Q. Consider the following statements: - A loan write-off does not prevent a bank from initiating recovery proceedings against the borrower using legal mechanisms.
- A loan is classified as a Non-Performing Asset (NPA) if the principal or interest payment remains overdue for 180 days.
Which of the above statements is/are correct?
Answer:
Only 1
Notes: Statement 1 is correct as banks can still pursue recovery of written-off loans through legal mechanisms. Statement 2 is incorrect because RBI norms classify an asset as NPA if repayments are overdue for more than 90 days, not 180 days. Thus, only statement 1 accurately reflects current banking practices and regulations.