NPA Full Form

What is the full form of NPA?

The full form of NPA is “Non Performing Assets”. NPA is also called a bad loan. It refers to a mortgage or advance in respect of which the interest or principal payment has been overdue for ninety days. This 90 Days duration is the standard time frame. It is called as Non Performing Assets (NPA) bank assets (loans or advances given to customers) which are not performing (no return).

Example of NPA

A bank has given a loan of ₹5 lakh to a company, in which interest is paid only ₹2500 per month. If the company fails to make payments for three consecutive months (90 days), the bank is required to classify this loan as an NPA to meet regulatory requirements. Alternatively, a loan can also be categorized as nonperforming if a company makes all interest payments but cannot repay the principal at maturity. NPAs impose a burden on the lenders in the form of non-payment of interest or reduced cash flow for the principal lender. This constrains the budget and slashes earnings and reduces the capital to be provided for subsequent loans.

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