Difference between Gross Npa Net NPA and provisions:

Gross NPA (Non-Performing Asset) is the sum of the value of defaulted loans and Net NPA is Gross NPA minus provisions made to absorb possible losses. Provisions are the amounts banks hold back to absorb possible losses on bad loans. Net NPA essentially represents the true risk exposure after adjusting for such buffers.
Below is a more elaborate breakdown:
Gross NPA (GNPA):
Represents the aggregate value of all non-performing loans, i.e., the borrower has not paid according to the terms agreed.
It’s a total amount, i.e., the total value of bad loans without any adjustments.
Net NPA (NNPA):
Comes to the figure obtained by deducting the provisions created by the bank from the Gross NPA.
Provisions are amounts which a bank reserves to absorb possible losses on bad loans.
Net NPA gives a more accurate picture of the asset quality and risk exposure of a bank, as it shows the uncovered risk after adjusting for provisions.
Provisions:
They are the funds that banks keep aside as a cushion to cover probable losses against non-performing assets.
Regulators such as the Reserve Bank of India (RBI) require banks to hold certain provisions depending on the quality of assets.
Provisions are really just a method of banks’ coping with the effect of bad loans on their health.
In other words:
Suppose a bank has advanced a total of ₹100 as loans, and ₹10 of them have become non-performing (Gross NPA = ₹10). The bank provisions ₹2 to account for the possible losses on these bad loans. So, the Net NPA would be ₹8 (₹10 – ₹2). This indicates that the actual exposure to risk by the bank due to bad loans is ₹8, after accounting for the provision made.

Gross NPA- Provision = Net NPA

More gross Npa more the risk
Net NPA typically 30% of Gross Npa it means of total Gross Npa 30% is at maximum Recoverable
Remaining is under provision

More the provision amount less er the bank profitability

So provision must be kept in mind while analyzing a bank Balance sheet
It also reflects the credit quality of the bank.