What do you mean by NPAs? Discuss in brief steps taken by RBI to counter the problem of NPA in India.

Non-performing asset (NPA) is defined as a credit facility in respect of which the interest and/or instalment of Bond finance principal has remained ‘past due’ for a specified period of time.

According to RBI, terms loans on which interest or instalment of principal remain overdue for a period of more than 90 days from the end of a particular quarter is called a Non-performing Asset.

Steps taken by RBI are as follows:

Asset Quality Review (AQR)

  • initiated in 2015 for clean and fully provisioned bank balance-sheets revealed high incidence of non-performing assets (NPAs). As a result of AQR and subsequent transparent recognition by PSBs, stressed accounts were reclassified as NPAs and expected losses on stressed loans.

Strategic Debt Restructuring (SDR)

  • Allowed lending banks to to convert loans into equity if a borrower fails to adhere to set deadlines Though, a CRISIL report has pointed out that this may even lead to pushing of NPAs to the future

Revamped the 5/25 scheme:

  • Allowed the banks to extend the re-payment schedule of loans to 25 years, with an option to re-finance them at the end of 5 years

 

Prompt Corrective Action

  • The RBI assesses the bank’s financial health on the basis of certain indicators like Capital Ratio and Asset Quality, and take corrective action to improve financial health or troubled and weak banks.

 

KPSC Notes brings Prelims and Mains programs for KPSC Prelims and KPSC Mains Exam preparation. Various Programs initiated by KPSC Notes are as follows:- For any doubt, Just leave us a Chat or Fill us a querry––

Hope we have satisfied your need for KPSC Prelims and Mains Preparation

Kindly review us to serve even better


KPSC Mains Test Series 2022

20 Quality mock tests and GS Mains Notes

Mains Test Series and Notes

Mains Printed Notes (With COD)


KPSC Prelims Test Series 2022

24 Quality mock tests and GS Prelims Notes

Prelims Test Series and Notes

Prelims Printed Notes (With COD)

[jetpack_subscription_form title=”Subscribe to KPSC Notes” subscribe_text=”Never Miss any KPSC important update!” subscribe_button=”Sign Me Up” show_subscribers_total=”1″]

error: Content is protected !!