← GlossaryBanking
Non-Performing Asset (NPA)
A loan becomes a non-performing asset when interest or principal has not been paid for 90 days. Banks must set aside money, called provisions, to cover likely losses on NPAs, which reduces their profits and ability to lend.
Why It Matters
High NPAs choke lending to the whole economy, because banks stop taking risks.
In India
Indian banks’ bad loans peaked above 11% of total loans around 2018 after a decade of reckless corporate lending. By 2025 the ratio had fallen to multi-year lows near 2.5%.
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