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translateGLOSSARY · BANKING

What is Non-Performing Asset (NPA)?

An NPA is a loan on which the borrower has not paid interest or principal for 90 days or more.

PrepClever Glossary · Banking

updateUpdated July 2026

Formula

Gross NPA Ratio = Gross NPAs ÷ Gross Advances × 100

When a loan turns non-performing, the bank must stop booking interest income and set aside provisions against it, hurting profitability. NPAs are classified as sub-standard, doubtful or loss assets. Gross NPA is the total; Net NPA subtracts provisions already made.

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Example

A bank with ₹50 crore of NPAs on ₹1,000 crore of loans has a Gross NPA ratio of 5%.

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IBPS PORBI Grade BJAIIBCAIIB

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Glossary

FAQs about Non-Performing Asset (NPA)

When does a loan become an NPA?add

Generally when interest or principal remains overdue for more than 90 days for a term loan, with specific norms for other facilities like cash credit and agricultural loans.

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What is Non-Performing Asset (NPA)?

Related Terms

Provisioning Coverage Ratio (PCR)

SARFAESI Act

Capital Adequacy Ratio (CAR)

FAQs about Non-Performing Asset (NPA)

Where to go from here

Master every term that matters

What is Non-Performing Asset (NPA)?

Related Terms

Provisioning Coverage Ratio (PCR)

SARFAESI Act

Capital Adequacy Ratio (CAR)

FAQs about Non-Performing Asset (NPA)

Where to go from here

Master every term that matters