Question
How is a non-performing asset (NPA) defined in the
context of agricultural loans specifically for long duration crops?Solution
In the case of agricultural loans for long duration crops, a non-performing asset (NPA) is classified when the instalment of principal or interest remains overdue for one crop season. This means that if the borrower fails to make the required payments for one crop season specifically for long duration crops, the loan will be categorized as an NPA. It is crucial for lenders to closely monitor and manage NPAs to mitigate potential risks and maintain a healthy loan portfolio.
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