The jargon on this chart, explained — no numbers, just what the words mean.
Non-Performing Asset (NPA)
A loan gone sour — the borrower has stopped paying interest or principal for 90 days or more, so the bank can no longer count on getting its money back. “Bad loan” is the everyday word for it.
Provisions
Money a bank sets aside from its own profits to absorb the likely loss on a bad loan — a cushion booked in advance. If the loan is never repaid, the provision takes the hit instead of that year’s earnings all at once.
Gross NPA
The full pile of bad loans a bank is carrying, before any of that cushion is subtracted.
Net NPA
What is left after provisions are taken out — the slice of bad loans the bank has not yet cushioned against. A loan that is fully provisioned drops out of this figure, which is why net NPA is always lower than gross.
Advances
The total money a bank has lent out and not yet been repaid — the loan book. The bad-loan ratio measures NPAs as a share of this.
Write-off
Removing a fully provisioned bad loan from the books to tidy the balance sheet. The bank can still chase the borrower in court — a write-off is an accounting step, not forgiveness of the debt.