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Module: General Practice

Q161: An MSME account was restructured and retained its "Standard" asset status. After one year, the borrower has serviced the loan satisfactorily without any default. What happens to the "Restructured Standard" tag?

A
The tag remains permanently on the account.
B
The account is re-classified as a "Standard Asset" without the restructuring tag (Upgradation).
C
The interest rate is automatically reduced by 2%.
D
The account is sold to a bad bank.
✅ Correct Answer: B
🎯 Quick Answer:
Re-classified as Standard without the tag.
Concept Definition: Upgradation of Restructured Accounts.
Regulatory Rule: If a restructured account performs satisfactorily (payment of principal and interest as per the new terms) for a "Specified Period" (typically 1 year), it is considered "cured." Outcome: The "Restructured" tag is removed, and it is treated as a normal Standard asset.
This reduces the provisioning requirement for the bank and improves the credit rating of the borrower.
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