Glossary for NPA

"A"

Asset Quality Review :- It is the assessment of  credit risk associated with a particular asset.

Asset Reconstruction Companies (ARC) :- Registered under companies act, 2013. The primary goal of ARC is to make profitable those assets which have been underperforming or classified as NPA.

"C"

Credit Risk  :- It is the risk of default by borrowers.

"E"

Expected Loss :- Amount that the bank is eventually expected to lose on that loan.

"P"

Prompt Corrective Action (PCA) :- RBI has set some trigger points on banks, if these are triggered, then actions will be taken by RBI. Actions like restricting the banks to not provide big loans & there will be raising of fresh capital also.

"R"

Restructured Assets :- It means the old asset or loan becomes new after reducing the size by paying off the amount which is affordable by the company (or borrower).

"W"

Write offs :-  In banking terms, it means removing the assets (or loans) from the bank's balance sheet. It is also known as "charge-offs".