# DIFFERENCE BETWEEN GROSS NPA AND NET NPA

In this article you get to know about meaning of Gross NPA and Net NPA.Now a days as per RBI guidelines every bank displays their NPA on their Balance Sheet. Banks Balance Sheet include the followings

In simple words Gross NPA means total of all loans which are not repaid by the borrowers within ninety days period other than agriculture loans. For agriculture loans NPA period depends to repayment schedule. Its basically 2 harvest seasons of the crops. Its does not generate any income for banks.

Net NPA is nothing but the actual loss suffered by the Bank. Net NPA is calculated on Net NPA= Gross NPA – Provisions

GROSS NPA AND NET NPA Example:

If you take a loan of  ₹ 2,00,000/- but you paid only ₹ 80000/- back. (₹ 120000/- remaining) Then you don’t pay for 3 EMIs and your loan gets categorized under NPA of the Bank.

Now Gross NPA is = ₹ 200000-₹ 80000

= ₹ 120000/-

Now out of this ₹ 120000/- Bank make a provision of ₹ 80000/-

and the remaining amount (₹ 120000-₹ 80000)

is ₹ 40000/- is Net NPA.

Gross Non-Performing Asset (NPA) percentage is a financial ratio that is used to measure the severity of a bank's non-performing assets. Non-performing assets are loans or advances that are not being serviced as per the agreed terms with the borrowers. They are considered to be at risk of default, and may not generate any income for the bank. The gross NPA percentage is calculated by dividing the total value of the bank's gross non-performing assets by the total value of its total assets, and expressing the result as a percentage. A higher gross NPA percentage indicates that a larger proportion of the bank's assets are at risk of default, which can be a sign of financial distress. It is important to note that the gross NPA percentage is different from the net NPA percentage, which is calculated by subtracting the value of the bank's provisions (such as loan loss reserves) from its gross non-performing assets, before dividing the result by the total value of its assets. The net NPA percentage is a measure of the net impact of non-performing assets on a bank's financial performance.

Net Non-Performing Asset (NPA) percentage is a financial ratio that is used to measure the severity of a bank's non-performing assets. Non-performing assets are loans or advances that are not being serviced as per the agreed terms with the borrowers. They are considered to be at risk of default, and may not generate any income for the bank.

The net NPA percentage is calculated by subtracting the value of the bank's provisions (such as loan loss reserves) from its gross non-performing assets, and then dividing the result by the total value of its assets, and expressing the result as a percentage. The net NPA percentage is a measure of the net impact of non-performing assets on a bank's financial performance.

It is important to note that the net NPA percentage is different from the gross NPA percentage, which is calculated by dividing the total value of the bank's gross non-performing assets by the total value of its total assets, and expressing the result as a percentage. A higher gross NPA percentage indicates that a larger proportion of the bank's assets are at risk of default, which can be a sign of financial distress.