NPA & Prudential Norms
61. Loan becomes NPA when overdue for:
A. 60 days
B. 90 days
C. 120 days
D. 180 days
Answer: B
Explanation: RBI defines NPA when interest or instalment remains overdue for more than 90 days. As per Master Circular on Prudential Norms dated 01.04.2022
2.2 ‘Out of Order’ status (applicable in CC/OD)
2.2.1 A CC/OD account shall be treated as ‘out of order’ if:
i) The outstanding balance in the CC/OD account remains continuously in excess of the sanctioned limit/drawing power for 90 days, or
ii) The outstanding balance in the CC/OD account is less than the sanctioned limit/drawing power but there are no credits continuously for 90 days, or the outstanding balance in the CC/OD account is less than the sanctioned limit/drawing power but credits are not enough to cover the interest debited during the previous 90 days period.
2.2.2 The definition of “out of order” as at paragraph 2.2.1 above shall be applicable to all loan products being offered as an overdraft facility, including those not meant for business purpose and/or which entail interest repayments as the only credits.
2.3 ‘Overdue’ status
2.3.1 Any amount due to the bank under any credit facility is ‘overdue’ if it is not paid on the due date fixed by the bank. The borrower accounts shall be flagged as overdue by the banks as part of their day-end processes for the due date, irrespective of the time of running such processes.
62. NPA norms are issued by:
A. RBI
B. SEBI
C. Government
D. NABARD
Answer: A
Explanation: RBI regulates asset classification and provisioning norms.
63. Sub-standard asset period:
A. Up to 12 months
B. 18 months
C. 24 months
D. 36 months
Answer: A
Explanation: An asset remains sub-standard for the first 12 months after becoming NPA.
64. Doubtful asset arises after:
A. 6 months
B. 12 months
C. 24 months
D. 36 months
Answer: B
Explanation: If a sub-standard asset remains unpaid beyond 12 months, it becomes doubtful.
65. Loss asset means:
A. Fully secured loan
B. Uncollectible loan
C. Restructured loan
D. Government loan
Answer: B
Explanation: Loss asset is considered irrecoverable though not yet written off.
66. Provisioning for loss asset:
A. 25%
B. 50%
C. 75%
D. 100%
Answer: D
Explanation: Banks must make 100% provision.
67. Asset classification governed by:
A. RBI prudential norms
B. Companies Act
C. Income Tax Act
D. SEBI regulations
Answer: A
Explanation: RBI issues Income Recognition and Asset Classification (IRAC) norms.
68. Wilful defaulter means:
A. Borrower unable to pay
B. Borrower deliberately defaults despite capacity
C. Small borrower
D. Agricultural borrower
Answer: B
Explanation: Such borrowers intentionally avoid repayment despite capacity.
69. Stressed asset resolution framework issued by:
A. RBI
B. SEBI
C. Government
D. NABARD
Answer: A
70. ARCs deal with:
A. Performing loans
B. Non-performing assets
C. Government bonds
D. Deposits
Answer: B
71. ARC stands for:
A. Asset Reconstruction Company
B. Asset Recovery Council
C. Asset Resolution Committee
D. Asset Regulation Company
Answer: A
72. Provisioning ensures:
A. Profit increase
B. Financial stability
C. Tax benefit
D. Loan growth
Answer: B
73. Effective NPA management improves:
A. Liquidity
B. Profitability
C. Asset quality
D. All of the above
Answer: D
74. Loan restructuring permitted under:
A. RBI guidelines
B. SEBI rules
C. Companies Act
D. Consumer Act
Answer: A
75. Write-off means:
A. Loan recovered
B. Loan removed from books but recovery continues
C. Loan cancelled
D. Loan transferred to government
Answer: B
76. Bank supervision of asset quality done by:
A. RBI
B. SEBI
C. Finance Ministry
D. NABARD
Answer: A
77. Gross NPA means:
A. NPAs before provisions
B. NPAs after provisions
C. Deposits
D. Profit margin
Answer: A
78. Net NPA means:
A. NPAs after provisions
B. Deposits
C. Gross loans
D. Income
Answer: A
79. Provisioning protects banks from:
A. Loan losses
B. Interest losses
C. Market losses
D. Tax losses
Answer: A
80. Reduction in NPA improves:
A. Balance sheet strength
B. Financial stability
C. Credit growth
D. All of the above
Answer: D