NPA

What is NPA?

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.

Why in News?

S&P Global Ratings, a credit rating agency, has said non-performing loans of banks are expected to decline to 5-5.5% of the total advances by March 2024.
As per the latest Financial Stability Report published by the RBI, the gross non-performing assets (GNPA) declined to a six-year low of 5.9% in March 2022.
The agency added that India’s economic growth prospects should remain strong over the medium term, with GDP expanding 6.5-7% annually in fiscal years 2024-2026.

Reference

Today Current Affairs Upsc Exam Syllabus & Previous Yearpaper.