Volume : V, Issue : VI, June - 2016

IMPACT OF NPAs ON BANKING SECTOR

Inamdar Meghnad Pushkarkumar, Dr. Kapil K. Dave

Abstract :

 Non–Performing Asset or NPA, It is called such as while it is an "Asset", it does not ing substantial income to its Owner or is just dormant. Call it a white elephant if you wish. Basically, it is having something that should work but does not. It is supposed to make Non– Performing Assets work. The RBI has issued guidelines to banks for classification of assets into four categories. NPA are those categories of assets (advances, bills discounted, overdraft, cash credit etc.) For which any amount remains due for a period of 180 days. Action for enforcement of security interest can be initiated only if the secured asset is classified as Non–Performing Asset. Non–Performing Asset means an asset or account of borrower, which has been classified by a bank or financial institution as sub–standard, doubtful or loss asset, in accordance with the directions or guidelines relating to asset classification issued by RBI. An amount due under any credit facility is treated as "past due" when it has not been paid within 30 days from the due date. Due to the improvement in the payment and settlement systems, recovery climate, up gradation of technology in the banking system, etc., it was decided to dispense with ‘past due‘ concept, with effect from March 31, 2001. Accordingly, as from that date, a Non performing asset (NPA) shell be an advance where interest and /or installment of principal remain overdue for a period of more than 180 days in respect of a Term Loan, the account remains ‘out of order‘ for a period of more than 180 days, in respect of an overdraft/ cash Credit(OD/CC), the bill remains overdue for a period of more than 180 days in the case of bills purchased and discounted, interest and/ or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purpose, and any amount to be received remains overdue for a period of more than 180 days in respect of other accounts.

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Article: Download PDF   DOI : 10.36106/ijsr  

Cite This Article:

INAMDAR MEGHNAD PUSHKARKUMAR, Dr. KAPIL K. DAVE IMPACT OF NPAs ON BANKING SECTOR International Journal of Scientific Research, Vol : 5, Issue : 6 JUNE 2016

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