Tag Archives: credit

NPA: Are We Staring at An Inevitable Credit Crisis?

NPA: Are we staring at an inevitable credit crisis?

Any loan which ceases giving a return to its lender for a specified period is known as a non-performing asset (NPA). Generally, that specified time is 90 days but may vary with countries and instruments. In the case of India also, NPAs are loans and advances where the borrower has stopped making interest or principal repayments for over 90 days.

According to projections by RBI, the gross NPA ratio for Indian commercial banks is likely to expand from 7.5 per cent in September 2020 to 13.5 per cent in September 2021. It seems to be a direct warning of a looming credit crisis.