

A non-performing asset is a loan or advance where the borrower has stopped making interest or principal repayments for a specified period, indicating potential default risk.

Loans are classified as NPAs when payments remain overdue beyond regulatory thresholds. Banks monitor repayment behaviour and asset quality continuously.
High NPA levels impact bank profitability and financial stability. They also influence lending rates and credit availability across the economy.
NPAs are closely monitored by regulators in India. Strong credit assessment and monitoring reduce systemic risk.