<<12345678910111213141516171819202122232425>> 1. Banks should not charge and take to income account interest on any NPA, what is the exception?NPA belonging to a Corporate accountIf the NPA is 90 days old but not 120 days oldInterest on advances against term deposits may be taken to income account on the due date, provided adequate margin is available in the accountsIf the contracted interest on the loan is 6.75% and aboveQuestion 1 of 25 2. How is significance in the erosion in the value of security reckoned?When the security becomes totally worthlessWhen the realisable value of the security is less than 50 per cent of the value assessed by the bank or accepted by RBIIf the realisable value of security is less than 10 per cent of the value assessed by the bankIf the realisable value of security is less than 50 per cent of the outstanding loan amountQuestion 2 of 25 3. What is the provision to be made as per the rules for a loss asset of Rs. 10 lakhs?Rs. 750000Rs. 500000Rs. 2000000Rs. 1000000Question 3 of 25 4. How is provisioning ratio defined?Ratio of provisioning to gross non-performing assetsRatio of provisioning to total loss assetsRatio of provisioning to total assetsRatio of current year's provision to last year's provisionQuestion 4 of 25 5. What was one of the important recommendations of the Narasimham Committee regarding bank balance sheets?To adopt complex accounting practicesTo comply with international accounting standardsTo maintain opaque balance sheetsTo disregard asset classificationQuestion 5 of 25 6. What was recommended by the Narasimham Committee regarding income recognition of non-performing assets?Recognition based on subjective considerationsRecognition on accrual basisRecognition based on record of recoveryRecognition based on external auditsQuestion 6 of 25 7. What is the purpose of introducing prudential norms for income recognition, asset classification, and provisioning by the Reserve Bank of India?To increase opacity in published accountsTo discourage uniform accounting practicesTo promote consistency and transparencyTo encourage subjective considerations in asset classificationQuestion 7 of 25 8. When does an asset become classified as a non-performing asset (NPA)?When interest and/or principal remain overdue for 30 daysWhen interest and/or installment of principal remain overdue for a period of more than 90 daysWhen interest and/or installment of principal remain overdue for a period of more than 180 daysWhen interest and/or installment of principal remain overdue for a period of more than 365 daysQuestion 8 of 25 9. How does an account become classified as 'out of order'?When the outstanding balance remains continuously below the sanctioned limit/drawing powerWhen the outstanding balance remains continuously equal to the sanctioned limit/drawing powerWhen the outstanding balance remains continuously in excess of the sanctioned limit/drawing powerWhen the outstanding balance remains continuously for 30 daysQuestion 9 of 25 10. How is income from non-performing assets (NPA) recognized according to international standards?Income is recognized on accrual basisIncome is recognized only when it is actually receivedIncome is recognized based on future projectionsIncome is recognized based on the borrower's creditworthinessQuestion 10 of 25 11. What happens to the interest accrued and credited to income account on an advance that becomes NPA?It is immediately realizedIt is reversed or provided for if not realizedIt continues to accrue until the NPA is resolvedIt is refunded to the borrowerQuestion 11 of 25 12. How should banks appropriate recoveries in NPAs if there is no clear agreement with the borrower?Banks should appropriate recoveries towards principal onlyBanks should appropriate recoveries towards interest onlyBanks should adopt an accounting principle and exercise the right of appropriation uniformlyBanks should not appropriate recoveries until a clear agreement is reached with the borrowerQuestion 12 of 25 13. How long does an asset need to remain non-performing to be classified as a substandard asset?Less than or equal to 6 monthsLess than or equal to 9 monthsLess than or equal to 12 monthsMore than 12 monthsQuestion 13 of 25 14. When does an asset get classified as a doubtful asset?After remaining non-performing for more than 6 monthsAfter remaining non-performing for more than 9 monthsAfter remaining in the substandard category for 12 monthsAfter remaining non-performing for more than 24 monthsQuestion 14 of 25 15. What distinguishes a doubtful asset from a substandard asset?Doubtful assets have higher recovery potentialDoubtful assets are easier to recover compared to substandard assetsDoubtful assets have all the weaknesses of substandard assets with the added characteristic that recovery is highly questionable and improbableDoubtful assets have no chance of recoveryQuestion 15 of 25 16. What defines a loss asset?An asset that has remained non-performing for more than 12 monthsAn asset where the borrower has defaulted onceAn asset identified by the bank or auditors as uncollectible with little salvage or recovery valueAn asset that has been written off wholly by the bankQuestion 16 of 25 17. How old can the stock statements relied upon by banks for determining drawing power be?Up to 6 months oldUp to 9 months oldUp to 12 months oldNot older than three monthsQuestion 17 of 25 18. When does a working capital borrowal account become NPA?When the borrower's financial position deterioratesWhen irregular drawings are permitted for a continuous period of 90 daysWhen the borrower submits financial statements on timeWhen the borrower's credit limit is reviewed within three monthsQuestion 18 of 25 19. What is the maximum duration within which regular or ad hoc credit limits need to be reviewed or regularized?Within 90 days from the due dateWithin 120 days from the due dateWithin 180 days from the due dateWithin 365 days from the due dateQuestion 19 of 25 20. How long should the delay in renewing or reviewing credit limits be considered undesirable?Beyond 30 daysBeyond 90 daysBeyond 120 daysBeyond 180 daysQuestion 20 of 25 21. Under what conditions may an MSME account be considered for upgrade to 'standard' status?If no payment remains overdue for a period of more than 90 daysIf the account demonstrates satisfactory performance for one year from the commencement of the first payment of interest or principalIf the outstanding in the account does not exceed the sanctioned limit for more than 30 daysIf the aggregate exposure of lenders is less than Rs. 10 croresQuestion 21 of 25 22. What does 'satisfactory performance' mean for a cash credit or overdraft account in the context of MSME accounts?The outstanding in the account should not be more than the sanctioned limit for a period of more than 30 daysNo payment remains overdue for a period of more than 30 daysThe aggregate exposure of lenders is less than Rs. 25 croresThe account demonstrates satisfactory performance for one year from the commencement of the first payment of interest or principalQuestion 22 of 25 23. When can standard accounts classified as NPA be upgraded in all other cases except MSME accounts?After six months from the date of implementation of the restructuring packageAfter one year from the commencement of the first payment of interest or principalAfter at least 50% of the sum of outstanding principal debt has been repaidAfter the borrower's financial position improvesQuestion 23 of 25 24. How should borrowal accounts with a solitary or a few credits recorded near the balance sheet date be handled?They should be upgraded to 'standard' status automaticallyThey should be classified as NPA without any subjective interpretationThey should be considered for upgrade based on the borrower's financial positionThey should be reviewed by the Statutory Auditors/Inspecting Officers for classificationQuestion 24 of 25 25. What must banks provide to the Statutory Auditors/Inspecting Officers in cases where borrowal accounts indicate inherent weakness near the balance sheet date?Detailed financial statements of the borrowerSatisfactory evidence about the manner of regularisation of the accountInformation about the borrower's repayment historyEvidence of recent payments made by the borrowerQuestion 25 of 25 Loading...
