Question: What Is The NPA Ratio?

How is NPA ratio calculated?

Formula: Net non-performing assets = Gross NPAs – Provisions.

Gross NPA Ratio is the ratio of total gross NPA to total advances (loans) of the bank.

Provision Coverage Ratio = Total provisions / Gross NPAs..

What are the 5 major categories of ratios?

Classification. Ratio analysis consists of calculating financial performance using five basic types of ratios: profitability, liquidity, activity, debt, and market.

What is KCC NPA?

India’s largest lender State Bank of India (SBI) has seen its gross non-performing assets (NPAs) under Kisan Credit Card (KCC) loans doubling in just a matter of three years. The onus of higher delinquencies partly rests on the trend of farm loan waivers that had started nearly four years ago.

How do banks reduce NPA?

Ways to Reduce NPAsTo release a notice to borrower (and their guarantor) asking them to release the payment within 60 days from the receipt of notice.To release notice to anyone who acquires the borrower’s secured assets to produce the same to the bank.More items…•

What is NPA norms?

The 90-day non-performing asset (NPA) norm would exclude the moratorium period for such accounts, RBI Governor Shaktikanta Das said. … The accounts turn non-performing assets (NPAs) after 90 days of overdue in making payments. The accounts are classified as standard before the 90-day period.

How do banks recover NPA?

Asset Reconstruction: In Asset Reconstruction the Securitization companies or Reconstruction Companies buy the NPAs from the banks and take measures to recover the bad loans from the borrower by carrying certain functions according to the powers vested in them by the Act.

What is NPA ratio of bank?

​Gross non-performing assets (NPAs) What this is: NPAs indicate how much of a bank’s loans are in danger of not being repaid. If interest is not received for 3 months, a loan turns into NPA. What it means: A very high gross NPA ratio means the bank’s asset quality is in very poor shape.

How do I get out of NPA?

Let us look out at the ways banks adopt for NPA account settlement.One Time Settlement (OTS) Banks can analyse the financial conditions of the borrowing party and decide to give them an option of one-time settlement of loans. … Restructuring of loan. … Converting unsecured loans to secured. … Deferring the payment.

How many types of NPA are there?

Banks are required to classify nonperforming assets into one of three categories according to how long the asset has been non-performing: sub-standard assets, doubtful assets, and loss assets. A sub-standard asset is an asset classified as an NPA for less than 12 months.

What is GNPA and NPA?

Gross vs. NPA’s are also classified as gross or net NPA’s. … Net NPA is arrived at when the principal amount is deducted by any payments received by the bank from the borrower with respect to the loan and also includes the amount the bank receives through its insurance claims or provisions set for the loan.

What do you mean by NPA?

non performing assetDefinition: A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. Description: Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets. 1.

Which bank has the highest NPA?

State Bank of India (SBI)Among the major public sector banks, State Bank of India (SBI) had the highest amount of NPAs at over Rs 1.86 lakh crore followed by Punjab National Bank (Rs 57,630 crore), Bank of India (Rs 49,307 crore), Bank of Baroda (Rs 46,307 crore), Canara Bank (Rs 39,164 crore) and Union Bank of India (Rs 38,286 crore).

Which bank has the lowest NPA in India?

Private-sector banks in India have higher capital buffer compared to state-owned peersBandhan Bank. 23.2%Kotak Bank. 22.4.HDFC Bank. 16.7.City Union. 15.7.DCB. 13.9.ICICI Bank. 13.6.Axis Bank. 13.5.IndusInd Bank. 13.2.More items…•

What is ideal CASA ratio?

CASA ratio of a bank is the ratio of deposits in current and saving accounts to total deposits. A higher CASA ratio indicates a lower cost of funds, because banks do not usually give any interests on current account deposits and the interest on saving accounts is usually very low 3-4%.

Why NPA is bad for bank?

What is the impact of NPAs? Lenders suffer a lowering of profit margins. Stress in banking sector causes less money available to fund other projects, therefore, negative impact on the larger national economy. Higher interest rates by the banks to maintain the profit margin.