CS Professional · Banking and Insurance - Laws and Practice · Performing and Non Performing Assets
Ananya Steels' term loan was classified as sub-standard NPA by Metro Bank on 1 April 2024. The account has shown no improvement and no recovery. On which date, at the earliest, should the bank upgrade its classification to doubtful under the RBI norms, assuming the asset remains NPA?
The asset becomes doubtful on 1 April 2025. Under RBI norms, an asset that has remained in the sub-standard category for 12 months is moved to the doubtful category. Counting twelve months from 1 April 2024 gives 1 April 2025.
- A1 October 2024
- B1 April 2025Correct
- C1 April 2026
- D1 April 2027
Explanation
An asset remaining in the sub-standard category for 12 months is classified as doubtful. 12 months from 1 April 2024 is 1 April 2025. Six months is incorrect, as that was not the prescribed period.
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