Non-Performing Assets/ Stressed Assets | PAPER II – PRINCIPLES & PRACTICES OF BANKING | MODULE B: FUNCTIONS OF BANKS
Non-Performing Assets (NPA) - Banking Notes Non-Performing Assets (NPA) and Stressed Assets Definition A Non-Performing Asset (NPA) is a loan or advance where: Interest and/or installment of principal remain overdue for more than 90 days in respect of a term loan. The account remains 'out of order' in respect of an Overdraft/Cash Credit. Income Recognition Income from NPAs is not recognized on an accrual basis. It should be recorded only when it is actually received. Computation of Gross Advances, Gross NPA, Net Advances, and Net NPA Example and Illustration: Given: Total Advances = ₹1,000 crore Gross NPAs = ₹150 crore Provisions on NPAs = ₹60 crore Formulas: Net Advances = Total Advances - Provisions Net NPAs = Gross NPAs - Provisions Gross NPA % = (Gross NPA / Gross Advances) × 100 Net NPA % ...