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With reference to the Banking system, consider the following statements:
1. When the loans are written-down, the recovery procedure is totally stopped.
2. Writing off loans frees up capital for better liquidity in banks.
2. Writing off loans frees up capital for better liquidity in banks.
Which of the above statement(s) is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
With reference to the Banking system, consider the following statement...
In News: Banks wrote off ₹1.2 lakh cr. in the past 9 months of FY21 to improve liquidity as per RBI.
Statement 1 is not correct. When the loans are written-down, the recovery procedure is not stopped but the mortgaged assets are reevaluated for their worth and loan recovery is attempted accordingly. Writedown is the opposite of a write-up, and it will become a write-off if the entire value of the asset becomes worthless and is eliminated from the account altogether.
Statement 2 is correct. Writing off loans frees up capital for better liquidity in banks. The banks reserve some capital based on CRAR requirements mandated by RBI on basis of BASEL norms. When loans are written off, banks’ accounts are cleared of non performing assets and the capital frees increasing liquidity (money to give loan). It never means the Bank will stop efforts for recovery. Bank will try to recover the loan and the recovered amount will go to a separate head.
Statement 1 is not correct. When the loans are written-down, the recovery procedure is not stopped but the mortgaged assets are reevaluated for their worth and loan recovery is attempted accordingly. Writedown is the opposite of a write-up, and it will become a write-off if the entire value of the asset becomes worthless and is eliminated from the account altogether.
Statement 2 is correct. Writing off loans frees up capital for better liquidity in banks. The banks reserve some capital based on CRAR requirements mandated by RBI on basis of BASEL norms. When loans are written off, banks’ accounts are cleared of non performing assets and the capital frees increasing liquidity (money to give loan). It never means the Bank will stop efforts for recovery. Bank will try to recover the loan and the recovered amount will go to a separate head.
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With reference to the Banking system, consider the following statements:1. When the loans are written-down, the recovery procedure is totally stopped.2. Writing off loans frees up capital for better liquidity in banks.Which of the above statement(s) is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?
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With reference to the Banking system, consider the following statements:1. When the loans are written-down, the recovery procedure is totally stopped.2. Writing off loans frees up capital for better liquidity in banks.Which of the above statement(s) is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? for Current Affairs 2025 is part of Current Affairs preparation. The Question and answers have been prepared according to the Current Affairs exam syllabus. Information about With reference to the Banking system, consider the following statements:1. When the loans are written-down, the recovery procedure is totally stopped.2. Writing off loans frees up capital for better liquidity in banks.Which of the above statement(s) is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Current Affairs 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Banking system, consider the following statements:1. When the loans are written-down, the recovery procedure is totally stopped.2. Writing off loans frees up capital for better liquidity in banks.Which of the above statement(s) is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?.
With reference to the Banking system, consider the following statements:1. When the loans are written-down, the recovery procedure is totally stopped.2. Writing off loans frees up capital for better liquidity in banks.Which of the above statement(s) is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? for Current Affairs 2025 is part of Current Affairs preparation. The Question and answers have been prepared according to the Current Affairs exam syllabus. Information about With reference to the Banking system, consider the following statements:1. When the loans are written-down, the recovery procedure is totally stopped.2. Writing off loans frees up capital for better liquidity in banks.Which of the above statement(s) is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Current Affairs 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Banking system, consider the following statements:1. When the loans are written-down, the recovery procedure is totally stopped.2. Writing off loans frees up capital for better liquidity in banks.Which of the above statement(s) is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?.
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