Non performing asset and its impact on the economy
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What are Non-Performing Assets?
A loan or lease that is not meeting its stated principal and interest payments.
A loan is an asset for a bank as the interest payments and the repayment of the principal amount create a stream of cash flows.
Banks usually treat assets as non-performing if they are not serviced for some time. If payment has not been made as of its due date then the loan gets classified as past due.
Once a payment becomes really late the loan gets classified as non-performing. A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
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