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[NPA] Non Performing asset

What is Non Performing asset NPA as per RBI

An asset, including a leased asset, becomes non-performing when it ceases to generate income for the bank. A ‘non-performing asset’ (NPA) was defined as a credit facility in respect of which the interest and/ or instalment of principal has remained ‘past due’ for a specified period of time.

2.1 Non ­performing Assets
  •  An asset, including a leased asset, becomes non­ performing when it ceases to generate income for the bank.
  •  A non ­performing asset (NPA) is a loan or an advance where;
  1.  interest and/ or installment of principal remain overdue for a period of more than 90 days in respect of a term loan,
  2.  the account remains ‘out of order’, in respect of an Overdraft/Cash Credit (OD/CC),
  3.  the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
  4.  the installment of principal or interest there on remains overdue for two crop seasons for short duration crops,
  5.  the installment of principal or interest thereon remains overdue for one crop season for long duration crops,
  6. the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitisation transaction undertaken in terms of guidelines on securitisation dated February 1, 2006.
  7.  in respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment.
  8. In case of interest payments, banks should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter.

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