Correct option is A
Correct Answer: (a) Non-Performing Assets
Explanation:
NPA stands for Non-Performing Assets. It refers to loans or advances that are in default or arrears, meaning the borrower has not made the required payments (either interest or principal) for a certain period, typically 90 days or more.
Information Booster:
- The full form of NPA is Non-Performing Assets.
- NPAs are loans or advances for which the principal or interest payment has remained overdue for a period of 90 days or more.
- In the banking sector, NPAs are a significant concern as they affect the profitability and liquidity of banks.
- Identifying and managing NPAs is essential for maintaining the financial health of banks.
- Regulatory bodies such as the Reserve Bank of India (RBI) provide guidelines for the classification and provisioning of NPAs.
Additional Information:
- NPAs are classified into substandard, doubtful, and loss assets, depending on how long the payments have been overdue.
- Effective NPA management includes strategies like loan restructuring, asset reconstruction, and legal recovery actions.
- High NPAs can limit the lending capacity of banks, which can negatively impact economic growth.
- Governments and financial institutions often adopt measures to reduce NPAs and strengthen the banking sector's overall stability.
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