Module: | Priority Sector, Consumer Protection & Digital Lending
Q140: Which of the following statements regarding fundamental banking definitions are correct?
1. A Non-Performing Asset (NPA) is defined as a loan or advance which has ceased to generate income for the bank.
2. An amount due to a bank is treated as "overdue" if it is not paid on the due date fixed by the bank.
Which of the statements given above is/are correct?
2. An amount due to a bank is treated as "overdue" if it is not paid on the due date fixed by the bank.
Which of the statements given above is/are correct?
✅ Correct Answer: C
The correct answer is C. Statement 1 is correct: The fundamental definition of a Non-Performing Asset (NPA) is a loan or advance that ceases to generate regular income (interest or principal installments) for the lending bank.
Statement 2 is correct: The term "overdue" is strictly defined as any amount due to the bank that is not paid exactly on the due date fixed by the bank.
There is no grace period for "overdue" status; the 90-day delinquency period applies to the transition from overdue to NPA, not to the definition of overdue itself.
Statement 2 is correct: The term "overdue" is strictly defined as any amount due to the bank that is not paid exactly on the due date fixed by the bank.
There is no grace period for "overdue" status; the 90-day delinquency period applies to the transition from overdue to NPA, not to the definition of overdue itself.