What are the NPA norms of RBI.

Question

Accepted Answer

NPA norms of RBI refer to the guidelines set by RBI for classification of non-performing assets.

NPA is an asset that ceases to generate income for the bank
RBI has set different norms for classification of NPAs based on the duration of default
For a standard asset, if interest or principal is overdue for 90 days or more, it is classified as NPA
For a sub-standard asset, if interest or principal is overdue for 90 days or more, it is classified as NPA
For a doubtful asset, if interest or principal is overdue for 180 days or more, it is classified as NPA
For a loss asset, if it is considered uncollectible, it is classified as NPA
Banks are required to make provisions for NPAs based on the classification
Provisions are made to cover the expected loss from the NPA
Higher provisions are required for higher classification of NPA

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