Economics • Banking & FinanceMedium
What does the term 'Non-Performing Asset' signify for a commercial bank operating in India?
A. A bank branch operating at a net operating loss for three consecutive quarters
B. A loan or advance where interest or principal installments remain overdue for a period exceeding ninety days✓ Correct Answer
C. Investment securities held by the bank that have suffered permanent capital depreciation
D. Fixed assets such as computers and office buildings that have completed their depreciation lifecycle
💡 Solution & Explanation
A Non-Performing Asset is classified when interest or principal payments on a credit facility remain overdue for more than ninety days for term loans, or when accounts remain out of order for cash credit and overdraft facilities. Operating losses of bank branches do not constitute asset classification categories. Investment depreciation is accounted for under investment portfolio valuation norms. Fixed assets represent infrastructure rather than credit assets.
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