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Banking

In: Business and Management

Submitted By bhawnaNarang
Words 302
Pages 2
NPA is an advance where payment of interest or repayment of installment of principal (in case of Term loans) or both remains unpaid for a period of 90 or more days (new norms with effect from 31st March, 2004). Ninety days overdue - With a view to moving towards international best practices and to ensure greater transparency, it has been decided to adopt the '90 days overdue' norm for identification of NPAs, from the year ending March 31, 2004. Accordingly, with
1. Interest and /or installment of principal remain overdue for a period of more than 90 days in respect of a Term Loan,
2. The account remains 'out of order' for a period of more than 90 days, in respect of an Over-drat (OD)
3. The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
4. Interest and/ or installment of principal remains overdue for two harvest seasons but for a period not exceeding two and half years in the case of an advance granted for agricultural purpose.
NPA represent bad loans, the borrowers of which failed to satisfy their repayment obligations.
Michael (2006) emphasized that NPA in loan portfolio affect operational efficiency which in turn affects profitability, liquidity and solvency position of banks. Non-Performing Assets (NPAs) of the Indian banking sector have been rising in 2011-12, reached at 2.9% from 2.4% in 2008-09.
NPA represent bad loans, the borrowers of which failed to satisfy their repayment obligations.
Michael (2006) emphasized that NPA in loan portfolio affect operational efficiency which in turn affects profitability, liquidity and solvency position of banks. Non-Performing Assets (NPAs) of the Indian banking sector have been rising in 2011-12, reached at 2.9% from 2.4% in

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