Financial Awareness - Risk, Stability & Emerging Finance
Under RBI norms, which category of Non-Performing Asset (NPA) is characterized by the asset remaining in the substandard category for more than 12 months?
Under RBI norms, which category of Non-Performing Asset (NPA) is characterized by the asset remaining in the substandard category for more than 12 months?
medium Q14 of 15
Step-by-Step Solution
Step 1: Understand NPA classification duration
Substandard assets become doubtful if they remain substandard for more than 12 months.Step 2: Apply classification rules
Assets overdue beyond 12 months in substandard category are classified as doubtful assets.Final Answer:
Doubtful Asset → Option DQuick Check:
Substandard >12 months = Doubtful Asset ✅
Quick Trick: Remember: Substandard >12 months converts to Doubtful.
Common Mistakes:
- Confusing Loss Asset with Doubtful Asset based on duration.
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