BY

K.JAYABHARATHI
I.M.COM.,
THIRAVIUM COLLEGE
OF ARTS AND SCIENCE
FOR WOMEN
KAILASAPATTY
THENI

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 Is an account which does not disclose any
problems & carries not more than normal risk
attached to the business.

 All loan facilities which are regular !

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 NPA is defined as a loan or an advance in respect of which the
interest &/or installment of principal remains “overdue” for a
period of more than 90 days in respect of a term loan or
remains “out of order” for a period of more than 90 days in
respect of an Overdraft /Cash Credit.

 Any amount due to the Bank under any credit facility, if not
paid by the due date fixed by the bank, becomes ‘overdue’.

 An asset, including a leased asset, becomes non-performing

when it ceases to generate income for the bank.
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Non Performing Asset: -
• A loan granted for short duration crops will be treated as NPA if the
installment of principal or interest thereon remains overdue for two crop
seasons. A crop season for each crop means the period upto harvesting of the
crops raised.

• A loan granted for long duration crops will be treated as NPA if the
installment of principal or interest thereon remains overdue for one crop
season. ( Long duration crops = crop season longer than 1 year & short
duration crops means which are not long duration crops )

• A bill purchased & discounted will be NPA if it remains overdue for a period
of more than 90 days from the date it is due.

• Any amount to be received remains overdue for a period of more than 90

days in respect of other accounts.
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NPA Identification – A Regular Exercise: -

 NPA identification is an ongoing process. An

asset should be classified as NPA within a month
of its’ becoming NPA & provisions for NPA
should be done on quarterly basis rather than at
year end only.

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Special Purpose Advances: -
 Agricultural Loans in areas suffering from Natural Calamities,
 Housing Loan to Staff
 Credit facilities guaranteed by Central would become NPA only if
the guarantee is repudiated by the Govt. State Govt. Guaranteed
Advances are treated at par with other advances.
 Project financing - For Infrastructure & Non infrastructure sectors
 Gold Loans – For Agricultural purposes & for non – Agricultural
purposes
 Loans against FDs / IVPs / KVPs / Life Policies are not treated as
NPA if adequate margin is available.
 Investments where Interest/Principal is overdue beyond 90 days
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 Gross NPA are the sum total of all loan assets that are
classified as NPAs as per RBI guidelines as on Balance Sheet
date. Gross NPA reflects the quality of the loans made by
banks. It consists of all the non standard assets, i.e. sub-
standard, doubtful & loss assets.

 If Gross NPA of any Co-operative Bank is more than 10%of

Gross Advances in any year, it comes under Supervisory
Action Framework of RBI.

 Net NPA = Gross NPA – Provision for BDDR

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 CA Gokul B Rathi

 Standard Assets :- Advance account which does not

disclose any problem & does not carry more than normal
business risk.
 Substandard Assets – Which has remained NPA for a
period less than or equal to 12 months.
 Doubtful Assets – Which has remained NPA for a period
more than 12 months.
 Loss Assets – where loss has been identified by the bank or
internal or external auditors or the RBI inspection, salvage
value of security is negligible & the entire asset is proposed
to be w/off after necessary approvals.

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This Act empowers the Bank:
 To issue demand notice to the defaulting borrower &
guarantor, calling upon them to discharge their dues in full
within 60 days from the date of the notice. 
 
 To give notice to any person who has acquired any of the
secured assets from the borrower to surrender the same to
the Bank. 
 
 To ask any debtor of the borrower to pay any sum due or
becoming due to the borrower. 
 
 Any Security Interest created over Agricultural Land cannot
be proceeded with.

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