Skip to content

CS Professional · Banking and Insurance - Laws and Practice · Analysis of Financial Statements of Banks

Hind Bank has gross advances of Rs 800 crore, of which gross NPAs are Rs 40 crore. Provisions held against these NPAs are Rs 25 crore. What are its Gross NPA ratio and Net NPA ratio (net NPA ratio computed as net NPAs divided by net advances)?

Gross NPA ratio is 5% (40 divided by 800). Net NPAs are 15 crore after deducting provisions of 25 crore, and net advances are 775 crore, so the net NPA ratio is about 1.94%. The other options use the wrong numerator or base.

  1. A5.00% and 1.94%Correct
  2. B5.00% and 3.13%
  3. C4.76% and 1.94%
  4. D5.00% and 1.88%

Explanation

Gross NPA ratio = 40/800 = 5%. Net NPA = 40 - 25 = 15 crore. Net advances = 800 - 25 = 775 crore. Net NPA ratio = 15/775 = 1.94%. Using 25/800 or 15/800 gives wrong figures, and 3.13% is 25/800, which is provisions over advances.

Did you get it right without looking?

One question tells you little. A timed set on Analysis of Financial Statements of Banks shows your real accuracy, how long you take and where you lose marks.

Practise Analysis of Financial Statements of BanksFree diagnostic mock

More Analysis of Financial Statements of Banks questions