PROFORMA NPA
- February 5, 2021
- Posted by: OptimizeIAS Team
- Category: Uncategorized
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PROFORMA NPA
Subject : Economics
Context : Almost all private sector banks, housing finance companies and NBFCs as well as a few public sector lenders have reported performances for the quarter ended December 31, 2020 with higher pro forma gross non-performing assets compared to the reported gross NPAs.
Concept :
- Supreme Court in its interim order dated 03.09.2020 directed that the accounts that were not declared NPA till 31.08.2020 shall not be declared NPA till further orders.
- Banks, while following SC’s order, are disclosing Proforma NPA as additional disclosure(in addition to gross NPA) for better understanding of financial performance & increasing provision thereon to cover for contingencies.
- Pro forma NPA includes non-performing assets created in 2020 when the RBI allowed banks to standstill recognition of fresh stressed assets.