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      Question

      What is the classification for an asset that has

      remained NPA for a period of less than or equal to 12 months according to the RBI’s IRAC guidelines?
      A Doubtful Assets Correct Answer Incorrect Answer
      B Substandard Assets Correct Answer Incorrect Answer
      C Loss Assets Correct Answer Incorrect Answer
      D Standard Assets Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

        Under the IRAC guidelines, when an asset has been classified as NPA for a period of less than or equal to 12 months, it is considered a "Substandard Asset." These assets are at risk, but there is still a possibility of recovery. Banks are required to make a provision of 15% for substandard assets to account for the potential loss.

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