For any lender — a bank, an NBFC — the core risk is simple: did the money lent out actually get paid back? GNPA is the percentage of total loans where the borrower has stopped paying as expected (a 'bad loan'). NNPA takes that same figure but subtracts the provisions the lender has already set aside to absorb the expected loss — so it reflects the net exposure still at risk. Lower is better for both. A declining GNPA/NNPA trend over several quarters is one of the most reliable signals that a lender's loan book is genuinely healthy, not just currently lucky.