Non Performance Assets – Meaning

  • All advances given by banks are termed “assets”, as they generate income for the bank by way of interest or instalments.
  • However, a loan turns bad if the interest or instalment remains unpaid even after the due date.
  • It turns into a nonperforming asset, or NPA, if it remains unpaid for a period of more than 90 days.
  • In fact, if any amount to be received by the bank remained overdue for more than 90 days, it is classified as an NPA.