NPAs

Concept: NPAs
Topic: Economic Development
Category: Indian Economy
Related News: Hindu, Feb 21
CNA mentions: 2 (Feb 21, Mar 2)

NPAs     

A non-performing asset (NPA) is a classification for credit facilities (loans) that are in default or are overdue on scheduled payments of interest or principal. Simply put, an asset can be labelled non-performing when it stops generating income for the lender. Generally, the time period beyond which default occurs is 90 days although this varies with the terms and conditions between the lender and the borrower. There are three categories of non-performing assets:

  1. Substandard assets: an asset that remains an NPA for not more than 12 months.
  2. Doubtful assets: an asset that remains an NPA for more than 12 months.
  3. Loss assets: whenever loss has been acknowledged by the Reserve Bank, but there is still some value remaining. So, the loan has not been completely written off.