NON PERFORMING

ASSETS (NPA)
Anand Agrawal-1
Kashyap Bhut- 10
Swetapadma Mishra-38
Saumya Pandey-43
Abhishek Singhee-56
Pranav Thurakia-61
Pradnya Wadia-63

Definition
NPA is defined as a loan or an advance in respect of which the

interest &/or installment of principal remains overdue for a

period of more than 90 days in respect of a term loan or remains
out of order for a period of more than 90 days in respect of an
Overdraft /Cash Credit.
Any amount due to the Bank under any credit facility, if not

paid by the due date fixed by the bank, becomes overdue.

An asset, including a leased asset, becomes non-performing

when it ceases to generate income for the bank.

Categories of NPA
As per RBI

Substandard Assets

Doubtful Assets

Loss Assets

Share of Gross NPAs

Reasons behind rise in NPA

Lack of proper pre-enquiry by the bank for sanctioning a loan to

a customer.
Non performance of the business or the purpose for which the

customer has taken the loan.

Willful defaulter.
Loans sanctioned for agriculture purposes.
Change in govt. policies leads to NPA.

Effects of NPA on banks & FI

Restriction on flow of cash in banks

Drain of profit

Bad effect on goodwill

Bad effect on equity value

Effects of NPA on Economy

Failure of banking sector
Growth slows down