How are Non-Performing Assets categorized by commercial banks when a credit facility remains doubtful of recovery for a prolonged period exceeding twelve months?

💡 Solution & Explanation

Under Reserve Bank of India prudential norms, loan accounts where interest or principal installments remain overdue for more than ninety days are classified as Non-Performing Assets. If an asset remains in the sub-standard category for a period exceeding twelve months, it is reclassified as a Doubtful Asset. Loss assets are those where loss has been identified by internal or external auditors but the amount has not been fully written off.