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    Question

    A borrower has defaulted on a term loan for over 90

    days. The bank categorizes the account as an NPA. Later, the borrower partially repays the overdue amount, but not the entire default. As per RBI norms, how should the account be classified?
    A Continue as NPA until full dues are cleared Correct Answer Incorrect Answer
    B Immediately upgrade to standard asset Correct Answer Incorrect Answer
    C Classify as a doubtful asset Correct Answer Incorrect Answer
    D Close the account permanently Correct Answer Incorrect Answer
    E Write off the loan Correct Answer Incorrect Answer

    Solution

    As per RBI guidelines, a non-performing account can be upgraded to a standard asset only when all overdues are fully paid. Partial payment does not change the asset classification.

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