Question

4. A substandard asset is one which has remained NPA for a period less than or equal to​

Answer 1

Answer:

A substandard asset has remained NPA for a period less than or equal to​ 18 months.

Explanation:

• A sub-standard asset was one that has been classed as a non-performing asset (NPA) for less than two years.
• However, as of March 31, 2001, a sub-standard asset has been non-performing for less than or equal to 18 months.
• In such circumstances, the borrower's or guarantor's current net worth, or the current market value of the security charged, is insufficient to secure full repayment of the banks' debts.
• In other words, such an asset will have well-defined credit problems that threaten the debt's liquidation and are marked by the obvious likelihood of a loss to the banks if the inadequacies are not resolved.

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