Management of non-performing assets in Virudhunagar District central co-operative Bank

Banks are one of the financial intermediaries doing the business of borrowing and lending. The borrowing sources of any bank largely consist of deposits received from the public. Funds secured through deposits, interbank loans, etc., are cheap in terms of cost. The banks lend funds on sufficient securities at higher rates of interest. The interest paid on deposits and that received on loan assets constitutes banker's spread. Non-performing Asset is an important constraint in the study of financial performance of a bank as it results in declining margin and higher provisioning requirement for doubtful debts. This paper attempts to study on management of non-performing assets in the perspective of the VRDCC Bank Ltd. The study was based on secondary data which are taken from annual reports of the VRDCC Bank Ltd. Trend percentage and Pearson correlation coefficients were used to analyse the data collected. Trend percentage on loan outstanding has increased tremendously during the study period. It was found that the recovery initiative is not consistent as the recovery ratio fluctuates throughout the period of study. The gross NPA is positively correlated with sub-standard assets and doubtful assets and negative correlated with loss assets. This evidences that the bank tries to achieve efficient management of sub-standard assets and doubtful assets. Rise in loss assets are a sign of weakness of loan assets management.