Economics • Banking & FinanceMedium
In the context of Indian banking, what does the term 'Special Mention Account (SMA)' signify?
A. Accounts that are classified as fraud due to systemic embezzlement.
B. Accounts that show signs of incipient stress before being classified as Non-Performing Assets (NPAs).✓ Correct Answer
C. Bank accounts maintained by foreign embassies and diplomatic missions.
D. High-net-worth individual accounts enjoying preferential interest rates.
💡 Solution & Explanation
Special Mention Accounts are monitoring categories established by the Reserve Bank of India to identify incipient financial stress in loan portfolios before they degenerate into Non-Performing Assets. Accounts are classified into specific sub-categories based on the exact number of days payments are overdue.
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