What are the classification of NPA?

What are the classification of NPA?

NPAs can be classified as a substandard asset, doubtful asset, or loss asset, depending on the length of time overdue and probability of repayment. Lenders have options to recover their losses, including taking possession of any collateral or selling off the loan at a significant discount to a collection agency.

What is non-performing assets RBI?

A ‘non-performing asset’ (NPA) was defined as a credit facility in respect of which the interest and/ or instalment of principal has remained ‘past due’ for a specified period of time.

What is NPA as per RBI norms?

For the above category of banks, an account would be classified as Non Performing Asset if the : (i) Interest and/or installment of principal remain overdue for a period of more than 180 days in respect of a Term Loan. 4 Tier II banks shall classify their loan accounts as NPA as per 90 day norm as hitherto.

How is a Borrowal account classified as NPA?

A. The classification of an asset as NPA should be based on the record of recovery. A working capital Borrowal account will become NPA if such irregular drawings are permitted in the account for a continuous period of 90 days even though the unit may be working or the borrower’s financial position is satisfactory.

What is non performing assets in India?

Definition: A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. Description: Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets. 1.

What is non performing assets with examples?

For example, a mortgage in default would be considered nonperforming. After a prolonged period of non-payment, the lender will force the borrower to liquidate any assets that were pledged as part of the debt agreement.

What is meant by non banking assets?

Non- Banking Assets, therefore, are those Financial Assets acquired by the banks to settle their debts. When a borrower is unable to repay the amount of the loan in cash and in place of that offers an asset to the bank. This is known as a non-banking asset.

What are NPA standard assets?

Standard Asset is one which does not disclose any problems and which does not carry more than normal risk attached to the business. Such an asset should not be an NPA. i. With effect from March 31, 2005 an asset would be classified as sub-standard if it remained NPA for a period less than or equal to 12 months.

What is asset classification?

Asset classification is a system for assigning assets into groups, based on a number of common characteristics. Various accounting rules are then applied to each asset group within the asset classification system, to properly account for each one.

What is a Borrowal account?

As per RBI, a small borrowal account (SBA) is defined as an account having a credit limit of up to 2,00,000. The holders of these accounts are individuals/entities who have relatively small credit/borrowal requirements.

What is NPA how income is Recognised on NPA assets?

Income from non-performing assets (NPA) is not recognised on accrual basis but is booked as income only when it is actually received. Therefore, banks should not take to income account interest on non-performing assets on accrual basis.

What are the different types of non performing assets?

Sub-Classifications for Non-Performing Assets (NPAs) 1 1. Standard Assets. They are NPAs that have been past due for anywhere from 90 days to 12 months, with a normal risk level. 2 2. Sub-Standard Assets. 3 3. Doubtful Debts. 4 4. Loss Assets.

How is income from nonperforming assets not recognised?

Internationally income from non­performing assets (NPA) is not recognised on accrual basis but is booked as income only when it is actually received. Therefore, the banks should not charge and take to income account interest on any NPA.

How does a bank categorize an NPA?

Afterward, the lender or bank will categorize the NPA into one of the following sub-categories: 1. Standard Assets They are NPAs that have been past due for anywhere from 90 days to 12 months, with a normal risk level. 2. Sub-Standard Assets

How is the classification of assets of banks done?

Likewise, the classification of assets of banks has to be done on the basis of objective criteria which would ensure a uniform and consistent application of the norms.