Examine the regulatory framework governing Non-Performing Assets in Indian banking. When does a credit facility get classified as a 'Sub-Standard Asset' under Reserve Bank of India prudential norms?

💡 Solution & Explanation

Under Reserve Bank of India prudential norms, an asset becomes non-performing when interest or principal remains overdue for more than ninety days. Once classified as non-performing, an asset is categorized as a Sub-Standard Asset if it has remained in that condition for a period less than or equal to twelve months. If it remains sub-standard for over twelve months, it is reclassified as a Doubtful Asset. Loss assets are those where loss has been identified by the bank or internal auditors but whose amount has not been fully written off.