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

Identification

With a view to moving towards international best practices and to ensure greater transparency, it has been decided to adopt the ‘90 days’ overdue’ norm for identification of NPAs, from the year ending March 31, 2004. Accordingly, with effect from March 31, 2004, a non-performing asset (NPA) shall be a loan or an advance where;

• Interest and/or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan,
• The account remains ‘out of order’ for a period of more than 90 days, in respect of an Overdraft
  Overdraft
  An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft...
  
  /Cash Credit (OD/CC),
• The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
• Interest and/or instalment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purposes, and
• Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.

Classification

Banks are required to classify non-performing assets further into the following three categories based on the period for which the asset has remained non-performing and the realisability of the dues:

• Sub-standard Assets
• Doubtful Assets
• Loss Assets