What Is NPA ? Types Of Non-Performing Assets

यह पोस्ट आप इस भाषा में भी पढ़ सकतें हैं - हिन्दी (Hindi)

First of all, it is very important for you to know what is NPA. NPA stands for non-performing assets. Sounds difficult? Don’t worry, we are here to explain to you. A non-performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. In simpler words, when a person takes a loan from the bank and is unable to pay the EMI, his loan account is then classified as an NPA account.

What Is NPA Types Of Non Performing Assets

What Is NPA?

We can say it this way also that there is no possibility for the bank to get the amount back from that account now. While issuing a loan amount, the bank promises the customer to give him/her a loan, for as long as he/she is regular in paying 10 percent interest on the amount. Later if he fails to return the amount, or his business seems to go down, he is in a problem. If he is unable to pay the amount for 90 days, his loan account is classified as an NPA account.

When a common man is unable to pay 1 lakh or 5 lakh loan amounts back, the bank uses various methods to get the amount back, but if this amount is exceptionally large, as in crores, the borrower already leaves the country before the bank issues a court notice. YOU KNOW WHO AM I TALKING ABOUT !!

According To Wikipedia

A non-performing loan (NPL) is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 90 days, but this can depend on the contract terms.

How many types of Non-Performing Assets are there –

NPA doesn’t simply mean that there is no way to get the bank’s money back. In fact, bank classifies these NPA accounts in 3 different types:-

1. Substandard asset- meaning an NPA which has been NPA for 1 year or less.

2. Doubtful asset- meaning doubtful asset that has been a doubtful asset for more than a year.

3. Loss asset- meaning an NPA which can’t pay back in any possible way.

When does an account become an NPA?

To be very simple and specific, when a person is unable to pay 3 continuous down payments, only then his account Is called as a Non-Performing Assets. In this case, the bank confiscates the property associated with the mortgage documents.

Disadvantages of an NPA –

By issuing an NPA, the bank’s profits are cut. This results in lesser revenue paid to the government. This eventually results in the raising of interest on investment amounts, as well as cutting of interest on the loan amount.

In the year 2007, NPA resulted in a great downfall in the economic market. Banks started hesitating to give loans. This imposed breaks on many great projects.

What is the condition of NPA in banks?

Right now, banks in India hold an NPA of 8.41 lakh crores out of which 90% is in public banks which constitute 70% banks in the country. According to the central bank, this amount can get raised to 20 lakh crores if no actions are taken. This amount was 3.51 lakh crores in 2015 which doubled up to 8.29 crore in the year 2017.

Non-Performing Assets is being topped by SBI with an NPA amount of 2 lakh crores, with PNB at the second position having 55.000 crores, leading BOI and IDBI at 46.000 crores and 43.000 crores respectively. In private sector banks, this amount is 43,000 crore for ICI CI bank followed by 20.000 crores and 7,000 crores for AXIS bank and HD FC bank respectively.

If we try to understand the condition, our country and go in great debt from which the condition will be definitely unrecoverable. To avoid the never-ending debt cycle, the country’s government must take appropriate actions in order to keep a check on this.

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यह पोस्ट आप इस भाषा में भी पढ़ सकतें हैं - हिन्दी (Hindi)

Categories BANKING

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