Bad Loans

Subject: Economy

Context:

Bad loans of Indian banks are expected to rise to 11.3-11.6% this fiscal and Rs 45,000-82,500 crore capital might be required to overcome the rising asset quality pressures, according to ICRA Ratings

Concept:

• A non-performing asset (NPA) is a banking industry term for a ‘bad loan’ – i.e. one that has not been repaid within the stipulated time, or where the scheduled payments are in arrears.
• A bank’s assets are the loans and advances it extends to customers. If these clients, including companies, do not repay either interest or part of principal or both, the loan turns into a bad loan.