All those assets which generate periodical income are called as Performing Assets (PA). While all those assets which do not generate periodical income are called as Non-Performing Assets (NPA).
If the customers do not repay principal amount and interest for a certain period of time then such loans become non-performing assets (NPA). Thus non-performing assets are basically non-performing loans.
In India, the time frame given for classifying the asset as NPA is 180 days as compared to 45 days to 90 days of international norms.
Types
NPA have been divided or classified into following four types:-
1.Standard Assets : A standard asset is a performing asset. Standard assets generate continuous income and repayments as and when they fall due. Such assets carry a normal risk and are not NPA in the real sense. So, no special provisions are required for Standard Assets.
2.Sub-Standard Assets : All those assets (loans and advances) which are considered as non-performing for a period of 18 months are called as Sub-Standard assets.
3.Doubtful Assets : All those assets which are considered as non-performing for period of more than 18 months are called as Doubtful Assets.
4.Loss Assets : All those assets which cannot be recovered are called as Loss Assets.
Provision on types of assets
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