Banking · Asset Classification
What is the mandatory action required when a non-performing asset is formally classified as a 'loss asset' by the bank, internal/external auditors, or RBI inspectors?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is completely written off immediately with no subsequent recovery legal action possible
- 2It continues to accrue regular interest income on a cash basis indefinitely
- 3It requires 100% provisioning or write-off because the asset is deemed completely uncollectible✓
- 4It is automatically transferred to an Asset Reconstruction Company at book value
Correct answer
It requires 100% provisioning or write-off because the asset is deemed completely uncollectible
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