Non Performing Asset means an asset or account of borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset, in accordance with the directions or guidelines relating to asset classification issued by RBI.
Earlier an asset was considered as non-performing asset (NPA) based on the concept of 'Past Due'. A ‘non performing asset’ (NPA) was defined as credit in respect of which interest and/ or installment of principal has remained ‘past due’ for a specific period of time. The specific period was reduced in a phased manner as under:
1993 - 4 Quarters
1994 - 3 Quarters
1995 - 2 Quarters
With a view to moving towards international best practices and to ensure greater transparency, '90 days' overdue* norms for identification of NPAs have been made applicable from the year ended March 31, 2004
a non-performing asset shall be a loan or an advance where:
Earlier an asset was considered as non-performing asset (NPA) based on the concept of 'Past Due'. A ‘non performing asset’ (NPA) was defined as credit in respect of which interest and/ or installment of principal has remained ‘past due’ for a specific period of time. The specific period was reduced in a phased manner as under:
1993 - 4 Quarters
1994 - 3 Quarters
1995 - 2 Quarters
With a view to moving towards international best practices and to ensure greater transparency, '90 days' overdue* norms for identification of NPAs have been made applicable from the year ended March 31, 2004
a non-performing asset shall be a loan or an advance where:
(i) Interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a Term Loan.
(ii) The account remains 'Out of order'@ for a period of more than 90 days, in respect of an Overdraft/ Cash Credit (OD/CC).
(iii) The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
(iv)Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.
overdue.
Any amount due to the bank under any credit facility, if not paid by the due date fixed by the bank becomes overdue.
'out of order'
if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power.
In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days or credits are not enough to cover the interest debited during the same period, these accounts should be treated as 'out of order'”.
