+919892855900 202 Dhun Building, Janmabhumi Marg, Fort, Mumbai-400001 info@npaconsultant.in
Your Guide in Crisis

Dr. Visswas ( Ex. Banker)
B.Com, LL.B., M.A. (Eco.),
ACS, A.I.I.A. (USA), Ph.D. (U.K)

Monday-Saturday

(10.30 AM to 6.30 PM)

About NPA

A Non-performing asset (NPA) is defined as a credit facility in respect of which the interest and/or installment of finance principal has remained ‘past due’ for a specified period of time. NPA is used by financial institutions that refer to loans that are in jeopardy of default. Once the borrower has failed to make interest or principle payments for 90 days the loan is considered to be a non-performing asset. Non-performing assets are problematic for financial institutions since they depend on interest payments for income. Troublesome pressure from the economy can lead to a sharp increase in non-performing loans and often results in massive write-downs.


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 NPA, from the year ending March 31, 2004. Accordingly, with effect from March 31, 2004, a non-performing asset (NPA)is a loan or an advance where;


  • Interest and/or installment of principal remain overdue for a period of more than 91 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/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 installment 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.
  • Non submission of Stock Statements for 3 Continuous Quarters in case of Cash Credit Facility.
  • No active transactions in the account (Cash Credit/Over Draft/EPC/PCFC) for more than 91days


Further 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: a sub standard asset is one which has been classified as NPA for a period not exceeding 12 months.
  • Doubtful Assets: a doubtful asset is one which has remained NPA for a period exceeding 12 months.
  • Loss assets: where loss has been identified by the bank, internal or external auditor or central bank inspectors. But the amount has not been written off, wholly or partly.


Effects of NPA:

  • The day to day operations in the account becomes difficult as Bank starts adjusting money deposited against the dues.
  • The approach of the Banker towards the borrower is more of lender – borrower rather than financer –cusomer relation. The borrower is in a helpless situation and at the mercy of the lender Bank, demoralising the borrower.


  • Most important the borrowers entire focus shifts from business revival to arranging money inorder to service the loan.
  • The reputation of the borrower is adversely affected.

NPA (Non Performing Asset) is an industrial phenomenon which indicates industrial sickness. The national growth of a country particularly country like India depends upon the growth and health of SME’s. The so called banking reform are targeted towards killing the Sick units rather than curing them. Serious attempts should be made by the lending institutions to give special treatment to he SME sector before taking the recovery recourse through SARFAESI ACT.


Financial sector reform in India has progressed rapidly on aspects like interest rate deregulation, reduction in reserve requirements, barriers to entry, prudential norms and risk-based supervision but changes required to tackle the NPA problem would have to span the entire gamut of judiciary, polity and the bureaucracy to be truly effective.


Unfortunately the policy makers, the politicians and the learned bankers inspite of being aware of the facts are not paying due attention. It is very important that the revival of the account should be worked out by offering restructuring package to the deserving units, which in turn will improve the national wealth.


We are of the opinion that the borrowers are unaware about the legal system and come under the immense pressure laid down by the lending institutions. The borrower usually requests to give some time to streamline the business through which the irregularity in the account could be met. It is a pity condition that instead of supporting such borrowers lending institutions usually threatens the borrowers for taking forceful possession of the mortgaged assets if the borrower fails to remit the money. The lending institutions are hereby requested to help deserving units revive their business by offering maximum support, guidance and revival packages to come out of the woods.


The lending institutions may refer such accounts to competent consultants as soon as the signs of industrial sickness become visible. If proper timely guidance is available we can definitely curtail the number of SME’s becoming NPA.


Only the financial paper projections are not enough. Dynamic and innovative mind set of the Consultant will definitely help both the Bank and SME’s in a big way.


SUCCESS MANTRA to handle the NPA situation

  • Don’t wait till the problem arises.
  • Seek professional guidance to know your rights as a borrower & take necessary steps at the right time.
  • Don’t come under the pressure of Bank
  • Don’t compromise on your business requirements. Be focused on business.
  • Don’t make over commitments fearing the “NPA’ tag
  • Take steps to safeguard your valuable assets.
  • Work out ways to raise finance with help of a professional guide
  • Ultimately settle with the Bank.

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