What is gross NPA ratio:

• Total NPA/Total Advances=Gross NPA Ratio.
• NPA is advances which do not earn interest for 90 days and more. Banks make provision for standard, sub-standard, doubtful and loss assets based on age of advance and mortgage value available at different rates. If provision amount is deducted we get Net NPA.

NPA:

• The Reserve Bank of India has defined Net NPA as Net NPA = Gross NPA – (Balance in Interest Suspense account + DICGC/ECGC claims received and held pending
• The net NPA (Net NPA = Gross NPAs – Provisions) divided by the total advances of a branch reflects the gross NPA ratio. It measures the overall quality of the bank’s loans. The lower the ratio, it is good for the bank, as it reflects that more loans are standard assets, which can be recovered on time.

What is in news : The gross non-performing asset ratio (GNPA) of India’s scheduled commercial banks (SCBs) may climb by the end of the current fiscal year to as much as 11.2% under a severe stress scenario, from 7.48% in March 2021