All about NPAs in banking sector for exam.IBPS PO examination has been conducted successfully at various centers and the result has been declared on the official website. Based on the performance of candidates in written examination they will next be called for the interview process and candidates have been preparing hard for the interview process. All those who will qualify the interview process will be called next for then joining process based on their preference in the written test and personal interview taken together. Here are some useful concepts on Non performing assets which are generally asked in the examination. Candidates can know the complete details about NPS from here. NPAs are related to only banking sector and time period, type of NPS and procedure to recover the loss assets is all important and here are the process of recovery and details about NPAs. Candidates need to learn it and it will help them in their banking interview process which will commence in the month of January 2016.It is Very Useful for Next bank vacancies Notification 2016-17 general awareness section.
Details about NPA for IBPS PO interview
NPA: Non performing asset is any asset which does not pay anything to the bank for a period of 90 days. A loan, overdraft or any bill can be regarded as NPA if they do not give any interest to the bank for a period of 90 days.
Below are given some time period in which some instrument can be regarded as NPAs
- If interest or installment or both of principal remain overdue for a period of more than 90 days in respect of a term loan.
- If Overdraft/ Cash Credit for an account remains ‘out of order’.
- If bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted.
- If installment of principal or interest remains overdue for two crop seasons for short duration crops / one crop season for long duration crops.
RBI has categorized the NPA into 3 major categories which are given below
- Sub standard asset: This is the asset which remains NPA for a period of up to 12 months.
- Doubtful asset: This is the sub standard asset, if it remains in this state for a period of 12 months then it is called as doubtful asset
- Loss asset: A asset is said to be loss if it cannot be recovered by bank through normal procedures. However the bank can comply with the rules and guidelines given by RBI to recover their loan/ asset though various methods if lost. This is called asset reconstruction and for this function there are various Asset reconstruction companies (ARCs)
An assert can be NPA for genuine reason which includes the economy condition and growth of the nation and it can be due to negligence and attitude of the payer. In the second case it is called willful defaulter and the loan can be recovered using various method which are sued by the banks. Below are some of the methods which are generally used for this
In this case Bank / FIs may
- refer the case to Debt Recovery Tribunal (DRT).
- refer to Asset Reconstruction Companies (ARC) as per SARFAESI Act, 2002.
- file winding up petition in the court of law.
- file criminal case against the wilful defaulter.
Once the asset is recovered it can be again treated as asset for the bank.