Economics • Banking & FinanceMedium
What does the term 'Substandard Asset' signify under the Reserve Bank of India's asset classification norms?
A. An asset that has remained overdue for a period exceeding 90 days.
B. An asset that has remained in the non-performing asset (NPA) category for a period less than or equal to 12 months.✓ Correct Answer
C. An asset that has been identified as uncollectible by auditors.
D. A standard loan that has been restructured due to natural calamities.
💡 Solution & Explanation
According to Reserve Bank of India asset classification norms, a substandard asset is a non-performing asset that has remained in that classification for a period not exceeding twelve months. Assets overdue beyond 90 days enter the general NPA bracket, and further classifications apply if defaults persist longer.
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