NPA
- ECONOMY
News:
Banks’ gross NPAs drop to
3.2% in Sept-end helped by retail loans
What's
in the news?
●
The gross non-performing asset (GNPA)
ratio of scheduled commercial banks (SCBs) fell to 3.2 per cent at
end-September from 3.9 per cent at end-March.
Key
takeaways:
●
The GNPA ratio remained the highest for
the agricultural sector and the lowest for retail loans as at end-September,
the report on Trends and Progress of Banking in India 2022-23 (FY23), released
by the RBI, showed.
Non-Performing
Assets (NPA):
●
NPA refers to a classification for loans
or advances that are in default or are
in arrears on scheduled payments of principal or interest.
●
In most cases, debt is classified as
non-performing, when the loan payments have not been made for a minimum period of 90 days.
Gross
non-performing assets (GNPA):
●
Gross non-performing assets are the sum of all the loans that have been
defaulted by the individuals who have acquired loans from the financial
institution.
Net
non-performing assets (NNPA):
●
Net non-performing assets are the amount
that is realised after provision amount
has been deducted from the gross non-performing assets
Stressed
assets vs NPA:
●
Stressed Asset = NPAs + Restructured
assets + Written off assets.
○
NPA
is the part of stressed assets.
Restructured
assets or loans:
●
These are assets which have an extended repayment period, reduced interest
rate, converting a part of the loan into equity, providing additional
financing, or some combination of these measures. Hence, under restructuring a
bad loan is modified as a new loan.
Written
off assets:
●
Written off assets are those the bank or
lender doesn’t count the money the
borrower owes to it.
●
The financial statement of the bank will
indicate that the written off loans are compensated through some other way.
●
There is no meaning that the borrower is
pardoned or got exempted from payment.