Effect of npa on banks?

Question

Effect of npa on banks?

Answer 1

npa non performing assets effects very much on banks, because profitability down due to npa.  while npa is minimise, banks gets relief & b/sheet attactive.

Answer 2

NPA in simple words may be defined as the borrower does not pay principal and interest for a period of 180 days.      

   The core banking business is of mobilizing the deposits and utilizing it for lending to industry. Lending business is generally encouraged because it has the effect of funds being transferred from the system to productive purposes which results into economic growth . The debtor take the funds from the bank in the form of credit and he have to payback the principle amount with the interest to the creditor as a result the creditor (Bank)gets the profit in the form of interest and again this profit is reinvested leading to the growth of the economy.              

             Because of the non performance or non recipt of interest or principal , the banks (creditor) money in the form of funds get blocked and is not available for furtherence of Banking business and thus the  profit margin of the Banks goes down.    

Answer 3

hello frnd the previous mail says everything perfect except that since financial year 2004 the NPA period has been changed to 90 days from 180 days. contact me directly via mail if u need any specific data for NPA.

Parag