Banking, mapped
MapGlossary
What kills the spread: NPAs·1 of 5
  1. What an NPA is (the 90-day rule)→
  2. SMA stress buckets (SMA-0/1/2)→
  3. Asset classification (standard → loss)→
  4. Provisioning→
  5. IRAC norms

What kills the spread: NPAs

What an NPA is: the 90-day rule that turns a loan bad

A loan turns NPA when interest or principal goes unpaid for more than 90 days.

Why it matters

NPAs are what destroy the spread your bank works to build. In lending or collections, knowing exactly when day 91 hits keeps you from being blindsided at quarter-end.

A worked example

Miss an EMI on 5 Jan and stay unpaid; around day 91 (early April) the account flips to NPA and stops earning income.

The picture

EMI missedSMA bucketsNPAProvisioning +reclassification1–90 days (early warning)crosses 90 daystriggers

What it leads to

Once a loan turns NPA it slides down the asset-classification ladder and triggers provisioning that hits the P&L.

Where it sits in the map

Assetclassification(standard → loss)Assetclassification(standard → loss)ProvisioningIRAC normsSMA stressbuckets(SMA-0/1/2)SMA stressbuckets(SMA-0/1/2)What an NPA is(the 90-day rule)

Follow the causation

this is the early-warning stage before the 90-day lineSMA stress buckets (SMA-0/1/2)→this is the ladder an account slides down once it's an NPAAsset classification (standard → loss)→this is the profit the bank must set aside the moment it turns NPAProvisioning→