NPA Classification Norms: Bank Audit Perspective
What is NPA (Non-Performing Asset)? For banks, advances given to their customers are assets. An asset, including a leased asset, becomes non-performing when it ceases to generate income for the bank. Categories of NPA Banks are required to classify non-performing assets into different categories based on duration of their non-performance as under: NPA Category Description Sub-standard Asset An asset which has remained NPA for less than or equal to 12 months Doubtful Asset An asset which has remained in sub-standard category for 12 months Loss Asset An asset which is considered uncollectible and where loss has been identified by the bank or its auditors or RBI but the amount has not been written off wholly Facility-wise NPA classification Norms as per RBI Master Circular on IRAC Norms dated 02-04-2024: Facility Type NPA Classification Norms Term Loan Interest and/or Principal remains overdue (01) for more than 90 days Overdraft / Cash Credit Ac