Non-Performing Asset (NPA)

Non-Performing Asset (NPA) Definition: A Non-Performing Asset (NPA) is a loan or advance where the principal or interest payment has remained overdue for a continuous period of 90 days. In agricultural loans, it revolves around crop seasons.

Why it matters in Debt Collection

• Directly impacts the profitability and capital adequacy ratio of the lending institution.
• Once tagged NPA, the borrower's credit score drops drastically (typically 50-100 points).
• Lenders must allocate capital provisions against NPAs, which blocks liquid capital for new lending.