BANKING AFFAIRS

Detailed explanation-1: -Selling the NPA to all the other banks – There is a provision for a bank to sell its NPA to some other bank only if this has remained in the books of the selling bank for more than two years. Also, it is mandatory to hold the NPA for at least 15 months before the bank can sell the NPA to some other bank.

Detailed explanation-2: -3 Doubtful Assets With effect from March 31, 2005, an asset is required to be classified as doubtful, if it has remained NPA for more than 12 months. For Tier I banks, the 12-month period of classification of a substandard asset in doubtful category is effective from April 1, 2009.

Detailed explanation-3: -The banking sector follows an automated system for tagging accounts as NPAs, under which the accounts are tagged as NPAs on the day the account becomes overdue for more than 90 days. However, in many NBFCs, this classification is made after the end of 90 or 180 days.

Detailed explanation-4: -There are different types of non-performing assets depending on how long they remain in the NPA category. An asset is classified as a sub-standard asset if it remains as an NPA for a period less than or equal to 12 months. An asset is classified as a doubtful asset if it remained as an NPA for more than 12 months.