Managing Non-Performing Assets

Loans are essential for various reasons, such as purchases, investments, renovations and business establishments, playing a pivotal role in increasing an economy's money supply and encouraging new players to enter the business arena. However, it becomes a non-performing asset (NPA) or a bad loan when the principal and interest are not paid promptly. In this course, we will teach you how to manage NPAs to curb their frequency and improve the margin of interest and profits. First, we'll introduce you to a simple banking model so you can understand the loan transactions between the lender and borrower. We then discuss 'credit monitoring' and how it can help sustain the health of an entire loan portfolio.

We'll show you bank loan recovery techniques and how to manage an NPA. You'll explore how they impact the balance sheets of both the lender and the borrower and how these reflect loan performance and business success. We'll discuss the impact of NPAs on banks, borrowers, and the economy, including what causes NPA and the factors contributing to high NPA rates. Insight into revenue-expense connections is crucial for improved profitability, and accrual accounting provides that clarity. You'll explore cash and accrual accounting methods and the broad classification of bank loans, including the types of NPAs. After that, you'll learn about income reversal in NPA accounts, income recognition in banks, the out-of-order position of cash credit (CC) and overdraft (OD) accounts, and the overdue position.

Next, we will examine NPA management in farm loans, the factors that affect agriculture, cropping processes in agriculture, production losses in agriculture and the types of crops. You'll study drawing power in NPA, how banks conduct securities valuation and how a loan account enters the special mention account (SMA) and the PNPA (pre-NPA) zone. Lastly, we'll review the cascading effects of SMA and NPA, a case study on asset classification and provisions, bank provision requirements and more. NPAs are a nuisance that menaces the operations of financial institutions and, thus, should be managed appropriately. We have designed this course for all learners, including bank managers, business owners, and tycoons. So to mitigate the NPAs in your establishment, enrol and start this course today!