An asset, including a leased asset, becomes non performing when it ceases to generate income for the bank. A non performing asset (NPA) is a 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’ in respect of an Overdraft/Cash Credit (OD/CC).
◦An account should be treated as 'out of order' if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as 'out of order'. - the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted
Any amount due to the bank under any credit facility is ‘overdue’ if it is not paid on the due date fixed by the bank. - the installment of principal or interest there on remains overdue for two crop seasons for short duration crops,
- the installment of principal or interest there on remains overdue for one crop season for long duration crops,
- the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitisation transaction
- in respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment.
