Syllabus: General Studies Paper 3

The asset quality of the banking system has improved with gross non-performing assets (GNPA) ratio declining from 7.4 per cent in March 2021 to a six-year low of 5.9 per cent in March 2022.

• The provisioning coverage ratio (PCR) improved to 70.9 per cent in March 2022 from 67.6 per cent a year ago.
• The slippage ratio, measuring new accretions to NPAs as a share of standard advances at the beginning of the period, declined across bank groups during FY22.
• Write-off ratio fell for the second year running to 20.0 per cent in 2021-22.
• India has the highest fintech adoption rate globally (87 per cent), receiving funding of $8.53 billion (in 278 deals) during 2021-22.

Notwithstanding the challenges from global spillovers, the Indian economy remains on the path of recovery, though inflationary pressures, external spillovers and geopolitical risks warrant careful handling and close monitoring.

What Is a Non-Performing Asset (NPA)?

• A nonperforming asset (NPA) refers to a classification for loans or advances that are in default or in arrears.
• A loan is in arrears when principal or interest payments are late or missed.
• A loan is in default when the lender considers the loan agreement to be broken and the debtor is unable to meet his obligations.
• In India, a non-performing asset (NPA) is defined as a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.