## NPA Classification and Provisioning
### What is an NPA?
A Non-Performing Asset (NPA) is a loan/advance where interest or principal repayment has remained overdue for more than 90 days.
### Classification Categories and Minimum Provision
| Category | Definition | Provision Required |
|---|---|---|
| Substandard | Remained NPA for ≤ 12 months | 15% of outstanding amount |
| Doubtful D1 | In substandard category ≤ 12 months (Doubtful up to 1 year) | 25% (secured) + 100% (unsecured) |
| Doubtful D2 | Doubtful 1–3 years | 40% (secured) + 100% (unsecured) |
| Doubtful D3 | Doubtful >3 years | 100% (secured) + 100% (unsecured) |
| Loss Asset | Identified as uncollectible; loss not yet written off | 100% of outstanding |
### Critical Principle: Security ≠ NPA Classification
> NPA classification is based solely on the record of recovery. Availability of security or net worth of the borrower/guarantor is irrelevant for classifying an account as NPA.
However, security does matter when calculating the provision amount for Doubtful assets (secured vs unsecured split).