A Non-Performing Asset (NPA) is a status assigned to a financial asset, such as a loan or an advance, when the borrower has not paid the scheduled interest or principal payments for a specified period. In most banking and financial regulations, a loan that is overdue for 90 days or more is categorized as an NPA. For instance, if a $100,000 mortgage does not receive any payment for three consecutive months, it can become an NPA. NPA indicates that the borrower may be experiencing financial distress, which could lead to a loss for the lending institution. Recognizing and managing NPAs effectively is critical to maintaining healthy financial operations. Non-performing assets are often classified into subcategories like substandard assets, doubtful assets, and loss assets, based on their duration of non-payment and the likelihood of recovery. From an accounting perspective, NPAs may require provisions to be made, impacting the financial statements of the lender. This term is frequently encountered in banking, particularly in credit risk management and financial reporting.