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    Question

    Which of the following assets is classified as a

    Sub-standard asset?
    A Loss asset identified by auditors Correct Answer Incorrect Answer
    B NPA for more than 12 months Correct Answer Incorrect Answer
    C NPA for less than 6 months Correct Answer Incorrect Answer
    D Standard asset with overdue interest Correct Answer Incorrect Answer
    E Doubtful asset for less than 1 year Correct Answer Incorrect Answer

    Solution

    An asset is classified as an NPA if principal or interest payments are overdue for more than 90 days. An asset becomes a sub-standard asset if it remains in the NPA category for a period less than or equal to 12 months (up to one year). It is considered to have well-defined credit weaknesses, but not all of the principal or interest is lost.

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