Non-Performing Asset Loans and advances given by the banks to its customers are an Asset to the bank. Just for the sake of simplicity, we can understand that a loan (an asset for the bank) turns as NPA when the EMI, principal or interest component for the loan is not paid within 90 days from the due date. Thus a Bad Loan is a n asset that ceases to generate any income for the bank . As per RBI guidelines, NPA is defined as under: Non performing asset (NPA) is a loan or an advance where; i. interest and/ or installment of principal remain overdue for a period of more than 90 days in respect of a term loan, ii. the account remains‘out of order’ in respect of an Overdraft/Cash Credit (OD/CC), iii. the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, iv. the instalment of principal or interest there on remains overdue for two crop seasons for short duration crops, v . the instalment of principal or interest
Comments
Post a Comment