“Non-Performing Assets” (NPA)
The interest and / or instalment of principal in respect of such an Advance has remained due for a specified period of time. The identification of NPA is done on the basis of the position as on the Balance Sheet date.
Time Limits:
An Advance / Asset will be treated as NPA considering the following time limits-
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Nature
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When termed as NPA
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Term Loan
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Interest and / or Instalment of principal has remained overdue for a period exceeding 90 days.
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Overdraft / Cash Credit
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The account has remained “Out-of-order” for a period exceeding 90 days.
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Bill Purchased & Discounted
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The bill remains overdue for a period exceeding 90 days.
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Agricultural Advances
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The instalment of principal or interest thereon remains overdue for-
· Short Duration Crops – Two Crop Seasons
· Long Duration Crops – One Crop Seasons
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Classification of assets:
The bank have to classify their advances as follows
1. Standard Assets: Standard Assets is one which do not pose any problems and which do not carry more than normal risk attached to the business. They are not NPAs.
2. Sub-Standard Assets: Substandard Assets are those which have remained an NPA for a period not exceeding 12 Months.
3. Doubtful Assets: An assets would be classified as doubtful if it remained in the sub-standard category for 12 Months.
4. Loss Assets: A loss asset is one where loss has been identified by the bank or Internal / External Auditors or by the RBI Inspection.
Rates of Provisioning for Non-Performing Assets
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Category of Advances
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Provision Rate (%)
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Standard Advances
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2
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Sub-Standard Advances
· Secured Portion
· Unsecured Portion
· Unsecured Portion in respect of Infrastructure loan accounts where certain safeguards such as escrow accounts are available.
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15
25
20
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Doubtful Advances – Unsecured Portion
Doubtful Advances – Secured Portion
· For Doubtful upto 1 year
· For Doubtful > 1 year and upto 3 years
· For Doubtful > 3 years
|
100
25
40
100
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Loss Advances
|
100
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