Explain the meaning of non-performing assets and their classification. What is the role of Reserve Bank of India in connection with non-performing assets ?

As per Section 2(1)(o) of Securitisation Act, a Non-Performing Asset means an asset or account of a borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset- in case such bank or financial institution is administered or regulated by an authority or body established, constituted or appointed by any law for the time being in force, in accordance with the directions or guidelines relating to assets classifications issued by such authority or body; in any other case, in accordance with the directions or guidelines relating to assets classifications issued by the Reserve Bank. Non-performing assets can be further classified into: Sub-standard assets: a sub standard asset is one which has been classified as NPA for a period not exceeding 12 months. Doubtful Assets: a doubtful asset is one which has remained NPA for a period exceeding 12 months. Loss assets: where loss has been identified by the bank, internal or external auditor or central bank inspectors. But the amount has not been written off, wholly or partly.