Banking · Asset Classification and NPA Norms
A loan sanctioned on July 1, 2024, has a 6-month principal moratorium. Monthly interest was paid until Dec 2024. The borrower defaults on interest and the first principal installment due on Jan 1, 2025. On March 31, 2025, the account remains unpaid. Under RBI guidelines, what is its classification as of March 31, 2025?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Sub-Standard Asset because the default occurred in the very first principal installment.
- 2Standard Asset because the moratorium period fully protects the account for the first 12 months.
- 3Special Mention Account 2 (SMA-2) because the default duration is more than 60 days but up to 90 days.✓
- 4Non-Performing Asset (NPA) because it has crossed the 90-day threshold.
Correct answer
Special Mention Account 2 (SMA-2) because the default duration is more than 60 days but up to 90 days.
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