{"id":2620,"date":"2019-10-20T12:49:26","date_gmt":"2019-10-20T12:49:26","guid":{"rendered":"https:\/\/commerceiets.com\/?p=2620"},"modified":"2019-10-20T12:49:26","modified_gmt":"2019-10-20T12:49:26","slug":"non-performing-assets","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/non-performing-assets\/","title":{"rendered":"NON-PERFORMING ASSETS"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/non-performing-assets\/#NON-PERFORMING_ASSETS\" title=\"NON-PERFORMING ASSETS\">NON-PERFORMING ASSETS<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/non-performing-assets\/#LEGAL_PROVISIONS_REGARDING_NON-PERFORMING_ASSETS\" title=\"LEGAL PROVISIONS REGARDING NON-PERFORMING ASSETS\">LEGAL PROVISIONS REGARDING NON-PERFORMING ASSETS<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/non-performing-assets\/#PROVISIONS_REGARDING_LOSS_ASSETS\" title=\"PROVISIONS REGARDING LOSS ASSETS\">PROVISIONS REGARDING LOSS ASSETS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/non-performing-assets\/#PROVISIONS_REGARDING_DOUBTFUL_ASSETS\" title=\"PROVISIONS REGARDING DOUBTFUL ASSETS\">PROVISIONS REGARDING DOUBTFUL ASSETS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/non-performing-assets\/#PROVISIONS_REGARDING_SUB-STANDARD_ASSETS\" title=\"PROVISIONS REGARDING SUB-STANDARD ASSETS\">PROVISIONS REGARDING SUB-STANDARD ASSETS<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h3 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"NON-PERFORMING_ASSETS\"><\/span>NON-PERFORMING ASSETS<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"has-medium-font-size\">Non-performing assets are the assets that cease to generate any kind of income for the <a href=\"https:\/\/commerceiets.com\/provisions-of-banking-regulation-act-1949\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"banking company (opens in a new tab)\">banking company<\/a>. The assets are categorized as non-performing by applying some standard norms. Non-performing asset is a loan or advance where:<\/p>\n\n\n\n<ul><li>Interest or installment of principal remain overdue for a period of more than 90 days in respect of term loan.<\/li><li>The amount remains \u2018out of order\u2019 in respect of overdraft or cash credit.<\/li><li>The bills remain overdue for a period of 90 days in the case of bills discounted or purchased.<\/li><li>The installment of principal or interest thereon remains overdue for a crop season for long duration crops.<\/li><li>The installments of principal or interest thereon remains overdue for one crop season for long duration crops.<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">The non-performing assets can be further classified into\nthree categories:<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong><em>SUB-STANDARD ASSETS:<\/em><\/strong> A substandard asset would be one which has remained Non-performing asset for a period of more than or equal to 12 months. Sub-standard assets are the assets which have well defined credit weaknesses that jeopardize the liquidation of the debt and indicate that the banks will sustain loss in case deficiencies are not corrected.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong><em>DOUBTFUL ASSETS: <\/em><\/strong>An asset would be classified as doubtful if it has remained in the sub-standard category for a period of 12 months. These assets have the probability of not getting encashed.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong><em>LOSS ASSETS:<\/em><\/strong> A loss asset is one where loss has been identified by the bank or internal or external auditors or by RBI inspection. But these assets are not allowed to get written off completely.<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"LEGAL_PROVISIONS_REGARDING_NON-PERFORMING_ASSETS\"><\/span>LEGAL PROVISIONS REGARDING NON-PERFORMING ASSETS<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"PROVISIONS_REGARDING_LOSS_ASSETS\"><\/span>PROVISIONS REGARDING LOSS ASSETS<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-medium-font-size\">Loss assets should be written off. If loss assets are\npermitted to remain in the books for any reason, 100% of the outstanding should\nbe provided for.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"PROVISIONS_REGARDING_DOUBTFUL_ASSETS\"><\/span>PROVISIONS REGARDING DOUBTFUL ASSETS<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-medium-font-size\">100% of the extent to which the advance is not covered by\nrealizable value estimated on realistic basis.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">In regard to the secured portion, the provision made as:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>   Period for which the advance has remained in the doubtful category    <\/strong><\/td><td><strong>   Provision required   <\/strong><\/td><\/tr><tr><td>\n  Upto one year\n  <\/td><td>\n  25%\n  <\/td><\/tr><tr><td>\n  One to three years\n  <\/td><td>\n  40%\n  <\/td><\/tr><tr><td>\n  More than three years\n  <\/td><td>\n  100%\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"PROVISIONS_REGARDING_SUB-STANDARD_ASSETS\"><\/span>PROVISIONS REGARDING SUB-STANDARD ASSETS<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-medium-font-size\">A general provision of 15% on the total outstanding should\nbe made without making any allowance for guarantee cover and securities\navailable.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">The \u2018unsecured exposures\u2019 which are identified as\nsub-standard would attract additional provision of 10% i.e. a total of 25% on\nthe outstanding balance. Unsecured Exposures are those exposures where the\nrealizable value of the security is not more than 10% as assessed by the RBI.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also study:&nbsp;<\/strong><\/td><td><strong>Also study:&nbsp;<\/strong><\/td><td><strong>Also study:&nbsp;<\/strong><\/td><td><strong>Also study:&nbsp;<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/joint-stock-company\/\">Meaning of company<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/types-of-companies\/\">Types of companies<\/a><\/td><td><a href=\"http:\/\/v\" target=\"_blank\">One person company<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-public-and-private-company\/\">Public VS Private Company<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/sweat-equity-shares\/\">Sweat Equity Shares<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/stock-and-shares\/\">Stock vs Shares<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/reserve-capital-and-capital-reserve\/\">Reserve Capital Vs Reserve Capital<\/a><\/td><td><a href=\"http:\/\/v\" target=\"_blank\">Different types of preference shares<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/different-types-of-preference-shares\/\">Equity vs Preference shares<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/slip-system-of-posting\/\">Slip System of Posting<\/a><\/td><td><a href=\"http:\/\/v\" target=\"_blank\">Redemption of preference shares<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/buy-back-of-shares\/\">Buy Back of shares<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/debentures\/\">Debentures<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/issue-of-debentures\/\">Issue of debentures<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/redemption-of-debentures\/\">Redemption of Debentures<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/sources-of-redemption-of-debentures\/\">Sources of redemption of debentures<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/balance-sheet-as-per-companies-act-2013\/\">Balance Sheet as per Companies Act 2013<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/divisible-profits\/\">Divisible Profits<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/amalgamation\/\">Amalgamation<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/purchase-consideration\/\">Purchase consideration<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/alteration-of-share-capital\/\">Alteration of share capital<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/internal-reconstruction\/\">Internal Reconstruction<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/provisions-of-banking-regulation-act-1949\/\">Provision of banking regulation act 1949<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/asset-classification-of-banking-company\/\">Asset classification of banking company<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/non-performing-assets\/\">Non-performing assets<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/advances-in-banking-company\/\">Advances in banking company<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/types-of-life-insurance-policies\/\">Life Insurance Accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/valuation-balance-sheet\/\">Valuation balance sheet<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/financial-statements-of-life-insurance-business\/\">Financial statements of life insurance companies<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/final-accounts-of-general-insurance-companies\/\">Final accounts of general insurance companies<\/a><\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>CONNECT ON LINKEDIN<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noopener\">https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>NON-PERFORMING ASSETS Non-performing assets are the assets that cease to generate any kind of income for the banking company. The assets are categorized as non-performing by applying some standard norms. Non-performing asset is a loan or advance where: Interest or installment of principal remain overdue for a period of more than 90 days in respect&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/non-performing-assets\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;NON-PERFORMING ASSETS&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":2624,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[102],"tags":[182],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/2620"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=2620"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/2620\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/2624"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=2620"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=2620"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=2620"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}