What is the importance of NPA in banking sector . And why we use it for every financial year

Question

Accepted Answer

NPAs are non-performing assets that impact a bank's financial health. They are important for assessing risk and making informed decisions.

NPAs are loans or advances that have stopped generating income for the bank due to non-payment by the borrower.
They indicate the quality of assets held by a bank and its ability to recover funds lent out.
Banks use NPAs to assess their financial health, manage risk, and make strategic decisions.
Regular monitoring of NPAs helps in identifying problem loans early and taking corrective actions.
For every financial year, NPAs are crucial for evaluating the bank's performance, setting targets, and planning for the future.
Example: If a bank has a high NPA ratio, it may indicate poor loan quality and potential financial instability.

Accepted Answer

NPA non performing assets. Even commercial bank doing it's business with advances . Means how much bank give to loan to general public with time period. If any person deposit it's principal amount late after three months bank will count it is npa. Cencept of time value of money

What is the importance of NPA in banking sector . And why we use it for every financial year

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