NPAs of banks to cross ₹10 lakh crore in March 2022

A non performing asset (NPA) is a loan or advance for which the principal or interest payment remains overdue for a period of more than 90 days.
Banks classify NPAs further into Substandard, Doubtful and Loss assets.
- Substandard assets: Assets which have remained NPA for a period less than or equal to 12 months.
- Doubtful assets: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.
- Loss assets: Loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.

With respect to agriculture, a loan granted for short duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for two crop seasons.
A loan granted for long duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for one crop season.

A joint report, released by rating agencies Assocham and Crisil, projected the gross non-performing assets (GNPAs) of commercial banks to exceed ₹10 lakh crore by March 2022.
NPAs are expected to rise to 8.5-9% by March 2022, driven by slippages in retail, micro, small and medium enterprise (MSME) accounts, besides some restructured assets.
According to the report, the GNPAs of banks have declined from the peak seen in March 2018 and were lower as of March 2021 vis-à-vis March 2020 on account of supportive measures, including the six-month debt moratorium, emergency credit line guarantee scheme (ECLGS) loans and restructuring measures.
The report also highlighted that risk management practices of Indian banks, especially public sector banks, needed to improve.

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