An account should be treated as out of order if the outstanding balance remains continuously in excess of the sanctional limits/drawing power and in case where the outstanding balance in the principal operating account is less than the sanctional limit/drawing power but there are no credits continuously for 90 days as on the date of balance sheet or credits are not enough to cover the interest debited during the same period.
An account known as NPA are non-performing asset. A non-performing asset are the loans that someone has but it has not been fully paid and the payments have stalled for some reason. This means that over a period of time the payments have back up and are now in arrears. This period of time is about 90 days. Sometimes, NPA accounts can be classified as out of order.
This status means that the account should be treated as out of order if the balance remains continuously in excess of the limit or drawing power. In cases where the outstanding balance in the principal operating account is less than the limit or drawing power, there are not credits for 90 days from the date of the balance sheet. The interest can’t be covered during that time either.
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