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      Question

      A term loan account is overdue for 45 days. According to

      RBI’s asset classification norms, under which category should this account be classified?
      A Standard Asset Correct Answer Incorrect Answer
      B SMA-0 Correct Answer Incorrect Answer
      C SMA-1 Correct Answer Incorrect Answer
      D SMA-2 Correct Answer Incorrect Answer
      E Sub-standard Asset Correct Answer Incorrect Answer

      Solution

      The Special Mention Account (SMA) classification helps in early identification of stress in borrower accounts, before they become NPAs (Non-Performing Assets). The RBI has categorized SMA accounts based on the number of days the principal or interest is overdue:

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