Non-Performing Assets (NPA)

Net NPA Ratio
Write-Offs

In banking terms, a nonperforming asset (NPA) is a loan in which the borrower is in default due to the fact that they have not made the scheduled payments for a specified period. According to International Monetary Fund (IMF), a non-performing asset or loan is classified as one for which;

  1. Payments of interest and principal are past due by 90 days or more
  2. At least 90 days of interest payments have been capitalized, refinanced or delayed by agreement
  3. Payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full

In India, non-performing loans are common in the agricultural sector where the farmers can't pay back the loan or the interest amount mainly as a result of losses due to floods or drought.

In banking terms, a nonperforming asset (NPA) is a loan in which the borrower is in default due to the fact that they have not made the scheduled payments for a specified period. According to International Monetary Fund (IMF), a non-performing asset or loan is classified as one for which;

  1. Payments of interest and principal are past due by 90 days or more
  2. At least 90 days of interest payments have been capitalized, refinanced or delayed by agreement
  3. Payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full

In India, non-performing loans are common in the agricultural sector where the farmers can't pay back the loan or the interest amount mainly as a result of losses due to floods or drought.

icon icon icon

SUBJECT Variables
A loan in which the borrower is in default due to the fact that they have not made the scheduled payments for a specified period.
Non-Performing Assets (NPA) | India | 2010 - 2023 | Data, Charts and Analysis
Current and historical data on Non-Performing Assets (NPAs) of Indian Banks - gross and net amounts, write-offs, and comparison with global peers.
2010,2011,2012,2013,2014,2015,2016,2017,2018,2019,2020,2021,2022,actual,amount,amounts,analysis,annual,asset,assets,bank,banking,banks,chart,charts,compared,comparison,current,data,default,defaulter,defaulters,defaults,economy,figure,figures,global,graph,graphs,gross,historical,india,indian,indicator,indicators,info,information,level,levels,loans,net,non-performing,npa,npas,ratio,ratios,recovery,sector,statistics,stats,value,values,willful,willfull,world,year,yearly
01/04/2010 To 31/03/2023
Net NPA Ratio
Write-Offs
icon
Characters : 129/225
Characters : 77/120
Characters : 146/160
Characters : 470/3500
To
Net NPA Ratio
Write-Offs
icon icon
GROSS NPA

Gross NPA is simply the total bad assets without factoring any provisions made by the banks.

icon icon icon

Amount
Source: RBI
Ratio
Source: RBI
  • The gross NPA of all scheduled commercial banks in India dropped to ₹7,43,653 crore in 2021-22 from ₹8,35,138 crore a year ago.
  • The gross NPA ratio (% of total advances) in 2021-22 was 5.8%, in comparison to 7.3% a year ago. The gross NPA ratio has fallen consecutively for 4 years since hitting a record 11.2% in 2017-18.
  • After reaching a high of 6.8% in 2017-18, the gross NPAs in 2021-22 equaled 3.4% of the total assets of the scheduled commercial banks in India.
icon icon icon

Bank
Source: RBI
  • 72.9% of the total gross NPAs of all scheduled commercial banks in 2021-22 were recognized by the public sector banks, the lowest ratio since 2011-12.
  • Private banks recognized 24.3% of the total gross NPA while foreign banks recognized 1.85% of the total gross NPA in 2021-22.
icon icon icon

NET NPA

Banks need to continuously assess their loans and set aside an amount in the beginning itself to accommodate for any losses. It means that for a total loan base of say 500 Crores, depending on the interest payments nature, banks are required to keep a provision aside, let us say 50 Crores. In simple terms, it means that the bank has already kept aside 50 Crores for bad assets and has the money to bear that loss. Net NPA is simply the total bad assets (actual) minus the provision left aside. eg.

Scenario 1: Gross NPA is 100 crore, provision is 10 crore . At the end of the year, the bank manages to collect 85 crore only. Thus Net NPA = 5 Crores (100-85-10 crore)

Scenario 2: If the bank manages to collect 95 crore. Then Net NPA = 5-10 = -5 crore.

Generic Conclusions: In an ideal and healthy scenario, the Net NPA mean of the all the banks should be close to zero. If an individual bank has Net NPA in negative, then that is a good sign. In practice you would see the Net NPA or Gross NPA as a percentage. Usually it is calculated on the total lending done for that year.

icon icon icon

TO READ THE FULL ARTICLE

Or
Continue with Email

Get full access to the exciting content on The Mirrority by logging in

Support independent journalism

Even the very best of media houses in our country today are yielding to the pressure of click-bait journalism in order to survive. More than ever before, our country needs journalism that is independent, fair and non-pliant to the bureaucracy. Such journalism needs the support of like-minded readers like you to help us survive editorially and financially.

Whether you live in India or India lives inside you, help us continue to produce quality journalism with your contribution.

CONTRIBUTE