How many of the bank's loans aren't being repaid?
Gross NPA Ratio
Bank numbers
Gross NPA is the share of a bank's loans where the borrower has stopped paying for 90 days or more.
In everyday life
You lend ₹100 each to 100 friends. If 3 stop paying you back for three months, 3% of your loans are 'bad'. That's your gross NPA.
How it's worked out
Example: Lotus Bank, a made-up company that takes deposits and gives loans.
In words: ₹3 of every ₹100 lent isn't being repaid.
Try it yourself
Move the sliders and watch the answer, the picture and the verdict change together.
₹3 of every ₹100 lent isn't being repaid.
- Bad loans
- The rest
Each dot is 1 of every 100 in “all loans”.
Rough guide
- Clean
- Watch
- Stressed
What's a good number?
- Clean
Up to 3%
- Watch
3% to 6%
- Stressed
Above 6%
Bad loans eat into profit, because the bank has to set money aside for them. Net NPA (after that money is set aside) should be much lower.
Key number in the sector guides for Banks.
How to read it
Good signs
- Gross NPA falling year after year.
- Net NPA below 1%.
Watch out for
- NPA rising while the bank is growing loans quickly.
- Loans being 'restructured' (new, easier terms) to avoid calling them bad.
Read it with
For learning only. Example companies are made up, and the rough guides are rules of thumb, not targets. Nothing here is advice to buy or sell any stock.