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Gross non-performing assets (GNPA)

1st April, 2024 Economy

Gross non-performing assets (GNPA)

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  • The gross non-performing assets (GNPA) of banks are set to improve further upto 2.1 per cent by the end of the Financial Year 2025, said a report by rating agency Care Ratings.

What is Gross NPA?

  • Simply put, gross NPA refers to the gross non-performing asset. This term is used by commercial banks. It denotes the total sum of an unpaid debt classified as a non-performing loan.
  • Usually, a commercial bank offers loans to non-honored customers. Financial institutes need to classify them as non-performing assets within a span of ninety days since they don’t get the net payment or its principal amount.


  • Net non-performing asset or net NPA is a term that most commercial banks use to indicate less allowance for any uncertain or poor debts. In simple words, commercial banks offer an amount to cover their debts. Suppose one deducts provisions for unpaid loans, the overall sum will relate to a net non-performing asset.

Gross NPA and Net NPA: Key Differences

Tabulated below is the list of the difference between gross NPA vs net NPA differences.

Parameters Determining the Key Difference Between Net NPA vs Gross NPA

Gross NPA


Meaning and Definitions

Gross NPA is the amount of the debts an establishment or people owe to the organization that has failed to collect or honour their contractual obligations

Net NPA is the amount that results upon deducting provision for any unpaid or doubtful debt from the loan’s sum.


How to Calculate the Amount

These loans are the total sum of loans defaulted by individuals who acquired loans from a financial institution.

Gross NPA = (A1 + A2 + …. + An) divided by Gross Advances

Here, A1 refers to the loans given to the first individual (A1)


These are the amount identified after the provision amount gets deducted from a gross NPA.

Net NPA = (the Total Gross NPA) minus (Provision for the Unpaid Debts)divided by the Gross Advances


Default Period

Financial institutions provide the borrowers with a grace period after which the individual needs to begin the payment of the loan alongside its interest. But in case of the expiry of the payment duration, the credit institution will be obligated to present a written for debts that aren’t yet paid.


Contrarily, the net non-performing asset doesn’t have any grace period. It is calculated instantly.


Causes of gross non-performing assets are industrial sickness, poor government policies, willful defaults, ineffective recovery tribunals, and natural calamities.

Note that net NPA is the principal product of gross NPA


Actual Loss

Net NPAs are the principal products of any gross non-performing asset.


Net NPA comprises the actual loss that an organization experiences after the debt has defaulted. Note that the credit institution offers unpaid loans. So, the amount is deducted from the default amount that leads to the actual loss any organization faces.



A company having bad equity value may face difficulties in attracting investors because of low ROI and the company’s low share value



Net NPAs impacts greatly on liquidity and profitability of an establishment. Here, low liquidity indicates that the company is unable to perform the tasks due to low cash. So, this means that the company cannot afford to operate its regular activities.

Point to Point comparison between Gross NPA and Net NPA

  •  Definition-wise, gross NPA and net NPA are entirely different. While gross NPA refers to the number of debts an organization fails to collect, net NPA is the amount of loan resulting after deducting provision for unpaid or doubtful debts from the loan defaulted sum.
    ●    Net NPAs do not comprise a grace period, while gross NPAs have a grace period
    ●    Causes of gross NPA may be indecent government policies, natural calamities, industrial sickness, or willful defaults, net NPAs are the principal products of gross NPAs
    ●    Net NPAs may impact profitability as well as the liquidity of a company when compared to gross NPAs.


Q. Differentiate between Gross Non-Performing Assets (NPAs) and Net Non-Performing Assets (NPAs) in the banking sector of India. Discuss the significance of each metric in assessing the health of banks and the overall financial system.