Module: | Capital Adequacy, Basel Norms & Monetary Policy
Q4: Which of the following product-specific rules for Non-Performing Asset (NPA) classification are correct?
1. A Credit Card account is treated as NPA if the minimum amount due is not paid within 90 days from the payment due date.
2. A Working Capital account is classified as NPA if "irregular drawings" are permitted for a continuous period of 90 days.
3. Overdue receivables representing positive Mark-to-Market (MTM) values in derivative contracts are treated as NPA if they remain unpaid for 90 days.
Which of the statements given above is/are correct?
2. A Working Capital account is classified as NPA if "irregular drawings" are permitted for a continuous period of 90 days.
3. Overdue receivables representing positive Mark-to-Market (MTM) values in derivative contracts are treated as NPA if they remain unpaid for 90 days.
Which of the statements given above is/are correct?
✅ Correct Answer: D
The correct answer is D. All three statements correctly state the product-specific RBI regulations for Non-Performing Assets.
Statement 1 is correct: For credit cards, the NPA trigger is strictly based on the failure to pay the Minimum Amount Due within 90 days from the specified payment due date.
Statement 2 is correct: In working capital facilities, if "irregular drawings" (drawings beyond the sanctioned limit or drawing power) are permitted continuously for 90 days, the account must be downgraded to NPA.
Statement 3 is correct: For derivative contracts, overdue receivables representing positive Mark-to-Market (MTM) values must be classified as NPA if they remain unpaid for a period of 90 days from the specified due date for payment.
Statement 1 is correct: For credit cards, the NPA trigger is strictly based on the failure to pay the Minimum Amount Due within 90 days from the specified payment due date.
Statement 2 is correct: In working capital facilities, if "irregular drawings" (drawings beyond the sanctioned limit or drawing power) are permitted continuously for 90 days, the account must be downgraded to NPA.
Statement 3 is correct: For derivative contracts, overdue receivables representing positive Mark-to-Market (MTM) values must be classified as NPA if they remain unpaid for a period of 90 days from the specified due date for payment.