Non performing asset (NPA) Act – Banking awareness notes

A Non-performing asset (NPA) is characterized as a credit office in regard of which the intrigue or potentially portion of Bond back key has stayed 'past due' for a predetermined timeframe. Non performing asset is utilized by money related establishments that allude to credits that are in danger of default. Once the borrower has neglected to make intrigue or rule installments for 90 days the advance is thought to be a non-performing resource. Non-performing asset (NPA) is hazardous for budgetary organizations since they rely on upon intrigue installments for money. Troublesome weight from the economy can prompt to a sharp increment in non-performing advances and frequently brings about huge compose downs.

  

A Non-performing asset is a loan or improvement where:-

Term loan: - interest and installment of principle remains overdue for more than 90 days.

Overdraft or cash credit: - account is out of order

Outstanding balance remains continuously in excess of the sanctioned limit.

Outstanding balance with in the sanctioned limit, but there are no credits continuously for 90 days as on the date of balance sheet.

With a view to moving towards universal best practices and to guarantee more prominent straightforwardness, it has been chosen to receive the '90 days' past due' standard for ID of NPA, from the year finishing March 31, 2004. In like manner, with impact from March 31, 2004, a Non performing asset (NPA) is a credit or a propel where; 

Intrigue as well as portion of vital stay past due for a time of over 91 days in regard of a term credit, The record stays 'out of request' for a time of over 90 days, in regard of an Overdraft/Cash Credit (OD/CC), The bill stays past due for a time of over 90 days on account of bills bought and reduced,

Intrigue or potentially portion of central stays past due for two reap seasons yet for a period not surpassing two half years on account of a progress conceded for agrarian purposes, and Any add up to be gotten stays past due for a time of over 90 days in regard of different records.