With reference to Non Performing Asset NPA consider the following statements It is a loan or advance...........

Indian Economic System(CSC) Money and banking

With reference to Non-Performing Asset (NPA), consider the following statements

It is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
An asset is classified as a doubtful asset if it remains as an NPA for a period less than or equal to 12 months.
Provisions are amounts that banks set aside from their profits to cover losses on NPAs.

How many of the above statements is/are correct?

Only One

Only Two

All Three

None

Only statements 1&3 are correct.

The gross Non-Performing Assets (GNPA) of the Indian banks are projected to see further improvement, potentially reaching up to 2.1 per cent by the end of the fiscal year 2025, as per a recent report.

About Non-Performing Asset (NPA)

It is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
They can include various types of loans, such as personal loans, business loans, mortgages and credit card debt.
When the ratio of NPAs in a bank's loan portfolio rises, its income and profitability fall, its capacity to lend falls and the possibility of loan defaults and write-offs rises.

Types of NPAs: Different types of NPAs depend on how long they remain in the NPA category

Sub-Standard Assets: An asset is classified as a sub-standard asset if it remains as an NPA for a period less than or equal to 12 months.
Doubtful Assets: An asset is classified as a doubtful asset if it remains as an NPA for more than 12 months.

NPA Provisioning

Provisioning means an amount that the banks set aside from their profits or income in a particular quarter for non-performing assets, such as assets that may turn into losses in the future.
Provisions are amounts that banks set aside to cover losses on NPAs.

Hence option 2nd is correct.