Non-Performing Assets (NPA)
5paisa Research Team
Last Updated: 26 Feb, 2025 11:08 PM IST

Content
- Introduction
- What is NPA in Banking?
- How Non-Performing Assets (NPA) Work?
- Categories of Non-performing assets
- NPA Provisioning
- NPA in Absolute Numbers
- NPA in ratio
- Example of NPA
- Impact of NPA on Operations
Introduction
Banking has various tools to measure its users' stability, performance, and credibility. Any slight imbalance could harm the bank's reputation. Non-Performing Assets (NPA) are one way to assess the strength and stability of a bank's finances.
The non-performing assets definition refers to the default loan classification by banks and other financial institutions. These loans' interest and principal payments have been past due for a considerable time. In India, a loan becomes a non-performing asset after 90 days. This blog explains what is non-performing assets in detail.
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Frequently Asked Questions
When a bank declares an NPA, the bank gives a notice period of 60 days before starting the legal procedure.
The bank will offer an option of a one-time loan settlement to settle an NPA account.
The formula to calculate NPA is as below.
Net NPA = Gross NPA - Provisions
An ideal NPA percentage that every bank should maintain is below 1%.