2. Introduction
• NPA stands for Non performing Assets.
• When you don’t make the repayment of Principal/interest or
both for a period of 90 days or more, the loan turns out to be
an NPA.
• NPAs a big burden on the banks as well as the economy of a
nation.
• Classical case of a big NPA is the bankruptcy of Kingfisher
airlines affecting the major banks like SBI,ICICI,etc.
3. Reason for NPAs
• Due to the government policies of catering to the priority
sector i.e., Agriculture, there has been a rise in the number of
NPA accounts moreover, agricultural land can not be sold.
• Due to an increase in sales pressure.
• Real estate bubble.
• Volatility in Global economy.
• Fraudulent borrowers.
• Easy availability of loans.
4. Problem created by bad loans
• Reduces the profitability
• Increase in provisions for written-off accounts
• Impact on lending rates.
• Credit ratings of the banks suffer.
• Creates a negative sentiment
• Leads to assets-liability mismanagement.
5. Solutions
• Asset recovery management firms.
• Proper pre-inspection and post-inspection.
• Re-structuring of loans.
• Establishing a recovery department.
• Regular follow ups of the borrowers.
• Stringent Audits.
• Monitoring/Valuating the assets through a common e-
platform.
• Displaying photographs of defaulters.(Especially for Rural
branches)
