A Vibrant Banking System

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A vibrant banking system is essential for any economy striving to achieve growth and stability in a competitive global business environment. The best indicator for the health of the banking industry in a country is its level of Non-performing assets (NPAs). NPAs are one of the major concerns for banks in India. It reflects the performance of banks. Reduced NPAs generally give the impression that banks have strengthened their credit appraisal processes over the years and growth in NPAs involves the necessity of provisions, which bring down the over all profitability of banks. The Indian banking sector is facing a serious problem of NPA. The magnitude of NPA is comparatively higher in public sectors banks. To improve the efficiency and…show more content…
Overdue Interest: Interest amount and/ or installment of principal amount remain overdue for a period of more than 90 days in respect of a term loan is characterized as non-performing assets or non-standard assets.
2. Overdraft or cash Credit: The account remains “out of order” for more than 90 days in respect of an Overdraft/Cash Credit (OD/CC).
3. Overdue Bills: The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted.
4. Short Duration Crop: The installment of principal amount or interest thereon remains overdue for two crop seasons for short duration crops.
5. Long Duration Crop: The installment of principal or interest thereon remains overdue for one crop season for long duration crops.
6. Securitization Liquidity: The amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitization transaction undertaken in terms of guidelines on securitization dated February 1, 2006.
7. Overdue of Derivatives: In respect of derivative transactions, the overdue receivables representing positive mark to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment.
Gross NPA and Net NPA
Gross NPA is an advance that is considered irrecoverable, for bank has made provisions, and which is still held in banks ' books
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