Q. Consider the following statements: A bank can sell Non performing Assets to other companies. Banks have to keep aside extra funds for Non Performing Assets Which among the above statements is/ are correct?
Answer: Both 1 & 2 are correct
Notes:

1. A bank can sell Non performing Assets to other companies: This statement is correct. As per RBI guidelines, banks have the option to sell their non-performing assets (NPAs) to other entities like Asset Reconstruction Companies (ARCs), NBFCs etc. This helps remove bad loans off their balance sheets.
2. Banks have to keep aside extra funds for Non Performing Assets: This statement is also correct. Banks are required to make provisions from their profits to cover expected losses from NPAs. Higher the NPA level, higher is the provision banks need to take. This impacts their profitability.

1

Above question is part of 10000+ MCQs for UPSC (Prelims) Paper-1 course in GKToday Android app.