Dear Client,

Once account declared NPA, no interest levied on it.

If recover through court than court will order interest payable at rate of interest payable in nationalized bank.

It may be 6% to 18%.

One a loan account turns NPA, no further interest will be debited to the account. The interest will be calculated as usual but will not be debited to the account. This amount of interest is known as arrears.

Whenever any credit comes in this NPA account, first priority will be to nullify the arrears which have accumulated over time.

Once the arrears are nullified,then only principal amount will get reduced , depending upon the amount credited.

Interest is duly charged and in fact additional penal interest is charged on NPA a/c as per terms of your loan agreement

Interest rate would be as per terms of loan agreement

Please check your agreement with the bank for the interest rate and NPA conditions and charges etc. it depends on different Bank at different rates based on the agreement and security position.

Non debiting of accrued interest to an account recognised as NPA does not mean that borrower gets relief for his default. If the interest accrued is debited to NPA account without its recovery it would swell the NPA amount to heavier figure attracting income tax. If interest income generated but not recovered is added to NPA figure, the bank has to pay income tax on such swelled amount eventhough the same is not recovered. However the internal practice of all the banks is to calculate shadow liabilty figure of the undebited portion of interest and add the same to NPA figure mentioned in the book, whenever recovery action is planned under adjudication process in civil court or DRT or enforcement action under SARFAESI Act. Bank does not loose its right to claim in respect of undebited portion of interest merely becuase it is not reflected in the book of accounts.

The same analogy applies to NPA accounts if the account is written off to '0' (in order to reduce the burden of provision) in the book of acoounts.

The maximum rate of interest that the bank can levy on the borrower is the rate of interest negotiated between the bank and the borrower at the time of dispersal of loan and signing of loan Agreement.

I guess as per RBI norms, bank cannot levy interest on balance in a NPA account

Let me check and revert

For interest rate on term loan go through your agreement of term loan it's differ bank to bank and type of loans

Once the account turns performing assets to non performing assets interest will only be added at the time of recovery