BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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sub-standard asset for a period of 12 months
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sub-standard asset for a period of 3 months
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sub-standard asset for a period of 6 months
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None of the above
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Detailed explanation-1: -A substandard asset is an asset classified as an NPA for less than 12 months. A doubtful asset is an asset that has been nonperforming for more than 12 months. Loss assets are loans with losses identified by the bank, auditor, or inspector that need to be fully written off.
Detailed explanation-2: -Doubtful assets: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.
Detailed explanation-3: -There are different types of non-performing assets depending on how long they remain in the NPA category. 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. An asset is classified as a doubtful asset if it remained as an NPA for more than 12 months.
Detailed explanation-4: -3 Doubtful Assets With effect from March 31, 2005, an asset is required to be classified as doubtful, if it has remained NPA for more than 12 months. For Tier I banks, the 12-month period of classification of a substandard asset in doubtful category is effective from April 1, 2009.