Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

6a3c4 Npa


Published on

Published in: Economy & Finance, Business
  • Be the first to like this

6a3c4 Npa

  1. 1. Amity Business School MBA Class of 2010, Semester IV Strategic Financial Management Prof Akhil Swami/Anuj Srivastava
  2. 2. Non performing Assets When asset ceases to generate income for bank
  3. 3. What are NPA <ul><li>Interest and or installment of principal remains overdue for a period of more than 90 days. </li></ul><ul><li>The account remains out of order in respect of overdraft, cash credit, </li></ul><ul><li>The bills remains overdue for period of more than 90 days in the case of bills purchased. </li></ul><ul><li>Loan Granted to short duration crop will be treated as NPA ,if the installment of principal or interest remains overdue for 2 crop seasons. </li></ul><ul><li>A loan granted to long term crop will be treated as NPA if the installment of Principal or interest remains overdue for one crop season. </li></ul>
  4. 4. Asset Classification <ul><li>Substandard asset. </li></ul><ul><li>Doubtful asset. </li></ul><ul><li>Loss asset. </li></ul>
  5. 5. How to tackle NPA <ul><li>Reschedulement of Loan . </li></ul><ul><li>Rehabilitation of Loan. </li></ul><ul><li>Management Transfer. </li></ul><ul><li>One time settlement. </li></ul><ul><li>Taking over the unit and selling the asset. </li></ul><ul><li>Loan transfer to Asset reconstruction co. </li></ul>
  6. 6. Provisioning for NPA <ul><li>Standard----------.25%, default less than 90 days </li></ul><ul><li>Substandard------10%,default more than 90 days and less than 12 months. </li></ul><ul><li>D-1------------------20%, default up to (15+12months)27months </li></ul><ul><li>D-2------------------30% , default up to 51(27+24)months </li></ul><ul><li>D-3and loss--------100% ,default more than 51 months </li></ul>
  7. 7. Types of LC <ul><li>Revocable LC-----may be canceled or amended, rare. </li></ul><ul><li>Irrevocable LC----Most commonly used in Foreign trade. Cannot be revoked. </li></ul><ul><li>Revolving LC----Can revolve in relation to time and value would stipulate certain ceiling in addition to date of expiry. </li></ul><ul><li>Transferable LC </li></ul><ul><li>Red clause LC---Payment in advance for purchasing/packing processing. Written in red ink. </li></ul>