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    Question

    According to the IRAC Norms, a loan where the borrower

    has defaulted on payment for over 12 months is classified as _________
    A SMA 1 Asset Correct Answer Incorrect Answer
    B SMA 2 Asset Correct Answer Incorrect Answer
    C Substandard Assets Correct Answer Incorrect Answer
    D Doubtful Assets Correct Answer Incorrect Answer
    E Loss Asset Correct Answer Incorrect Answer

    Solution

    Under IRAC norms , Non performing assets can be further categorized as:  

    • Sub Standard Assets - An asset which has remained NPA for a period less than or equal to 12 months  
    • Doubtful Assets - An asset which has remained in the substandard category for a period of 12 months.  
    • Loss assets - Identification of loss by bank, or internal/external auditor, or RBI ; Asset not written off wholly ; Asset is considered uncollectible and its continuance as a bankable asset is not warranted but may have some salvage and recovery value .  

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