Non-Performing Assets

 Reserve Bank of India defines Non-Performing Assets in India as any advances or loan that is overdue for more than 90 days.

Types of Non- Performing Assets (NPA)

a) Sub- Standard Assets

An asset is classified as a sub-standard asset if it remains as an NPA for a period less than or equal to 12 months.

b) Doubtful Assets

An asset is classified as a doubtful asset if it remains in sub-standard category for more than 12 months.

c) Loss Assets

An asset is considered as a loss asset when it is 'uncollectible' and of such little value that it's continuence as a bankable asset is not warranted.

Although there may be some salvage or recovery value  

GNPA

GNPA stands for gross non- performing assets. it is a total value of non- performing assets.

NNPA

NNPA stands for Net Non-Performing Assets. NNPA substracts the provisions made by the bank from the gross NPA. Therefore Net NPA gives you the exact value of non- performing assets after the bank has made specific provisions 

NPA Ratio

GNPA Ratio= GNPA/total advances

NNPA Ratio= NNPA/ total advances

To check the soundness of bank's financial condition,one should check the NPA Ratio

Dr Sucheta Dalvi