CMA Intermediate · Corporate Accounting and Auditing · Auditing of Different Types of Undertakings
Under RBI prudential norms, a term loan to a bank's borrower becomes a non-performing asset when interest or instalment remains overdue for more than what period?
A term loan becomes a non-performing asset when interest or an instalment of principal stays overdue for more than 90 days under RBI income recognition and asset classification norms. Shorter or longer periods such as 60 or 180 days are not the current criterion.
- A90 daysCorrect
- B60 days
- C120 days
- D180 days
Explanation
Under the income recognition and asset classification norms, a loan is an NPA when interest and/or principal remains overdue for more than 90 days. The 180-day period belonged to older norms and is not current.
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