BANKING AFFAIRS

Detailed explanation-1: -If the interest or principal remains overdue for a period 90 days or three months and above the loan account is classified as a Non-Performing Asset (NPA).

Detailed explanation-2: -A Non-performing asset (NPA) is a loan or an advance where: 1. interest and/ or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan, 2.

Detailed explanation-3: -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.

Detailed explanation-4: -In any case, delay beyond six months is not considered desirable as a general discipline. Hence, an account where the regular/ ad hoc credit limits have not been reviewed/ renewed within 180 days from the due date/ date of ad hoc sanction will be treated as NPA.

Detailed explanation-5: -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.