Are restructured loans considered non performing?

Restructured loans do not necessarily mean NPLs. A bank may decide to restructure a performing exposure. At the same time, when restructuring a performing exposure, the bank needs to ensure that, even when the restructuring resulted in a new exposure, it does not wind up falling into any of nonperforming criteria.

What happens when a loan is restructured?

Loan restructuring is a process in which borrowers facing financial distress renegotiate and modify the terms of the loan with the lender to avoid default. It helps to maintain continuity in servicing the debt and gives borrowers a certain degree of flexibility to restore financial stability.

Can a NPA account be restructured?

Accounts classified NPA can be restructured; however, the extant asset classification norms governing restructuring of NPAs will continue to apply.

What happens when a loan account becomes a non performing asset?

What happens when a loan becomes NPA? When a loan becomes an NPA, Non-Performing Asset, the bank has the right to confiscate the property or asset purchased through the loan. They can then auction the asset to pay against the loan outstanding.

What is NPA and types of NPA?

Recording Nonperforming Assets (NPA) Banks are required to classify nonperforming assets into one of three categories according to how long the asset has been nonperforming: sub-standard assets, doubtful assets, and loss assets. A substandard asset is an asset classified as an NPA for less than 12 months.

What is NPA as per RBI?

A ‘non-performing asset’ (NPA) was defined as a credit facility in respect of which the interest and/ or instalment of principal has remained ‘past due’ for a specified period of time. The specified period was reduced in a phased manner as under: Year ending March 31. Specified period. 1993.

Is Loan Restructuring good or bad?

Restructuring means increased loan repayment burden as compared to the original term. It is better to avoid loan restructuring if the repayment tenure goes beyond the date of retirement. You may face liquidity issues or difficulty in meeting the new repayment obligations.

What is the process of loan restructuring?

Here are the basic eligibility criteria for loan restructuring:

1. The applicant must have not been more than 30 days overdue on EMI/Interest payment as on Mar 01, 2020.
2. Applicant must have been impacted financially in terms of loss or reduction of income / cash flows due to the COVID-19 pandemic.

How do I recover my NPA loan?

Mainly recovery is done through the following aspects:

1. Lok Adalats. The Lok Adalat is one of the alternative dispute redressal mechanisms set up by the government.
2. Debt Recovery Tribunals (DRTs)
3. Sarfaesi Act.
4. Insolvency And Bankruptcy Code (IBC)

How can I check my NPA account?

1. IDENTIFICATION EXERCISE FOR BANK NPA. Verification of Concurrent Audit / Internal Audit Report. Screening of accounts. Coding of accounts.
2. OTHER POINTS FOR CONSIDERATION IN ASSET CLASSIFICATION BY BANKS : ♣ Availability of security / net worth of borrower/ guarantor. ♣ Accounts with temporary deficiencies.