A loan account is classified as a Non Performing Asset when the interest or instalment remains overdue for more than:
- A.30 days
- B.60 days
- C.90 days
- D.180 days
Correct answer
Explanation
The correct answer is C, 90 days. Under the asset classification norms of the Reserve Bank of India, a term loan becomes a Non Performing Asset when interest or an instalment of principal stays overdue for more than ninety days. Once it is an NPA, the bank must stop treating the interest as income and must set aside provisions against the account. NPAs are then graded further as substandard when they have been non performing for up to twelve months, doubtful beyond that, and loss assets when recovery is not expected at all.
Option A, thirty days, and option B, sixty days, describe an account that is merely overdue and is watched under the special mention categories, not yet an NPA. Option D, one hundred and eighty days, was the older norm in India before the ninety day rule was brought in to match international practice. Agricultural loans follow a separate rule based on crop seasons.
Read the full article: Banking Terms and Abbreviations: Full Forms and Meanings
Practice Questions
View allIn banking, the full form of RTGS is
- A.Rapid Transfer Gross Scheme
- B.Rapid Transfer Gross Settlement
- C.Real Time Gross Settlement
- D.Real Time Gross Scheme
Show answer
RTGS is the system in which a transfer instruction is settled singly and immediately, rather than being held and netted off with others.
Read the full explanation →Which of the following is an instrument of monetary policy used by RBI? I. SLR II. MSS III. Corridor
- A.I and II
- B.II and III
- C.I, II and III
- D.I and III
Show answer
All three belong to the monetary policy toolkit of the Reserve Bank of India. SLR, the Statutory Liquidity Ratio, is the part of its deposits that a bank must keep with itself in cash, gold or approved securities, and raising or lowering it changes how much a bank can lend.
Read the full explanation →Which of the following is a qualitative tool used by RBI to control money supply?
- A.Bank Rate
- B.Moral Suasion
- C.Open Market Operations
- D.Cash Reserve Ratio
Show answer
The tools of the Reserve Bank are divided into quantitative tools, which change the total amount of credit in the system, and qualitative or selective tools, which change the direction in which that credit flows.
Read the full explanation →To improve internal control of banks, Reserve Bank of India has asked all banks to do what till 30 April 2018?
- A.To connect SWIFT with its Basic Banking Solution (CBS)
- B.To connect RTGS with their Core Banking Solution (CBS)
- C.To connect NEFT with its Basic Banking Solution (CBS)
- D.To connect MICR to their Basic Banking Solution (CBS)
Show answer
SWIFT is the international messaging network over which banks send payment and guarantee instructions across borders.
Read the full explanation →An IFSC code used for electronic funds transfer in India consists of how many characters?
- A.9
- B.11
- C.13
- D.16
Show answer
The Indian Financial System Code is an eleven character alphanumeric code that identifies a particular bank branch taking part in the electronic payment systems of the Reserve Bank of India.
Read the full explanation →