What are Stressed Assets?
By Balaji
Updated on: February 17th, 2023
Stressed assets are similar to non-performing assets (NPA) or special mention accounts (SMA), which include written-off assets and restructured loans. Stressed assets are a strong indicator of the health of the Indian banking system. Anyone can understand the bank’s financial situation.
Table of content
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1. Stressed Assets
Stressed Assets
Stressed assets are a sum of Non-performing assets, restructured loans, and written-off assets. During the period of 90 days before becoming non-performing assets, these are called ‘stressed assets.’ There has been a major rise in the percentage of stressed assets or non-performing assets (NPAs) in the banking industry recently. Mismanagement, misgovernance, and other factors could be to blame.
- Bank assets include loans made to individuals and investments made by the bank.
- Stressed assets fall under the purview of bank loans.
- The Indian banking sector faces economic risks as the number of stressed assets in these institutions grows.
- People and customers are interested in learning more about NPAs and stressed assets at banks.
- It aids in understanding the bank’s financial situation.
- This formula can be used to understand bank-stressed assets- NPAs + restructured loans + written-off assets = stressed assets
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