A non-performing asset (NPA) refers to a loan or advance where the repayment of the principal amount or interest has been delayed for a span of 90 days or more.
The three types of Non-Performing Assets are:
1. Substandard Assets
2. Doubtful Assets
3. Loss Assets
These are assets that are not performing for a period less than or equal to 12 months.
These are assets that are not performing for a period of 12 months or more.
These assets are deemed 'uncollectible' due to minimal or no monetary value. Though they may hold slight recovery potential, they're no longer considered bank assets.
Gross Non-Performing Assets (GNPA) represent the collective sum of all loan assets that borrowers have not repaid within a span of ninety days.
Net Non-Performing Assets (NNPA) refer to the remaining amount obtained by subtracting uncertain and unpaid debts from the GNPA figure.
Gross Non-Performing Assets (NPAs) do not reflect the true financial impact on the organization.
On the other hand, Net NPAs (NNPAs) accurately represent the real financial loss experienced by the organization.