Non-performing asset

A non-performing loan (NPL) is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 90 days, but this can depend on the contract terms. A non-performing loan (NPL) is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 90 days, but this can depend on the contract terms. According to International Monetary Fund, a loan is nonperforming when: By bank regulatory definition, non-performing loans consist of: In India, non-performing loans are common in the agricultural sector where the farmers can't pay back the loan or the interest amount mainly as a result of losses due to floods or drought. Generally NPL problems are resolved in two ways: Worldwide, the most common and successful approach towards NPL management is the establishment of Asset Management Companies (AMC). These companies use public or bank funds to remove NPAs from the bank books. For example, the Korea Asset Management Corporation purchased as much as 80% of bad loans at market rate following the Asian crises. Now, there are several proactive measures that are being implemented: