Consider the following statements regarding the Non Performing Asset It is a loan or an advance wher...........

Indian Economic System(PCS) Money and banking

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Consider the following statements regarding the Non-Performing Asset: It is a loan or an advance where

interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a Term Loan.
the installment of principal or interest thereon remains overdue for two crop seasons for short duration crops.
the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted. Which of the above statements is are correct?

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Explanation:

A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.

Description: Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets.

1. Substandard assets: Assets which has remained NPA for a period less than or equal to 12 months.

2. Doubtful assets: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.

3. Loss assets: As per RBI, “Loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.”