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Banking Term: Non Performing Assets

Jan 15, 2015 17:01 IST

    Non Performing Assets are those assets, which become non performing when it ceases to generate income for the bank. Nonperforming Asset becomes loan or an advance where

    • Interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a term loan,
    • The account remains ‘out of order’ for a period of more than 90 days, in respect of an Overdraft/Cash Credit (OD/CC),
    •  The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
    •  Interest and/or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purposes, and
    •  Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.
    •  Non submission of Stock Statements for 3 Continuous Quarters in case of Cash Credit Facility.
    • No active transactions in the account (Cash Credit/Over Draft/EPC/PCFC) for more than 91days

    Question

    Bad advances of a Bank are called _____?

    (1) Bad debt      

    (2) Book debt

    (3) Non Performing Asset

    (4) Out of order accounts            

    (5) Overdrawn accounts

    Ans. 3

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