Nonperforming assets (NPAs) are recorded on a bank's balance sheet after a prolonged period of non-payment by the borrower.
Definition of 'Non-Performing Assets'
A non-performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. Banks are required to classify NPAs further into Substandard, Doubtful, and Loss assets. 1. Substandard assets:
Assets that have remained NPA for a period of less than or equal to 12 months. 2. Doubtful assets:
An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months. 3. Loss assets:
As per RBI, “Loss 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.”
Types of Non-Performing Assets (NPA)
• Term Loans. ...
• Cash Credit and Overdraft. ...
• Standard Assets. ...
• Sub- Standard Assets. ...
• Doubtful Debts. ...
• Loss Assets. ...
• Character. ...
• Collateral.
Causes of Non Performing Assets in banks:
• Ineffective recovery tribunal. ...
• Willful Defaults. ...
• Natural calamities. ...
• Industrial sickness. ...
• Lack of demand. ...
• Change on Govt. ...
• Defective Lending process. ...
• Inappropriate technology.
Non-Performing Assets (NPA)
• Which bank has the highest NPA?
IDBI Bank.
GNPA ratio of IDBI Bank is as high as 27.47 percent, which is the highest among all the private and public sector banks. The deteriorating asset quality of PVBs in terms of the GNPA ratio is due to the reclassification of IDBI Bank Ltd as a private bank.
• Why NPA is so high in PSU banks?
The study highlights that the primary causes of higher NPAs in PSBs are their liberal credit policies and loose terms and conditions of loans, deficiencies in the credit sanctions, and disbursements of loans.
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