economics

1. Deposit Insurance-NPAs-SARFAESI

2. NPA
• Definition: A non performing asset (NPA) is a loan or advance for which the principal or
interest payment remained overdue for a period of 90 days.
• Description: Banks are required to classify NPAs further into Substandard, Doubtful and
Loss assets.
1. Substandard assets: Assets which has remained NPA for a period less than or equal to
12 months.
2. Doubtful assets: An asset would be classified as doubtful if it has remained in the
substandard category for a period of 12 months.
3. Loss assets: As per RBI, “Loss asset is considered uncollectible and of such little value
that its continuance as a bankable asset is not warranted, although there may be some
salvage or recovery value.”

3. Deposit Insurance
• Encourage the confidence
• Protect bank account holder
• Ensure the safety
• The first deposit insurance was Federal Deposit Insurance
Corporation.(FDIC),. During Great Depression Period.
• FDIC established in 1933 in US. To restore banking system.
• After1960 central banks adopted deposit insurance.
• According to International Association Deposit Insurance(IADI), 113
countries adopted insurance deposit insurance.

4. • Deposit Insurance in India
• In India ID started with launch of Deposit Insurance and credit Guarantee
corporation (DICGC) by RBI in 1961.
• DICGC was fully own by RBI.
• Mandatory for all banks, like commercial banks, local area banks, RRBs all
states and union territories.
• All Co-operative banks Except Chandigarh, Lakhswdeep Dadra Nagar Haveli