Question

Non-performing Assets (NPAs) of a bank in India is defined as an asset, which remains unpaid by a borrower for a certain period of time in terms of interest, principal, or both. Reserve Bank of India (RBI) has changed the definition of NPA thrice during 1993-2004. in terms of the holding period of loans. The holding period was reduced by one quarter each time. In 1993, the holding period was four quarters (360 days). Based on the above paragraph, the holding period of loans in 2004 after the third revision was ________ days.

Options :

  1. 90

  2. 180

  3. 45

  4. 135

Show Answer

Answer :

90

Solution :

Initial holding period = 360 days

Number of days for each quarter = 90 days

It is given that the holding period was reduced by one quarter each time i.e. reduced by 90 days each time and RBI has changed the definition of NPA thrice during 1993-2004.

After the first revision, the holding period of loans = 360 – 90 = 270

After the second revision, the holding period of loans = 270 – 90 = 180

After the third revision, the holding period of loans = 180 – 90 = 90

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