Non-performing asset
Also called: NPA, NPAs, bad loans, gross NPA, net NPA, provision coverage ratio, credit cost
A loan on which the borrower has stopped paying for longer than a period set by the regulator.
Gross NPAs are the total of such loans; net NPAs subtract provisions already made. The provision coverage ratio shows how much of the bad loans is covered, and credit cost shows what bad loans cost each year. Bad loans usually appear years after rapid lending growth.
Learn more in these lessons
- Analysing banks and lendersHow do you analyse a bank or a lending company?
- Case study: a lender in crisis (Yes Bank, 2018-2020)What can investors learn from the Yes Bank crisis?
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