Question

    For an Asset Reconstruction Company (ARC), after how

    many days of overdue does a receivable get classified as a Non-Performing Asset (NPA) in its books?
    A 90 days Correct Answer Incorrect Answer
    B 100 days Correct Answer Incorrect Answer
    C 180 days Correct Answer Incorrect Answer
    D 270 days Correct Answer Incorrect Answer
    E 360 days Correct Answer Incorrect Answer

    Solution

    • In the context of ARCs, the definition of NPA is slightly different from that used for banks. • An asset is treated as NPA in the books of an ARC if: o Interest or principal (or installment) is overdue for 180 days or more from the date of acquisition or the contractual due date (whichever is later). o Or if overdue for 180 days or more as per the repayment plan formulated by the ARC. o Or if overdue for 180 days or more in case no resolution plan is formulated. • This longer window (180 days) reflects the specialized nature of ARCs, which deal with stressed assets that need restructuring or realization.

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