Decoded: What are pro forma NPAs and how does that impact borrowers?

An analysis of results declared by listed banks so far shows that the NPA figures shown in the bank income statements are lower than the ones earmarked on pro forma basis

The financial results season is on. Listed Indian banks have been presenting two sets of numbers on asset quality. One, presented by adhering to the rule book as well as an apex court ruling. The other shows numbers, on prudential basis, termed as pro forma figures assuming the absence of the court ruling that bars treating defaulting loans as non-performing assets (NPAs). The latter reveals a much clearer picture about the pain or stress on books.

What are pro forma NPAs? And why are they being disclosed as distinct from those shown in the income statement of banks?

Lenders are