Banking Awareness Set 59 (NPA)

Banking Awareness Non Performing Asset

Important Banking Awareness Questions on Non Performing Asset (NPA) for SBI PO, IBPS PO, NIACL, LIC, RBI, RRB PO Clerk, IPPB and other competitive exams. Banking Awareness Non Performing Asset

  1. A term loan is said to be non performing when interest and/ or installment of principal remain overdue for a period of more than _______ .
    A) 30 days
    B) 90 days
    C) 45 days
    D) 180 days
    View Answer
    Option B
    Explanation
    : Banks should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 daysfrom the end of the quarter.
  2. Any loan for short duration crops is classified as NPA when the installment of principal or interest there on remains overdue for _____ crop seasons
    A) one
    B) four
    C) three
    D) two
    View Answer
    Option D
    Explanation
    : the instalment of principal or interest there on remains overdue for two crop seasons for short duration crops
  3. Any loan for long duration crops is classified as NPA when the installment of principal or interest there on remains overdue for _____ crop seasons
    A) one
    B) four
    C) three
    D) two
    View Answer
    Option A
    Explanation
    : the instalment of principal or interest there on remains overdue for one crop season for long duration crops,
  4. An account should be treated as ________ if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power.
    A) out of limit
    B) out of order
    C) out of drawing
    D) out of line
    View Answer
    Option B
    Explanation
    : An account should be treated as ‘out of order’ if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as ‘out of order’.
  5. A sub­standard asset is one, which has remained NPA for a period less than or equal to _______.
    A) 6 months
    B) 12 months
    C) 18 months
    D) 24 months
    View Answer
    Option B
    Explanation
    : With effect from 31 March 2005, a sub­standard asset would be one, which has remained NPA for a period less than or equal to 12 months.
  6. An asset is classified as doubtful if it has remained in the sub­standard category for a period of _____.
    A) 6 months
    B) 12 months
    C) 18 months
    D) 24 months
    View Answer
    Option B
    Explanation
    : In simple words after an asset has remained NPA for more than 12 months is it a doubtful asset.
  7. A __________ is one where loss has been identified by the bank or internal or external auditors or the RBI inspection but the amount has not been written off wholly.
    A) Standard Asset
    B) Loss Asset
    C) By-stand Asset
    D) Loan Asset
    View Answer
    Option B
    Explanation
    : A loss asset is one where loss has been identified by the bank or internal or external auditors or the RBI inspection but the amount has not been written off wholly. In other words, such an 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.
  8. ________ is one where the bank, for economic or legal reasons relating to the borrower’s financial difficulty, grants to the borrower concessions that the bank would not otherwise consider.
    A) Renovated account
    B) Reprimed account
    C) Advance account
    D) Restructured account
    View Answer
    Option D
    Explanation
    : Restructuring would normally involve modification of terms of the advances / securities, which would generally include, among others, alteration of repayment period / repayable amount/ the amount of instalments / rate of interest (due to reasons other than competitive reasons).
  9. What does M stands for in SMA with respect to NPA?
    A) Monetary
    B) Monopoly
    C) Money
    D) Mention
    View Answer
    Option D
    Explanation
    : SMA- Special Mention Accounts. Banks will categorise accounts as SMA when the money remains outstanding for 30-90 days after due payment date.
  10. How many sub-categories are there in Special Mention Accounts (SMA)?
    A) 2
    B) 3
    C) 4
    D) 5
    View Answer
    Option B
    Explanation
    : SMA-0 => Principal or interest payment not overdue for more than 30 days.
    SMA-1 => Principal or interest payment overdue between 31-60 days
    SMA-2 => Principal or interest payment overdue between 61-180 days

 

 

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6 Thoughts to “Banking Awareness Set 59 (NPA)”

  1. sachin shukla Banker of 2017

    6/10

  2. jaga

    thank u ….nice questions ..from very depth of NPA.
    its the beauty of AZ…:)

  3. Ambika

    thank you sir 🙂

  4. P@yal

    @surajskt:disqus sir In SMA -2 It should be from 61-90 days?

    1. Suraj

      yes…
      sma-0 => till 30 days
      sma-1=>31-60 days
      sma-2 =>61-90 days

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