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All questions of Non-Performing Assets (NPA) for Bank Exams Exam
A loan granted for short duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for________.- a)One Crop Season
- b)Two crop seasons
- c)Three Crop Season
- d)Four Crop Season
- e)Five Crop Season
Correct answer is option 'B'. Can you explain this answer?
A loan granted for short duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for________.
a)
One Crop Season
b)
Two crop seasons
c)
Three Crop Season
d)
Four Crop Season
e)
Five Crop Season
|
Kiran Saha answered |
The correct answer is option 'B': Two crop seasons.
Explanation:
A loan granted for short duration crops will be treated as Non-Performing Asset (NPA) if the installment of principal or interest remains overdue for two crop seasons. Let's understand this in detail:
1. Definition of Non-Performing Asset (NPA):
- Non-Performing Asset refers to a loan or advance for which the principal or interest payment is due for a certain period of time and remains unpaid by the borrower.
- In other words, when a borrower fails to make the required payments for a specified period, the loan is classified as an NPA.
2. Significance of Crop Seasons:
- In agriculture, crops are classified based on the duration they take to grow and mature. This classification helps in determining the loan repayment schedule for agricultural loans.
- The concept of crop seasons is used to assess the timely repayments of loans granted for short duration crops.
3. Loan for Short Duration Crops:
- Short duration crops include crops like paddy, wheat, maize, pulses, etc., which have a relatively shorter growth period compared to long duration crops like sugarcane, fruit-bearing trees, etc.
- Loans are granted to farmers for cultivating these short duration crops.
4. Classification as NPA:
- As per the guidelines of the Reserve Bank of India (RBI), a loan granted for short duration crops will be classified as an NPA if the installment of principal or interest remains overdue for two crop seasons.
- This means that if the borrower fails to make the required payments for two consecutive crop seasons, the loan will be considered as an NPA.
5. Implications of NPA classification:
- When a loan is classified as an NPA, it reflects the inability of the borrower to repay the loan as per the agreed terms.
- The classification of a loan as an NPA has various implications for the lender, including the need to make provisions, the impact on profitability, and the initiation of recovery measures.
In conclusion, a loan granted for short duration crops will be treated as an NPA if the installment of principal or interest remains overdue for two consecutive crop seasons. This classification helps in identifying loans that have become non-performing and allows the lender to take appropriate measures for recovery.
Explanation:
A loan granted for short duration crops will be treated as Non-Performing Asset (NPA) if the installment of principal or interest remains overdue for two crop seasons. Let's understand this in detail:
1. Definition of Non-Performing Asset (NPA):
- Non-Performing Asset refers to a loan or advance for which the principal or interest payment is due for a certain period of time and remains unpaid by the borrower.
- In other words, when a borrower fails to make the required payments for a specified period, the loan is classified as an NPA.
2. Significance of Crop Seasons:
- In agriculture, crops are classified based on the duration they take to grow and mature. This classification helps in determining the loan repayment schedule for agricultural loans.
- The concept of crop seasons is used to assess the timely repayments of loans granted for short duration crops.
3. Loan for Short Duration Crops:
- Short duration crops include crops like paddy, wheat, maize, pulses, etc., which have a relatively shorter growth period compared to long duration crops like sugarcane, fruit-bearing trees, etc.
- Loans are granted to farmers for cultivating these short duration crops.
4. Classification as NPA:
- As per the guidelines of the Reserve Bank of India (RBI), a loan granted for short duration crops will be classified as an NPA if the installment of principal or interest remains overdue for two crop seasons.
- This means that if the borrower fails to make the required payments for two consecutive crop seasons, the loan will be considered as an NPA.
5. Implications of NPA classification:
- When a loan is classified as an NPA, it reflects the inability of the borrower to repay the loan as per the agreed terms.
- The classification of a loan as an NPA has various implications for the lender, including the need to make provisions, the impact on profitability, and the initiation of recovery measures.
In conclusion, a loan granted for short duration crops will be treated as an NPA if the installment of principal or interest remains overdue for two consecutive crop seasons. This classification helps in identifying loans that have become non-performing and allows the lender to take appropriate measures for recovery.
What are the causes of Non- Performing Assets (NPAs)?- a)Business Management problems
- b)Internal bank Management
- c)Credit Policy
- d)Lack of adequate resources
- e)All the above
Correct answer is option 'E'. Can you explain this answer?
What are the causes of Non- Performing Assets (NPAs)?
a)
Business Management problems
b)
Internal bank Management
c)
Credit Policy
d)
Lack of adequate resources
e)
All the above
|
Ishan Choudhury answered |
Causes of NPA:
- Business Management problems
- Internal bank Management
- Credit Policy
- Lack of adequate resources
Which committee was formed to look into the NPA (Non-Performing Assets) and recommended the Inter creditor agreement ?- a)Saksham Committee
- b)Sashakt Committee
- c)Shakti Committee
- d)Shanti Committee
- e)None of the Above
Correct answer is option 'B'. Can you explain this answer?
Which committee was formed to look into the NPA (Non-Performing Assets) and recommended the Inter creditor agreement ?
a)
Saksham Committee
b)
Sashakt Committee
c)
Shakti Committee
d)
Shanti Committee
e)
None of the Above
|
Kavya Saxena answered |
- Sunil Mehta, a non-executive chairman of Punjab National Bank , was the head of Sashakt Committee.
- The government had constituted a committee led by Sunil Mehta to resolve the issue of NPAs.
- Sunil Mehta said the new RBI direction making the Inter-Creditor Agreement (ICA) framework mandatory is a move in the right direction for resolution of non-performing assets (NPAs or bad loans).
- Sashakt panel has recommended that bad loans of up to Rs 50 crore will be managed at the bank level, with a deadline of 90 days.
- For bad loans of Rs 50-500 crore, banks will enter into an ICA, authorising the lead bank to implement a resolution plan in 180 days or refer the case to the National Company Law Tribunal (NCLT).
- The Sashkat ICA can be modified to incorporate the requirements of the new framework and serve as the Master Inter-Creditor Agreement for resolution of all stressed asset under BLRA (Bank Led Resolution Approach).
Debt Recovery Tribunals are established in various cities under the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act ________.- a)1993
- b)1995
- c)1996
- d)1998
- e)2002
Correct answer is option 'A'. Can you explain this answer?
Debt Recovery Tribunals are established in various cities under the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act ________.
a)
1993
b)
1995
c)
1996
d)
1998
e)
2002
|
Nikita Singh answered |
Debt Recovery Tribunals are established in various cities under the “Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993”.
The rearrangement of a distressed company's outstanding commitments to its creditors aims to restore a company's liquidity so that it can avoid bankruptcy is called ________________.- a)Prompt Corrective Action
- b)Non-Performing Assets
- c)Strategic Debt Restructuring Scheme
- d)Joint Lenders’ Forum
- e)Corporate Debt Restructuring
Correct answer is option 'E'. Can you explain this answer?
The rearrangement of a distressed company's outstanding commitments to its creditors aims to restore a company's liquidity so that it can avoid bankruptcy is called ________________.
a)
Prompt Corrective Action
b)
Non-Performing Assets
c)
Strategic Debt Restructuring Scheme
d)
Joint Lenders’ Forum
e)
Corporate Debt Restructuring
|
Rahul Mehta answered |
The rearrangement of a distressed company's outstanding commitments to its creditors is known as corporate debt restructuring. A corporate debt restructuring aims to restore a company's liquidity so that it can avoid bankruptcy.
The RBI has established various trigger points for assessing, monitoring, controlling, and correcting weak and troubled banks. Which of the following are the trigger points established by the RBI?- a)Capital to Risk-weighted Assets Ratio (CRAR)
- b)Non-Performing Assets (NPA)
- c)Return on Assets (RoA)
- d)All the above
- e)None of the above
Correct answer is option 'D'. Can you explain this answer?
The RBI has established various trigger points for assessing, monitoring, controlling, and correcting weak and troubled banks. Which of the following are the trigger points established by the RBI?
a)
Capital to Risk-weighted Assets Ratio (CRAR)
b)
Non-Performing Assets (NPA)
c)
Return on Assets (RoA)
d)
All the above
e)
None of the above
|
|
Rohan Sengupta answered |
As part of the prompt corrective action (PCA) framework, the Reserve Bank has defined regulatory trigger points in terms of three parameters: capital to risk-weighted assets ratio (CRAR), net non-performing assets (NPA), and Return on Assets (RoA).
Consider the following statements regarding the Classification of NPAs. - Doubtful Assets are assets that have remained NPA for a period less than or equal to 12 months.
- Substandard Assets is an asset that would be classified as doubtful if it has remained in the substandard category for a period of 12 months.
- As per RBI, a loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.
Which of the statements given above is/are correct?- a)1 and 2 only
- b)2 and 3 only
- c)1, 2 and 3
- d)3 only
- e)Only 1 and 3
Correct answer is option 'D'. Can you explain this answer?
Consider the following statements regarding the Classification of NPAs.
- Doubtful Assets are assets that have remained NPA for a period less than or equal to 12 months.
- Substandard Assets is an asset that would be classified as doubtful if it has remained in the substandard category for a period of 12 months.
- As per RBI, a loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.
Which of the statements given above is/are correct?
a)
1 and 2 only
b)
2 and 3 only
c)
1, 2 and 3
d)
3 only
e)
Only 1 and 3
|
|
Rohan Sengupta answered |
Gross Non-Performing Assets (NPAs) of banks are expected to rise to 8-9% this fiscal from 7.5% as on March 31, 2021, but they would still remain below the peak of 11.2% seen at the end of fiscal 2018.
If an NPA remains for a period less than or equal to 12 months, then it is considered to be ___________.- a)Standard Assets
- b)Sub-Standard Assets
- c)Doubtful Assets
- d)Loss of Assets
- e)Wilful Defaulters
Correct answer is option 'B'. Can you explain this answer?
If an NPA remains for a period less than or equal to 12 months, then it is considered to be ___________.
a)
Standard Assets
b)
Sub-Standard Assets
c)
Doubtful Assets
d)
Loss of Assets
e)
Wilful Defaulters
|
|
Ritika Choudhury answered |
If an NPA remains for a period less than or equal to 12 months is considered to be Sub- Standard Assets.
What is meant “By Technical NPA”?- a)A loan account becoming NPA for non – renewal
- b)A loan account becoming NPA for not obtaining stock statements
- c)Non- recording the due date after re-phasing / restructuring of a loan account
- d)All of the above
- e)None of the above
Correct answer is option 'D'. Can you explain this answer?
What is meant “By Technical NPA”?
a)
A loan account becoming NPA for non – renewal
b)
A loan account becoming NPA for not obtaining stock statements
c)
Non- recording the due date after re-phasing / restructuring of a loan account
d)
All of the above
e)
None of the above
|
|
Ishan Choudhury answered |
NPA is a loan account becoming NPA for non – renewal, for not obtaining stock statements and non- recording the due date after re-phasing / restructuring of a loan account.
What are the Causes of Non- Performing Assets (NPA)?- a)Asset quality
- b)Profitability
- c)Total debt level or leverage, which measures the financial risk of the bank
- d)Both (a) and (b)
- e)All (a),(b) and (c)
Correct answer is option 'E'. Can you explain this answer?
What are the Causes of Non- Performing Assets (NPA)?
a)
Asset quality
b)
Profitability
c)
Total debt level or leverage, which measures the financial risk of the bank
d)
Both (a) and (b)
e)
All (a),(b) and (c)
|
|
Kavya Saxena answered |
Causes of PCA:
- Capital Adequacy Ratio (CAR)
- Asset quality
- Profitability
- Total debt level or leverage, which measures the financial risk of the bank
__________ are the borrowers who are unwilling to repay their debt obligations, despite having the capacity to pay.- a)Standard Assets
- b)Sub-Standard Assets
- c)Doubtful Assets
- d)Loss of Assets
- e)Wilful Defaulters
Correct answer is option 'E'. Can you explain this answer?
__________ are the borrowers who are unwilling to repay their debt obligations, despite having the capacity to pay.
a)
Standard Assets
b)
Sub-Standard Assets
c)
Doubtful Assets
d)
Loss of Assets
e)
Wilful Defaulters
|
Aisha Gupta answered |
In any of the four situations listed below, a person or company is considered a "wilful defaulter": When a borrower (person or business) fails to meet their payment obligations, although having the financial means to do so. There is a planned plan to default on the debt.
An asset is classified as substandard- a)If the asset has remained NPA for a period less than or equal to 18 months
- b)If the asset has remained NPA for a period less than or equal to 12 months
- c)If the asset has remained NPA for a period between 12 months and 15 months
- d)None of the above
- e)Both 1 and 2
Correct answer is option 'B'. Can you explain this answer?
An asset is classified as substandard
a)
If the asset has remained NPA for a period less than or equal to 18 months
b)
If the asset has remained NPA for a period less than or equal to 12 months
c)
If the asset has remained NPA for a period between 12 months and 15 months
d)
None of the above
e)
Both 1 and 2
|
|
Nikita Singh answered |
If an asset has remained NPA for a period less than or equal to 12 months then that is classified as substandard.
A cash credit account will become NPA if it ________- a)Remains out of order for more than 90 days
- b)Stock statement not submitted for 60 days
- c)Account not reviewed for 3 months
- d)All of the above
- e)None of the above
Correct answer is option 'A'. Can you explain this answer?
A cash credit account will become NPA if it ________
a)
Remains out of order for more than 90 days
b)
Stock statement not submitted for 60 days
c)
Account not reviewed for 3 months
d)
All of the above
e)
None of the above
|
|
Kabir Verma answered |
- NPA stands for Non-Performing Asset.
- It is an asset when it ceases to generate income for the bank and becomes overdue for more than 90 days.
- It places a financial burden on the lender.
- NPA is categorized into 3 categories:
- Sub-standard assets: For less than 12 months.
- Doubtful assets: For more than 12 months.
- Loss assets: The one that needs to be fully written off.
- 'Project Sashakt India AMC' has been implemented by the government to tackle the problem of NPAs.
- The project is recommended by Sunil Mehta Committee.
- SBI has the highest NPA in India with over Rs. 1.86 lakh crore followed by Punjab National Bank and Bank of India.
__________ is a classification used by financial institutions for loans and advances on which the principal is past due and on which no interest payments have been made for some time.- a)Negotiable Instruments
- b)Non-Performing Assets
- c)Financial Inclusion
- d)Financial Intermediaries
- e)Ombudsman
Correct answer is option 'B'. Can you explain this answer?
__________ is a classification used by financial institutions for loans and advances on which the principal is past due and on which no interest payments have been made for some time.
a)
Negotiable Instruments
b)
Non-Performing Assets
c)
Financial Inclusion
d)
Financial Intermediaries
e)
Ombudsman
|
|
Kabir Verma answered |
Non-Performing Asset is a classification used by financial institutions for loans and advances on which the principal is past due and on which no interest payments have been made for some time.
If a NPA remained for more than 12 months, then it is called ______________.- a)Standard Assets
- b)Sub-Standard Assets
- c)Doubtful Assets
- d)Loss of Assets
- e)Wilful Defaulters
Correct answer is option 'C'. Can you explain this answer?
If a NPA remained for more than 12 months, then it is called ______________.
a)
Standard Assets
b)
Sub-Standard Assets
c)
Doubtful Assets
d)
Loss of Assets
e)
Wilful Defaulters
|
|
Kavya Saxena answered |
If an NPA remained for more than 12 months is called Doubtful Assets.
When was the Corporate Debt Restructuring implemented by the RBI in India for rearrangement of a distressed company's outstanding commitments?- a)1998
- b)2000
- c)2001
- d)2004
- e)2005
Correct answer is option 'C'. Can you explain this answer?
When was the Corporate Debt Restructuring implemented by the RBI in India for rearrangement of a distressed company's outstanding commitments?
a)
1998
b)
2000
c)
2001
d)
2004
e)
2005
|
|
Rahul Mehta answered |
Corporate Debt Restructuring, or CDR, is a scheme developed by the Reserve Bank of India (RBI) through a circular released on August 23, 2001, for implementation by banks and financial institutions (FIs) to recover debt from debtors who are unable to pay the full amount owed.
Which of the following statement is correct with respect to Doubtful Assets?- a)Which remains substandard for a period above 12 months
- b)Which remains substandard for a period of 90 days
- c)Which has become doubtful of recovery because of non-availability of security
- d)Both 1 and 3
- e)None of the above
Correct answer is option 'A'. Can you explain this answer?
Which of the following statement is correct with respect to Doubtful Assets?
a)
Which remains substandard for a period above 12 months
b)
Which remains substandard for a period of 90 days
c)
Which has become doubtful of recovery because of non-availability of security
d)
Both 1 and 3
e)
None of the above
|
|
Ritika Choudhury answered |
The asset which remains substandard for a period of 12 months are doubtful assets.
What does M stands for in SMA with respect to NPA?- a)Monetary
- b)Monopoly
- c)Money
- d)Mention
- e)Memorandum
Correct answer is option 'D'. Can you explain this answer?
What does M stands for in SMA with respect to NPA?
a)
Monetary
b)
Monopoly
c)
Money
d)
Mention
e)
Memorandum
|
|
Rahul Mehta answered |
- SMA stands for Special Mention Accounts.
- SMA is an account that is exhibiting signs of borrower defaulting of her debt obligations before being identified as NPA.
- SMA is subcategorized as:
- SMA 0 - 1 to 30 days.
- SMA 1 - 31 to 60 days.
- SMA 2 - 61 to 90 days.
- NPA (Non-Performing Asset): An asset when it ceases to generate income for the bank and becomes overdue for more than 90 days.
When was the Insolvency and Bankruptcy Board of India set up?- a)April 1, 2016
- b)July 1, 2016
- c)October 1, 2016
- d)June 1, 2016
- e)None of these
Correct answer is option 'C'. Can you explain this answer?
When was the Insolvency and Bankruptcy Board of India set up?
a)
April 1, 2016
b)
July 1, 2016
c)
October 1, 2016
d)
June 1, 2016
e)
None of these
|
|
Rohan Sengupta answered |
The Insolvency and Bankruptcy Board of India was established on October 1, 2016 in accordance with the provisions of The Insolvency and Bankruptcy Code, 2016.
Chapter doubts & questions for Non-Performing Assets (NPA) - RBI Assistant Preparation Course 2025 is part of Bank Exams exam preparation. The chapters have been prepared according to the Bank Exams exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for Bank Exams 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
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