Non Performing Assets in Banks

Now, to study non performing assets in banks has become important because RBI's Financial Stability Report which has been published today, has told that main reason of decreasing the profitability will be non performing assets in banks. RBI explained in the report that the gross NPA ratio in the agriculture sector rose to 3.3 per cent in March from 2.4 per cent a year earlier.

What is  non performing assets in banks?

Non performing assets is the investment of banks in doubtful loan. In simple words, it means to give loan to those parties who will not repay on the time. RBI has made a simple rules of asset classification  for showing non performing assets in the balance sheet.

If bank does not get his given loan with in 90 days after date of its collection, it will become non performing asset in bank. In bank term, it is called NPA. It is also called non performing debt or loan.

Related : RBI's Balance Sheet Analysis