Question

The terms NPAs and Stressed Assets in financial sector refers to
1. Insurance companies
2. Chit funds
3. Banks
4. Mutual fund companies

Answer 1

Correct Answer - Option 3 : Banks

The correct answer is Banks.

• NPAs
  • A Non-Performing Asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
  • Banks are required to classify NPAs further into Substandard, Doubtful, and Loss Assets. 
• Stressed assets
  • Stressed assets = NPAs + Restructured loans + Written off assets
  • The stressed asset is a powerful indicator of the health of the banking sector.
• Bank
  • A bank is a financial institution licensed to receive deposits and make loans.
  • Banks may also provide financial services such as wealth management, currency exchange, and safe deposit boxes.
  • There are several different kinds of banks including retail banks, commercial or corporate banks, and investment banks.
  • Banks are regulated by the national government or central bank.

• Chit funds
  • A chit fund is a type of rotating savings and credit association system.
  • Some variations of chit funds, the savings are for a specific purpose.
  • Chit funds are often microfinance organizations.
  • A chit fund comprises a group of members, called subscribers.