated the effects of capital adequacy regulation on selected bank asset quality and efficiency measures. Relevant data were generated from the Central Bank of Nigeria (C. B. N. ) and Nigeria Deposit Insurance Corporation (N. D. I. C. ) official sources, including the balance sheets of selected Nigerian quoted banks. By the use of eight multiple regression equations, it was found that the use of the minimum liquidity ratio (MLR) is irrelevant in controlling industry NPAs. The objective of controlling banking sector liquidity in the Nigerian industry with the MLR may rather increase industry NPAs and culminate in high risk concentrations. The cash reserve ratio (CRR) was more effective tool in controlling the level of NPAs in the industry as a whole and the distressed banks in particular. As the ratio of equity to loans advances increases, we should expect the classified loans ratio to decrease and asset quality to rise, and vice versa. Under regimes of rising equity-to-total-assets (ETA) ratio, we should expect the loan loss reserves ratio to fall, and vice versa. Basak (2009) made an attempt to examine the working and financial performance of the Urban Cooperative Banks (UCBs) that cater to the credit needs of persons of small means. Though some UCBs had performed creditably in the recent years, a large number of them have shown discernible signs of weakness. The operational efficiency was unsatisfactory and characterized by low profitability, ever-growing Non-Performing Assets (NPAs) and relatively low capital base. The large-scale sickness in the UCBs had shaken the public confidence in cooperative banks. In this context, this study was conducted. To make the analysis simpler and presentable, the author took up the Contai Co-operative Bank Ltd. , one of the leading UCBs in West Bengal for a case study. The study was based on secondary data and other information provided by the bank in its published annual reports. The relevant data had been collected for the period from 1995-96 to 2006-07. This data had been analyzed with the help of statistical tools like ratios, percentages, averages and trend analysis, chi-square test, and multiple regression analysis. The objective of the study was to identify and analyze the trend, progress and problems of this bank, to throw light on the problems of swelling NPAs and to offer some meaningful suggestions for improving the efficiency and effectiveness of this bank. The perusal of review of literature revealed that number of studies had been conducted regarding NPAs. But in all these studies the main focus was mainly on the impact of non performing assets on the profitability of the concerns. Its focus remained on the issues related to the operational efficiency which is unsatisfactory with the ever growing nonperforming assets. Such areas like causes that convert the loan assets into NPAs and the remedies to control them were overlooked in the above researches. NEED OF STUDY The need of the study was to reduce the gap that was identified in the previous researches. The researches conducted earlier lay emphasis on the meaning of non performing assets and their performance. It showed that increase and decrease in non performing assets affects the performance and its cost and even affects the economies of scale. The areas like causes of NPAs and remedies to control them were ignored. Considering the ample importance of this aspect, the present study was conducted to know the existence of non performing assets in the banks and to find out the causes of their occurrence. On the basis of such causes, this study evaluated the measures that banks were adopting to manage it. SCOPE OF STUDY The scope of the research was to know about non performing assets present in banks. It included the meaning, types, causes, remedies, RBI regulations related to NPA. The respondents of the study were limited to Amritsar city and the sample size was 50 banks. OBJECTIVES OF STUDY . The study has been undertaken in order to achieve the following objectives: ? To know the number of NPA cases faced by banks. ? To know the reasons due to which loan assets are converted into NPAs. ? To know the remedies used by banks to control NPAs To evaluate the strategies followed by banks to manage NPAs. ? To suggest appropriate strategies to control NPAs. Research methodology is a way to systematically solve the research problem. The research methodology includes the various methods and techniques for conducting a research. Marketing research is the systematic design, collection, analys is and reporting of data and finding relevant solution to a specific marketing situation or problem. I. RESEARCH DESIGN: Research is, thus, an original contribution to the existing stock of knowledge making for its advancement. The purpose of research is to discover answers through the application of scientific procedures. This project has a specified framework for collecting data in an effective manner. Such framework is called â€Å"Research Design†. Type of Research This research is descriptive in nature because it is regarding the knowing of causes of non performing assets prevailing in banks and financial institutions. It includes survey that is conducted in order to gather the already existing information. It even describes the remedies taken by banks and financial institutions in controlling NPAs. II. SAMPLING DESIGN: Sample Universe – Universe refers to the total of the items or units in any field of inquiry. It refers to the geographical area that is covered while conducting the research. Universe for this project was all the banks operating in India. Sampling unit – The target population must be defined that has to be sampled. The sampling unit pertaining to this study was all the banks in Amritsar city. Sample size – This refers to number of respondents to be selected from the universe to constitute a sample. The sample size of 50 banks was taken. Sampling Technique – Convenience Sampling was used to select the sample. Convenient sampling is a non probability sampling technique that attempts to obtain a sample of convenient elements . In case of convenience sampling, the selection of sample depends upon the discretion of the interviewer. In this project, Questionnaire Method was used for the collecting the data. With the help of this method of collecting data, a sample survey was conducted. III. DATA COLLECTION AND ANALYSIS: †¢ Secondary sources: Secondary sources are those which are collected from the already published material. In this study secondary data was collected from books, journals and websites. †¢ Primary Data: Primary data are those which hare collected afresh and for the first time and thus happen to be original in character. In this study primary data was collected from respondents with the help of well structured questionnaire. IV. TOOLS OF PRESENTATION: Tables and figures were used to present the data. V. TOOLS OF ANALYSIS: The analysis was done by using percentages. LIMITATIONS OF STUDY It is said, â€Å"What is worth doing is worth doing best†. In other words a person should aim at perfection. However in real life this is not always possible. Human have to work within the limitation set by the nature and society. That is to say even though every possible effort has been made to make this project report authentic and comprehensive however many constraints were also at play. The major limitations of the study are:- ? Due to paucity of time and resources a countrywide survey was not possible. Hence only Amritsar city has been taken for the study. Since a smaller sample was chosen so it may not be a true representative of the population under study. ? The possibility of the respondent’s responses being biased cannot be ruled out. ? Most of the study was restricted to Internet and published data because of the non availability of primary data. After collecting the data the analysis of data and interpretation is done. Tabulation of data is done wherein classified data is put in the form of tables. After tabulation the analysis work is carried out using various techniques. Statement: To know whether there were non performing assets in the organization. Table 5. 1: Existence of Non Performing Assets in the Organizations |Existence of NPAs |No. f Respondents |%age of responses | |Yes |47 |94 | |No |3 |6 | |Total |50 |100 | Figure 5. 1: Existence of Non Performing Assets in the Organizations Analysis and Interpretation: It was clear from the table that out of 50 respondents majority had non performing assets in their organization. i. e. 94% banks had NPAs and 6% were without it. Statement: To know the number of cases that become NPAs every year. Table 5. 2: Percentage No. of Cases that Become NPAs No. of Cases (%) |No. of Respondents |% age of Responses | |1%-2% |18 |38. 30 | |2%-3% |19 |40. 43 | |3%-4% |4 |8. 51 | |4%-5% |2 |4. 25 | |5%Above |4 |8. 1 | | Total |47 |100 | Figure 5. 2: Percentage No. of Cases that Become NPAs Analysis and Interpretation: It represented that out of 50 banks, 40. 43% of banks had NPAs between 2%-3%, 38. 30% had NPAs between 1%-2%, 8. 51% had between 3%-4% and 5% above while remaining 4. 25% had between 4%-5%. Statement: To know which cases become NPAs mostly. Table 5. 3: Type of Cases Becoming NPAs |Type of Cases |No. of Respondents |% age of Responses | |Fully financed |42 |80. 7 | |Partially financed |10 |19. 23 | |Total |52 |100 | Figure 5. 3: Type of Cases Becoming NPAs Analysis and Interpretation: Most of the cases of fully financed in which the whole project is financed by the lender, were becoming NPAs i. e. 80. 77% and the remaining cases were of partially financed i. e. 19. 23%, in which some amount is provided as a loan. Statement: To know the types of lending that converts into NPAs. Table 5. : Lendings Provided by Institutions that Become NPAs |Types of lending |No. of Respondents |% age o f Responses | |Personal loans |23 |28. 40 | |Housing loans |22 |27. 16 | |Motor Vehicle |13 |16. 05 | |Business Financing |11 |13. 58 | |Project Financing |7 |8. 4 | |Any Other |5 |6. 17 | |Total |81 |100 | Figure 5. 4: Lendings Provided by Institutions that Become NPAs Analysis and Interpretation: According to 28. 40% of banks, personal loans, for 27. 16% housing loans, for 16. 05% loans for motor vehicle, 13. 58% loans for business financing, 8. 64% loans for project financing were becoming NPAs. Remaining 6. 17% falls in any other categories which include loans given against Government guarantee. Statement: To know the security/collateral required by banks against above loans. Table 5. 5: Security/Collateral Required Against Loans |Security |No. of Respondents |%age Responses | |Property |38 |54. 28 | |Fixed Deposits |16 |22. 86 | |Stock in Trade |10 |14. 29 | |Any other |6 |8. 7 | |Total |70 |100 | Figure 5. 5: Security/Collateral Required Against Loans Analysis and Interpretation: From above it was clear that 54. 28% require property for granting loans,22. 86% provide loans against fixed deposits, 14. 29% provide loans against stock and remaining 8. 57% requires other types of security for advancing loans. Statement: To know the main reasons for loan assets becoming NPAs. Table 5. 6: Reasons for Becoming NPAs |Reasons |No. of Respondents |%age of Responses | |Willful Default |20 |28. 7 | |Poor follow-up Supervision |19 |26. 76 | |Market failure |11 |15. 49 | |High targets fixed by banks |9 |12. 68 | |Wrong lending |7 |9. 86 | |Poor legal framework |3 |4. 22 | |Any other |2 |2. 2 | |Total |71 |100 | Figure 5. 6: Reasons for Becoming NPAs Analysis and Interpretation: It is clear from above that 28. 17% considered willful default by borrowers as the main reason for the occurrence of non performing assets. For 26. 76% poor follow-up and supervision, for 15. 49% market failure, for 12. 68% high targets, for 9. 86% wrong lending, for 4. 22% poor legal framework were the reasons for loan assets becoming NPAs. Statement: To know the existence of recovery system prevailing in the organizations for the recovery of NPAs. Table 5. : Existence of Recovery System in the Organization |Recovery system |No. of Respondents |% age of Responses | |Yes |46 |97. 87 | |No |1 |2. 13 | |Total |47 |100 | Figure 5. 7: Existence of Recovery System in the Organization Analysis and Interpretation: Majority i. e. 97. 7% of the banks had recovery system in their organization for controlling NPAs while the remaining 2. 13% did not have any type of recovery system with them. Statem ent: To know the remedies taken by banks to control/manage NPAs. Table 5. 8: Various Remedies to Control NPAs |Remedies |No. of Respondents |% age of Responses | |Proper field investigation |31 |39. 24 | |Strict follow-up |22 |27. 85 | |Effective credit appraisal |19 |24. 5 | |Normal funding limit |0 |- | |Any other |7 |8. 86 | |Total |79 |100 | Figure 5. 8: Various Remedies to Control NPAs Analysis and Interpretation: It was clear from above that 39. 24% considered proper field investigation as effective measure in controlling NPAs. 27. 85% considered strict follow- up, 24. 05% considered effective credit appraisal as the remedies to control NPAs. Statement: To know the performance of recovery system Table 5. 9: Performance of Working of Recovery System |Performance |No. of Respondents |% age of Responses | |Poor |2 |4. 26 | |Fair |6 |12. 77 | |Good |28 |59. 57 | |Very Good |8 |17. 2 | |Excellent |3 |6. 38 | |Total |47 |100 | Figure 5. 9: Performance of Working of Recovery System Analysis and Interpretation: It was clear from the above that 59. 57% of the banks reported the performance of their recovery system as good, for 17. 02% the recovery system was working very good. For 12. 77% the performance was not good but fair. Only 6. 38% reported the working of recovery system as excellent. Statement: To know whether long term strategy would be fruitful in controlling NPAs. Table 5. 0: Fruitfulness of Developing Long Term Strategy |Long term strategy |No. of Respondents |%age of Responses | |Yes |44 |93. 62 | |No |3 |6. 38 | |Total |47 |100 | Figure 5. 10: Fruitfulness of Developing Long Term Strategy Analysis and Interpreta tion: It was also clear that for majority of the banks i. e. 93. 2% long term plans will help in managing non performing assets. For the remaining 6. 38% these would not work in controlling NPAs. Statement: To know the percentage of future targets for NPAs. Table 5. 11: Future Targets for NPAs |Amount (%) |No. of Respondents |%age of Responses | |less than 1% |31 |65. 96 | |1%-2% |12 |25. 53 | |2%-3% |4 |8. 1 | |3%-4% |0 |- | |4% above |0 |- | |Total |47 |100 | Figure 5. 11: Future Targets for NPAs Analysis and Interpretation: From the above data it was clear that for the majority 65. 96% their future targets in controlling NPAs would be less than 1%. 25. 53% of the financial institutions try to range their NPAs between 1%-2% and the remaining 8. 51% try to keep it within the limit of 2%-3%. On the basis of this study, the most crucial points that can be highlighted were as follows: ? Out of 50, majority of the banks had non performing assets in their organization. This showed that many of the loans and advances given by banks were not recovered by them. ? Majority of the banks face less percentage of NPAs every year. This showed that out of total advances, maximum was returned to them by the borrowers. ? Majority of the fully financed cases, in which whole project is financed by banks, become NPAs. ? In maximum of the cases loans were provided against the property of a borrower and against his fixed deposits. ? Mostly the personal loans and housing loans turned into NPAs. This showed that artificial property is shown by borrowers at the time of availing loan. ? Willful default was the main reason causing NPA. A borrower may have enough money but he may not have intention to pay the installment money. ? Poor follow-up was another main reason for NPAs. It was seen that inadequate supervision made the chances of the assets to become NPAs very high. ? In order to control non performing assets, majority of the banks had recovery system in their respective organizations. ? Although many remedies were taken by majority of the banks in controlling NPAs but proper field investigation contributed to the maximum. It helped in accurate verification of income, property of the person who want loan against it. According to majority of the banks the recovery system was working good but not excellent. ? Financial institutions consider the development of long term strategy beneficial in controlling non performing assets. ? Last but not the least many banks aimed at con trolling the non performing assets less than 1%. CONCLUSION Non performing asset is a worrying factor for the banks. It is affecting the profitability of the banks by adding to the cost very badly. Though a good number of preventive moves were taken in this regards but the problem is inev