NPA
NPA stands for Non-Performing Asset, which refers to loans or advances that are in default or in arrears. Specifically, an asset is classified as non-performing when the borrower has not made any scheduled payments for a specified period, typically 90 days. This classification is important for banks and financial institutions as it affects their profitability and financial health.
When a loan becomes an NPA, it can lead to significant losses for the lender. To manage NPAs, banks often implement strategies such as restructuring loans or selling them to asset reconstruction companies. Effective management of NPAs is crucial for maintaining the stability of the banking sector and the overall economy.