Question

What is the full form of the term 'NPA' as used in banking environment?

• A. Not Profitable Assets
• B. New Potential Assets
• C. Non Performing Assets
• D. Net Performing Assets

Answer 1

The Correct Option is C

The term 'NPA' in the context of banking stands for Non Performing Assets. In the banking environment, a Non Performing Asset refers to a classification for loans or advances that are in default or arrears on scheduled payments of principal or interest. When a borrower fails to make the required payments for a certain period, typically 90 days for most facilities, the loan is categorized as an NPA. This classification is critical for banks to manage their financial health and risk since NPAs do not yield any income and might incur losses for the bank. Understanding NPAs is crucial for assessing the asset quality of a bank and its risk exposure.