BANKING AFFAIRS

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

The practice of reducing NPAs through cross-lending to square off loans from bank is known as?

A	“Ever-Greening” of advances
B	“Take Over” of advances
C	Compromise Settlement
D	All of the above

Explanation:

Detailed explanation-1: -An evergreen loan is a loan that does not require the repayment of principal during the life of the loan, or during a specified period of time. In an evergreen loan, the borrower is required to make only interest payments during the life of the loan.

Detailed explanation-2: -The evergreening of loans is a well-known exercise, in which banks revive a loan on the verge of default by granting further loans to the same firm.

Detailed explanation-3: -A credit card is an example of an evergreen loan. When you apply, the credit card company will review your income, credit score, and other financial information to determine your credit limit and your annual percentage rate (APR).

Detailed explanation-4: -Besides, the RBI does not approve of evergreen loans and has set strict norms and potential penalties for banks committing this practice.

There is 1 question to complete.