What are non performing assets with examples?

The classification of advances or loans which are in arrears or default are known as Non Performing Assets (NPA). The loan is considered to be default when the debtor is not able to meet his obligations. NPA’s are classified based on the probability of repayment or based on length of time overdue. You can read about the Non Performing Assets (NPA) – What is the meaning of NPA? [UPSC Economics Notes] in the given link.

A loan is in arrears when interest payments or principal is missed or is late. After a lengthy period of non-payment by the borrower, the balance sheet of the banks records the Non Performing Assets (NPAs).

Further readings:

  1. RBI – Reserve Bank of India [UPSC Indian Economy Notes]
  2. Bad Banks – Idea Proposed by Indian Banking Association (IBA) Due to COVID-19

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