What Is A Standard Asset?

What is NPA as per RBI?

A ‘non-performing asset’ (NPA) was defined as a credit facility in respect of which the interest and/ or instalment of principal has remained ‘past due’ for a specified period of time.

The specified period was reduced in a phased manner as under: Year ending March 31.

Specified period..

What do you mean by NPA in banking?

non performing assetDefinition: A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. Description: Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets.

What is provision in banking?

What Are General Provisions? General provisions are balance sheet items representing funds set aside by a company as assets to pay for anticipated future losses. For banks, a general provision is considered to be supplementary capital under the first Basel Accord.

What are the 7 asset classes?

Analyzing the Seven Asset ClassesMarket Story & Outlook:Charting the 7 Asset Classes:1) US Equities:2) Currency:3) Bond/Fixed Income:4) Commodities:5) Global Markets:6) Real Estate (REITS):More items…

What is standard asset as per RBI?

Standard Asset is one which does not disclose any problems and which does not carry more than normal risk attached to the business. Such an asset should not be an NPA. i. With effect from March 31, 2005 an asset would be classified as sub-standard if it remained NPA for a period less than or equal to 12 months.

What is provision for standard assets?

If the borrower regularly pays his dues regularly and on time; bank will call such loan as its “Standard Asset”. As per the norms, banks have to make a general provision of 0.40% for all loans and advances except that given towards agriculture and small and medium enterprise (SME) sector.

What are the types of assets?

What are the Main Types of Assets?Cash and cash equivalents.Accounts Receivable.Inventory.Investments.PPE (Property, Plant, and Equipment) PP&E is impacted by Capex,Vehicles.Furniture.Patents (intangible asset)

What is provision rate?

The provision for credit losses (PCL) is an estimation of potential losses that a company might experience due to credit risk. The provision for credit losses is treated as an expense on the company’s financial statements.

Why is NPA bad?

Credit contraction: Burgeoning NPAs reduces recycling of funds, and by extension, also that of the bank’s ability to lend more. This, in turn, results in interest income decline. On a macro level, it contracts money circulation that can lead to an economic slowdown.

Is car an asset?

The short answer is yes, generally, your car is an asset. But it’s a different type of asset than other assets. Your car is a depreciating asset. Your car loses value the moment you drive it off the lot and continues to lose value as time goes on.

What is difference between banks & NBFCs?

Bank is a government entitled financial intermediary which aims to provide banking services to customers. NBFC is a company which provides services similar to banking services to people without holding a bank license. A bank is registered under banking regulation act, 1949.

What do you mean by standard assets?

Standard asset for a bank is an asset that is not classified as an NPA. The asset exhibits no problem in the normal course other than the usual business risk. … More specifically, according to RBI circular, sub-standard asset is an asset that has continued to remain an NPA for a period less than or equal to 1 year.

What are standard assets for NBFC?

“Standard asset” means an asset in respect of which, no default in repayment of principal or payment of interest is perceived and which does not disclose any signs of impairment nor carry more than normal risk attached to the business.

How is Bank NPA calculated?

Formula: Net non-performing assets = Gross NPAs – Provisions. Gross NPA Ratio is the ratio of total gross NPA to total advances (loans) of the bank. Net NPA to Advances (loans) Ratio is the ratio of Net NPA to advances.

What are the types of NBFCs?

The different types of NBFCs:Asset Finance Company.Loan Company.Mortgage Guarantee Company.Investment Company.Core Investment Company.Infrastructure Finance Company.Micro Finance Company.Housing Finance Company.

How do we classify NPA?

Banks are required to classify nonperforming assets into one of three categories according to how long the asset has been non-performing: sub-standard assets, doubtful assets, and loss assets. A sub-standard asset is an asset classified as an NPA for less than 12 months.

What is NPA norms?

The 90-day non-performing asset (NPA) norm would exclude the moratorium period for such accounts, RBI Governor Shaktikanta Das said. … The accounts turn non-performing assets (NPAs) after 90 days of overdue in making payments. The accounts are classified as standard before the 90-day period.

What are the 2 types of assets?

One can classify assets into two major asset classes: tangible assets and intangible assets. Tangible assets contain various subclasses, including current assets and fixed assets. Current assets include inventory, accounts receivable, while fixed assets include buildings and equipment.