Question: What Is NPA As Per RBI?

What is NPA ratio?

​Gross non-performing assets (NPAs) What this is: NPAs indicate how much of a bank’s loans are in danger of not being repaid.

If interest is not received for 3 months, a loan turns into NPA.

What it means: A very high gross NPA ratio means the bank’s asset quality is in very poor shape..

What is restructuring of loan as per RBI?

The scheme allows banks to restructure loans of borrowers that were regular in their repayments and did not have more than 30 days overdue as of March 1, 2020, without downgrading their asset classification to a non-performing asset. Here is the set of FAQs released by RBI: 1.

What is provisioning in NPA?

Banks/FIs are required to set aside a portion of their income as provision for the loan assets so as to be prepared for any contingent losses that may arise in the event of non-recovery of loans. The amount of provision to be kept by the bank/FI, will depend on the probability of loan recovery.

How is RBI tackling with NPA?

To tackle NPA problem, RBI puts 200 stressed bank accounts under scanner. As part of its effort to contain rising non-performing assets (NPAs), the RBI has started scrutiny of 200 large accounts to assess the level of stress and provisioning done against them by respective banks.

What are the types of NPA?

Types of Non-Performing Assets (NPA)Overdraft and cash credit (OD/CC) accounts left out-of-order for more than 90 days.Agricultural advances whose interest or principal installment payments remain overdue for two crop/harvest seasons for short duration crops or overdue one crop season for long duration crops.More items…•

When an account is declared NPA?

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.

What is the main function of RBI?

In the Indian context, the basic functions of the Reserve Bank of India as enunciated in the Preamble to the RBI Act, 1934 are: “to regulate the issue of Bank notes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to …

Which government is responsible for NPA?

Congress governmentRaghuram Rajan’s statement clearly proves that it is the Congress which is responsible for increased NPAs, Congress: Party leader Randeep Surjewala said I agree that the Congress government was responsible for the Rs 2.83 lakh crore NPAs in 2014.

What are 3 types of assets?

What are the Main Types of Assets?Cash and cash equivalents.Accounts Receivable.Inventory. It is often deemed the most illiquid of all current assets – thus, it is excluded from the numerator in the quick ratio calculation.Investments.PPE (Property, Plant, and Equipment) … Vehicles.Furniture.Patents (intangible asset)

What is NPA crisis?

The markets seized up, banks refused to lend to each other in the overnight money markets, the commercial paper market for corporates froze and money market funds which were known to never “break the buck”, did so at the peak of the crisis. …

How can I recover my NPA?

Here are five ways the government and Reserve Bank of India can speed up recovery of non-performing assets (NPAs).Amendment in banking law to give RBI more powers. … Stringent NPA recovery rules. … RBI’s loan restructuring schemes. … Present NPA scenario. … Banks may need to take a “hair cut”

How much is NPA recovery?

Due to the Narendra Modi government’s efforts to bring down non-performing assets (NPAs) in banks and financial institutions, Rs 4 lakh crore has been recovered through insolvency and bankruptcy proceedings since 2014 which is a “major achievement,” Union minister Anurag Thakur said on Friday.

What is standard asset as per RBI?

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.

How is NPA calculated?

Formula: Net non-performing assets = Gross NPAs – Provisions. Gross NPA Ratio is the ratio of total gross NPA to total advances (loans) of the bank. … Provision Coverage Ratio = Total provisions / Gross NPAs.

Where is NPA shown in balance sheet?

(i) Interest accrued in respect of non-performing advances should not be debited to borrowal accounts but shown separately under ‘Interest Receivable Account’ on the ‘Property and Assets’ side of the balance sheet and corresponding amount shown under ‘Overdue Interest Reserve Account’ on the ‘Capital and Liabilities’ …