About Stressed Assets and how it is different from NPA

  • A stressed asset is an indicator of the health of the banking system.
  • It is a combination of NPA, Restructured loans and Written off assets.
  • Assets of the banking system comprises of loans given and investment in bonds made by banks.
  • Quality of the asset indicates how much of the loans taken by the borrowers are repaid in the form of interests and principal.

Restructured loans:

  • These are assets which got an extended repayment period, reduced interest rate, converting a part of the loan into equity, providing additional financing.
  • Under restructuring a bad loan is modified as a new loan.
  • This is because a restructured loan was a past NPA or it has been modified into a new loan.
  • Corporate Debt Restructuring Mechanism (CDM) allows restructuring of loans.


Written off Assets:

  • These are those bank or lender doesn’t count the money borrower owes to it.
  • The financial statement of the bank will indicate that the written off loans are compensated through some other way.
  • The ratio of stressed assets to gross advances of the Indian Banking System is increasing from 2013 onwards.
  • It has risen from around 6 per cent at end of March 2011 to 11.1 per cent by 2015.

Public Sector Banks have the highest stressed asset ratio 13.5 per cent of total advances as of March 2015, compared to 4.6 per cent in the case of private sector banks.

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