Multiple choice

Directions: Choose the correct option for the given question.

Debts overdue for a period of exceeding 18 months should be treated as

  1. standard assets

  2. sub-standard assets

  3. loss assets

  4. doubtful assets
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

According to RBI prudential norms for asset classification, debts overdue for more than 18 months are classified as 'doubtful assets'. Standard assets are performing loans (overdue up to 12 months). Sub-standard assets are overdue for 12-18 months. Loss assets are those identified as uncollectible with little recovery value. The 18-month threshold marks the transition from sub-standard to doubtful category, indicating higher credit risk and requiring higher provisioning by banks.

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