December 15, 2017

Banking Awareness for IBPS, SBI, RBI exams #18

Non-Performing Assets - Banking Awareness for SBI PO, SBI Clerk, IBPS PO, IBPS Clerk, RBI Grade B, RBI Assistant exams

Banking Awareness for SBI PO, SBI Clerk, IBPS PO, IBPS Clerk, RBI Grade B, RBI Assistant exams

  1. A performing asset is one which yields regular income in terms of repayment of principal and interest.
  2. A Non-performing asset is one which has stopped yielding principal and/or interest and is not paid by the borrower for a period of 90 days.
  3. Account is treated as “out of order” if outstanding balance remains continuously in excess of the sanctioned limit or drawing power.
  4. Any amount due to the bank on any credit facility is “overdue” if it is not paid on due date fixed by the bank.
  5. The Narasimhan Committee recommended that banks should have greater consistency and transparency in their published accounts (balance sheet, profit & loss account).
  6. RBI initially fixed over 1 year (four quarters in case of Cooperative banks) as period of NPA to be defined. However, this period has been reduced in stages and at present it is 90 days.
  7. From 31.3.2004, RBI introduced a concept of “out of order” where an asset will be called an NPA, if principal and interest remain overdue or outstanding for a period of 90 days or more from the sanctioned limit or calculated drawing power in case of cash credit / overdraft accounts.
  8. Standard asset is one which does not show or indicate any sign of distress or problem with regard to recovery/repayment of dues.
  9. A substandard asset was one, which has remained NPA for a period not exceeding 90 days from the due date.
  10. In a Poverty Pyramid index, Casual Informal Wage Employment and Domestic Work of population faces the highest poverty risk
  11. Banks and other financial institutions in India are required to maintain a certain amount of liquid assets like cash, precious metals and other short-term securities as a reserve all the time, this is known as SLR
  12. When there is a difference between all receipts and expenditure of the Govt. of India, both capital and revenue, it is called Revenue Deficit
  13. SARFAESI Act is specially launched to facilitate banks in recovery of bad loans.
  14. BEF is the statement which banks submit to RBI relating to Importers who have not submitted documentary evidence for import within stipulated time period
  15. RBI has suggested that an MSE is considered 'sick' when any of the borrowed amount of the enterprise remains a non-performing asset (NPA) for three months or more.

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