Asset Quality and Non-Performing Assets

What you will be able to do

• State the 90-day rule and how the NPA trigger differs across loan types.
• Classify an NPA as sub-standard, doubtful or loss and order the SMA buckets.
• Compute the gross NPA ratio, net NPA ratio and provision coverage ratio from a balance-sheet extract.
• Explain slippage, upgradation, write-off versus waiver, restructuring and the IBC resolution route.

What is inside this lesson

1. 1Why asset quality matters
2. 2What makes an asset non-performing
3. 3Four-way classification
4. 4SMA early-warning buckets
5. 5Gross NPA, net NPA and provision coverage
6. 6Reading a bank's asset-quality numbers
7. 7Life-cycle of a bad loan
8. 8Common confusions
9. 9Quick revision
10. 10Practice