BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It is usually a loan that is not producing income
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It is created If a borrower misses paying his equated monthly instalment (EMI) for 90 days.
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High NPA are a sign of good financial health.
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Asset Reconstruction Companies (ARC’s)buy bank NPA at a discount along with the right to recover the money.
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Detailed explanation-1: -Devaluated Assets Was this answer helpful?
Detailed explanation-2: -Rising NPAs undermine the bank’s image, making the public lose trust in banks. The depositors may withdraw their deposits causing liquidity issues for banks. The lack of liquidity prevents banks from lending for other productive activities in the economy.
Detailed explanation-3: -b) Doubtful Assets An asset is classified as a doubtful asset if it remained as an NPA for more than 12 months.
Detailed explanation-4: -Definition: 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.