Economics · Banking System
A major structural concern in Indian banking has been the balance between credit growth and asset quality, particularly during phases of rapid lending. Which statement best captures this concern?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Credit appraisal becomes less relevant when collateral values are rising
- 2Higher NPAs have no material effect on profitability if deposits continue to grow
- 3Asset quality improves automatically when loan books expand rapidly
- 4Rapid credit expansion without adequate risk appraisal can lead to high NPAs and balance sheet vulnerabilities✓
Correct answer
Rapid credit expansion without adequate risk appraisal can lead to high NPAs and balance sheet vulnerabilities
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