NPA (Non Performing Assets) — Definition, Types & Examples

Non Performing Assets (NPA) refer to a loan or advance for which the principal or interest payment is due but has not been paid for a period of 90 days or more. In other words, it is an asset that has stopped yielding income.

– A term loan is considered non-performing if the interest or installments are overdue for a period of 90 days.

– A cash credit (CC) or over draft (OD) account is considered non-performing if it remains out of order for a period of 90 days.

– A bills payable or bills discounting account is considered non-performing if it remains overdue or unpaid for a period of 90 days.

Out of Order/NPA	22-01-2014	22-04-2014
Sub-Standard	22-04-2014	22-04-2015
D-1	22-04-2015	22-04-2016
D-2	22-04-2016	22-04-2018
D-3	22-04-2018	–

Agriculture NPA

For Short Duration Crop: If installment or interest is overdue for two crop seasons.

For Long duration crop: If installment or interest is overdue for one crop season.

NPA on account of erosion in the value of security

– If the realizable value of the security is less than 50%, the account will be shifted to the Doubtful category.

– If the realizable value of security is less than 10%, the account will be shifted to the Loss asset category.

Computaion of Gross Advances, Gross NPA, Net Advances and Net NPA

A. Gross Advances=Standard assets + Gross NPA

B. Gross NPA as percentage of gross advances=Gross NPA/Gross Advances

C. Net Advances=Gross Advances – deductions

D. Deductions:
Provisions held in the case of NPA accounts
DICGC/ECGC claims received and held pending adjustment.
Part payment received and kept in suspense a/s or similar

E. Net NPA = Gross NPA – Deductions
F. Net NPA as % of net advances = Net NPA/ Net Advances

Asset Classification

Group	Definition
Standard	Accounts which are in order.
Sub-Standard	Accounts which have been classified as NPAa for a period of not exceeding 12 months.
Doubtful: (D-1,D-2,D-3)	Sub-standard accounts which have remained NPA for period Exceeding 12 months.
Loss Assets	Accounts which have become unrealizable, where losses have been identified by the bank/internal or external auditors/ RBI inspectors.