Question

Non performing asset and its impact on the economy

Answer 1

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.