NPA and Asset Classification: RBI Guidelines#
What is NPA?#
Non-Performing Asset (NPA) is a loan or advance where interest or principal payment remains overdue for a specified period.
Asset Classification Categories#
| Category | Description | Provision |
|---|---|---|
| Standard | Regular repayment | 0.4% - 1% |
| Sub-standard | NPA for ≤12 months | 15% |
| Doubtful | NPA for >12 months | 25-100% |
| Loss | Unrecoverable | 100% |
NPA Recognition Period#
| Type of Loan | Overdue Period |
|---|---|
| Cash credits/Overdraft | 90 days |
| Term loans | 90 days |
| Bills purchased/discounted | 90 days |
| Agricultural advances | 90 days (seasonal: 2 crop seasons) |
Provisioning Requirements#
| Asset Category | Provision |
|---|---|
| Standard Assets | 0.40% (standard), 1% (higher) |
| Sub-standard Assets | 15% |
| Doubtful - 1 year | 25% |
| Doubtful - 1-3 years | 40% |
| Doubtful - >3 years | 100% |
| Loss Assets | 100% |
NPA Resolution#
- Restructuring
- Resolution through IBC
- Write-off (with RBI approval)
- Asset reconstruction companies
RBI Circulars on NPA#
- IRAC norms
- 5/25 restructuring
- Sustainable structuring
- COVID-19 restructuring