What are Non-Performing Assets (NPA), and what does it mean to write them off?

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Non-Performing Assets (NPA) are loans or advances that have stopped generating income for the lender. Writing off an NPA means removing it from the books as a loss.

Non-Performing Assets (NPA) are loans or advances where the borrower has stopped making interest or principal repayments for a specified period of time.
Banks classify NPAs based on the number of days a loan has been overdue, such as Substandard Assets, Doubtful Assets, and Loss Assets.
Writing off an NPA means the lender removes it from their books as a loss, typically after all possible efforts to recover the amount have been exhausted.
Writing off an NPA does not mean the borrower is absolved of their debt; the lender can still pursue legal action to recover the amount.
Example: If a borrower defaults on a loan for more than 90 days, the bank may classify it as an NPA and eventually write it off if recovery is deemed unlikely.

What are Non-Performing Assets (NPA), and what does it mean to write them off?

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