The correct answer is D. All of the above.
A non-performing asset (NPA) is a loan or receivable that is not being repaid as agreed. NPAs can arise for a variety of reasons, such as a borrower’s financial difficulty, a change in economic conditions, or fraud.
In India, a loan is considered an NPA if interest and/or loan instalments are overdue for more than 90 days. The account is also considered an NPA if it is out of order for more than 90 days in case of overdraft/cash credit. Similarly, a bill remains overdue for more than 90 days is also considered an NPA.
NPAs are a major problem for banks and other financial institutions. They can lead to losses, reduce profitability, and damage a bank’s reputation. NPAs can also make it difficult for banks to lend money to new borrowers.
Banks have a number of strategies for dealing with NPAs. These include:
- Renegotiation: Banks may try to renegotiate the terms of the loan with the borrower, such as extending the repayment period or reducing the interest rate.
- Sale: Banks may sell NPAs to other banks or investors.
- Write-off: Banks may write off NPAs as a loss.
NPAs are a complex issue, and there is no one-size-fits-all solution. Banks need to carefully manage their NPAs to minimize their impact on the bank’s financial health.