IDBI Bank launches ‘Own Your NPA’ campaign

In a bid to speedily recover Non-Performing Assets (NPA), the IDBI Bank has launched a campaign named ‘Own Your NPA’.

What is ‘Own Your NPA’ campaign?

It is a NPA recovery drive launched by the IDBI Bank through which it has tasked its managers — at the zonal, regional and branch levels — to focus their on making recoveries from the top 20 bad loan accounts in their jurisdiction. As part of the campaign, each zonal, regional and branch manager will personally go and meet the customers. The bank has identified 1522 cases, involving an aggregate principal outstanding of Rs 5,805 crore which is approximately 73% of its total NPAs of Rs 7,959 crore as on June-end 2013.

What is Non-Performing Assets (NPA)?

In simple words, the assets of the Banks which don’t perform (means don’t bring any return) are called Non Performing Assets. In more general sense they are “bad Loans”.

  • Any asset, including a leased asset, becomes non performing when it ceases to generate income for the bank.

However, there is a prescribed definition by the RBI which defines the NPAs as:

  • Terms Loans on which interest and / or installment of principal remain overdue for a particular quarter for a period of more than 90 days from the end of that particular quarter.
  • The Bills those remain overdue for a period of More than 90 Days from the end of a quarter.
  • Any amount to be received remains overdue for a period of more than 90 days.
  • The Cash Credit account remains out of order for a period of more than 90 days. Out of order means over the sanctioned limit.

Note: This period of 90 Days for the above categories was 180 days prior to 2004.
So 90 Days is the thumb rule in the deciding the NPAs. However, there is an exception to this. Go through the following case:
A farmer has taken a loan for a paddy crop in the beginning of the Rabi Season and has not made a repayment. In which of the following situations, if Installment or interest is not paid for this loan, it would become a NPA (Non Performing Asset)?

  1. 90 Days from the due date
  2. 90 Days from the end of the Rabi Season
  3. 1 crop season from the due date
  4. 2 crop seasons from the due date

The answer of the above question is (4) i.e. 2 crop seasons from the due date. Please note the following:

  • For short duration crop agriculture loans such as paddy, Jowar, Bajra etc. if the loan (installment / interest) is NOT paid for 2 crop seasons (means Kharif, and next Rabi in the above question), it would be termed as a NPA.
  • For long duration crops, the above would be 1 Crop season from the due date.



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