Are you looking to know about difference between Gross NPA and Net NPA? If yes then you came to right website.
In this article you get to know about meaning of Gross NPA and Net NPA.
This article is written after reading RBI Circular, Wikipedia and more than 5 articles related to Gross NPA and Net NPA.
GROSS NPA:
Now a days as per RBI guidelines every bank displays their NPA on their Balance Sheet. Banks Balance Sheet include the followings
- Gross NPA
- Net NPA
- Gross NPA Percentage
- Net NPA Percentage
- Percentage of NPA to Gross Advances
In simple words Gross NPA means total of all loans which are not repaid by the borrowers within ninety days period other than agriculture loans. For agriculture loans NPA period depends to repayment schedule. Its basically 2 harvest seasons of the crops. Its does not generate any income for banks.
NET NPA:
Net NPA is nothing but the actual loss suffered by the Bank. Net NPA is calculated on
Net NPA= Gross NPA – Provisions
GROSS NPA AND NET NPA Example:
If you take a loan of ₹ 1,00,000/- but you paid only ₹ 40000/- back. (₹ 60000/- remaining) Then you don’t pay for 3 EMIs and your loan gets categorized under NPA of the Bank.
Now Gross NPA is = ₹ 100000-₹ 40000
= ₹ 60000/-
Now out of this ₹ 60000/- Bank make a provision of ₹ 40000/-
and the remaining amount (₹ 60000-₹ 40000)
is ₹ 20000/- is Net NPA.
Conclusion:
Dear reader in this article you get to know about Gross NPA and Net NPA meaning and its differences. Gross NPA is not an actual NPA of the Bank. Net NPA is actual NPA.
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