22 February 2015

Non Performing Assets (NPA) – Banking Study Material & Notes

NPA or Non performing assets have been in news for long enough to become a feature in almost every banking exam nowadays. As a banking recruitment aspirant, you must be aware of the defining norms for NPA in India. If you see your future in the banking sector then, you should familiarize yourself with these basic terms related to this sector.non performing assets (npa)A detailed understanding of terms like this is mandatory for scaling heights in banking industry. Looking at the importance of such terms for aspirants, we have compiled the basic definition used by the reserve bank of India to classify assets as non performing. We hope this study material and notes about banking will be helpful in your preparation and equip you well for your any future challenges that may come your way. Now let us look into the details of Non Performing Assets(NPA) under the Banking study material and notes.


Non Performing Assets are basically those assets of banks or other similar financial institutions which, as the name suggests, do not perform the task of income/interest generation for the bank.

The Reserve Bank of India defines, these non performing Assets according to international best practices of “90 days overdue” norms. According to these norms, a NPA is such a loan or advance given by a bank where:

  • The interest or installment of the principal sum remains overdue for more than 90 days (in respect of a term loan),

  • The account remains ‘out of order’ for more than ninety days (in respect of an Overdraft/Cash Credit),

  • The bill is overdue for more than 90 days (in the case of bills purchased and discounted),

  • Agricultural loans: The installment or interest of the principal sum remains overdue for 2 crop seasons( for short duration crops),

  • Agricultural loans: The installment or interest of the principal sum remains overdue for 1 crop seasons( for long duration crops),

  • The amount of liquidity facility ha been outstanding for more than 90 days, with respect to a securitisation transaction done according to the terms of guidelines on securitisation, 2006.

  • For derivative transactions, the overdue receivables that represent positive mark-to-market value of a derivative contract, they remain unpaid for time duration of 90 days from the specified due date for payment.

We will keep this section updated according to updates from RBI for simplifying thier guidelines and norms for your better understanding.

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