Report on Non-Performing Assets of Banks

Scope of the Study
 Concept of Non Performing Asset  Guidelines  Impact of NPAs  Reasons for NPAs  Preventive Measures  Tools to manage NPAs

Scope of the Project
 Study of NPAs in Indian Banking sector Involves study of sector not particular bank focus on NPAs not Banking Sector will not inculd any amendment after Feb.2005

Introduction
NPA. The three letters Strike terror in banking sector and business circle today. NPA is short form of “ Non Performing Asset”. The dreaded NPA rule says simply this: when interest or other due to a bank remains unpaid for more than 90 days, the entire bank loan automatically turns a non performing asset. The recovery of loan has always been problem for banks and financial institution. To come out of these first we need to think is it possible to avoid NPA, no can not be then left is to look after the factor responsible for it and managing those factors.

Definitions:

An asset, including a leased asset, becomes non-performing

when it ceases to generate income for the bank. 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.

 With a view to moving towards international best practices and to ensure greater
transparency, it has been decided to adopt the ‘90 days’ overdue’ norm for identification of NPAs, from the year ending March 31, 2004. Accordingly, with effect from March 31, 2004, a non-performing asset (NPA) shall be a loan or an advance where;

i Interest  The

and/ or instalment of principal remain overdue for a period of

more than 90 days in respect of a term loan, account remains ‘out of order’ for a period of more than 90 days, in

respect of an Overdraft/Cash Credit (OD/CC),

 bill remains overdue for a period of more than 90 days in the case of The
bills purchased and discounted,

 Interest

and/or instalment of principal remains overdue... [continues]

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