What is a loss asset?

When the amount has not been written off wholly but loss has been identified by the RBI, or external auditor, or internally by the bank, then this asset is classified as a loss asset. You can read about the Non Performing Assets (NPA) – What is the meaning of NPA? [UPSC Economics Notes] in the given link.

When an asset fails to generate income for the bank, that asset becomes a non performing asset (NPA). When an asset is classified as an NPA for less than 12 months, then it is classified as a Substandard NPA. When the asset has not been performing for more than 12 months, then these assets are classified Doubtful Assets.

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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