Definition: A non-performing asset (NPA) is a classification used by financial institutions for loans and advances on which the principal is past due and on which no interest payments have been made for a period of time. In general, loans become NPAs when they are outstanding for 90 days or more. 

Categorization: NPA are categorized in to following categories: 

  • Standard Assets: They are NPAs that have been past due for anywhere from 90 days to 12 months, with a normal risk level. 
  • Sub-Standard Assets: They are NPAs that have been past due for more than 12 months. They have a significantly higher risk level.  
  • Doubtful Debts: Non-performing assets in the doubtful debts category have been past due for at least 18 months.   
  • Loss Assets: These are non-performing assets with an extended period of non-payment. With this class, banks are forced to accept that the loan will never be repaid. 
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