Module: General Practice
Q25: Scenario: "Delta Textiles," a Micro Enterprise, is facing a severe cash crunch. Their loan account with "Bank X" has been overdue for 65 days. The bank wants to classify the account under the stress framework.
Question: Under the RBI's Prudential Norms on Income Recognition and Asset Classification (IRAC) and the MSME Rehabilitation framework, which category does this account currently fall into?
✅ Correct Answer: C
The payment is overdue for 65 days.
SMA-0: 1-30 days overdue.
SMA-1: 31-60 days overdue.
SMA-2: 61-90 days overdue.
NPA: More than 90 days overdue.
Since 65 falls within the 61-90 range, the account is classified as SMA-2. At this stage, the bank is mandated to initiate a Corrective Action Plan (CAP) to prevent the unit from slipping into NPA status.
SMA-0: 1-30 days overdue.
SMA-1: 31-60 days overdue.
SMA-2: 61-90 days overdue.
NPA: More than 90 days overdue.
Since 65 falls within the 61-90 range, the account is classified as SMA-2. At this stage, the bank is mandated to initiate a Corrective Action Plan (CAP) to prevent the unit from slipping into NPA status.