Module: General Practice
Q24: Regarding the "Out of Order" status for Cash Credit (CC) or Overdraft (OD) facilities, consider the following conditions:
The outstanding balance remains continuously in excess of the sanctioned limit/drawing power for 90 days.
The outstanding balance is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days.
The outstanding balance is less than the sanctioned limit/drawing power, but credits during the previous 90 days are not enough to cover the interest debited during the same period.
Which of the above conditions classifies the account as "Out of Order"?
The outstanding balance is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days.
The outstanding balance is less than the sanctioned limit/drawing power, but credits during the previous 90 days are not enough to cover the interest debited during the same period.
Which of the above conditions classifies the account as "Out of Order"?
✅ Correct Answer: D
🎯 Quick Answer:
An account is treated as "Out of Order" if any one of the three listed conditions is met.Condition 2 (No Velocity): Balance is within limit, but NO credits (deposits) for 90 days.
Condition 3 (Interest Coverage): Balance is within limit and there are credits, but the sum of credits < sum of interest debited in the previous 90-day period.
Causal Reasoning: The third condition is critical; a borrower might deposit small amounts to keep the account "active," but if they aren't even covering the interest charged, the debt is effectively compounding, signaling stress.