Economics • Banking & FinanceMedium
In the context of the Indian financial architecture, what does the term 'Special Mention Account (SMA)' signify?
A. A classification category used to identify stress and incipient stress in loan accounts before they are classified as Non-Performing Assets (NPAs).✓ Correct Answer
B. A special category of savings accounts reserved exclusively for foreign institutional investors.
C. Government-backed accounts designed to channel remittance inflows from non-resident Indians.
D. A tier of treasury bills issued by the central bank to manage structural liquidity surpluses.
💡 Solution & Explanation
Special Mention Accounts serve as an early warning framework utilized by banks to monitor incipient stress and prevent loans from slipping into Non-Performing Asset status. Other alternatives incorrectly link the term to foreign institutional accounts or treasury bill issuances.
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