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Report on Non Performing Assets of Bank

Report on Non Performing Assets of Bank

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Published by hemali chovatiya

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Published by: hemali chovatiya on Nov 11, 2009
Copyright:Attribution Non-commercial


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Scope of the Study Scope of the Study 
Concept of Non Performing Asset
Impact of NPAs
Reasons for NPAs
Preventive Measures
Tools to manage NPAs
Scope of the Project Scope of the Project 
Study of NPAs in Indian Banking sector 
Involves study of sector not particular bank
focus on NPAs not Banking Sector 
will not inculd any amendment after Feb.2005
. The three letters Strike terror in banking sector and business circle today.NPA is short form of “ Non Performing Asset”. The dreaded NPA rule says simplythis: when interest or other due to a bank remains unpaid for more than
90 days
,the entire bank loan automatically turns a non performing asset. The recovery of loan has always been problem for banks and financial institution. To come out of these first we need to think is it possible to avoid NPA, no can not be then left isto look after the factor responsible for it and managing those factors.
An asset, including a leased asset, becomes non-performingwhen it ceases to generate income for the bank.A ‘non-performing asset’ (NPA) was defined as a credit facility in respect of whichthe interest and/ or instalment of principal has remained ‘past due’ for a specifiedperiod of time.
With a view to moving towards international best practices and to ensuregreater transparency, it has been decided to adopt the ‘
90 days’ overdue’ 
normfor identification of NPAs, from the year ending March 31, 2004. Accordingly, witheffect from March 31, 2004, a non-performing asset (NPA) shall be a loan or anadvance where;
Interest and/ or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan,
The account remains ‘out of order’ for a period of more than 90 days, inrespect of an Overdraft/Cash Credit (OD/CC),
The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
Interest and/or instalment of principal remains overdue for two harvestseasons but for a period not exceeding two half years in the case of anadvance granted for agricultural purposes, and
Any amount to be received remains overdue for a period of more than 90days in respect of other accounts.As a facilitating measure for smooth transition to 90 days norm, banks have beenadvised to move over to charging of interest at monthly rests, by April 1, 2002.However, the date of classification of an advance as NPA should not be changedon account of charging of interest at monthly rests. Banks should, therefore,continue to classify an account as NPA only if the interest charged during anyquarter is not serviced fully within 180 days from the end of the quarter with effectfrom April 1, 2002 and 90 days from the end of the quarter with effect from March31, 2004.
'Out of Order' status:'Out of Order' status:
An account should be treated as
'out of order' 
if the outstanding balance remains continuously in excess of the sanctionedlimit/drawing power. In cases where the outstanding balance in the principaloperating account is less than the sanctioned limit/drawing power, but there areno credits continuously for six months as on the date of Balance Sheet or creditsare not enough to cover the interest debited during the same period, theseaccounts should be treated as
'out of order'
Any amount due to the bank under any credit facility is ‘overdue’ if itis not paid on the due date fixed by the bank.
Types of NPA:Ty 
 pes of NPA:
 A] Gross NPA A] Gross NPAB] Net NPAB] Net NPA A] Gross NPA: A] Gross NPA:

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