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MACROECONOMICS
allow it to absorb unanticipated losses. The higher the amount of capital the
more protected are uninsured depositors in the event of liquidation of the
institution and the more it inspires confidence about the financial institu-
tions’ ability to continue as a going concern.
Note that an asset is regarded as non-performing when it ceases to gener-
ate income for the bank. A non-performing asset (NPA) is defined as a credit
facility in respect of which the interest and/or instalment of the principal has
remained past due for a specified period of time.
Banks are required to classify NPAs further into the following ...
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