Maya Iyer is a Software Professional who availed a Term Loan of ₹ 50 lacs at an interest of 9% p.a. from Cosmos Bank, Cochin for buying a XYZ Brand Vehicle. The loan was taken on 15th February, 2020 repayable in 10 Years

CS Professional · Banking and Insurance - Laws and Practice · PYQS · December 2025
Maya Iyer is a Software Professional who availed a Term Loan of ₹ 50 lacs at an interest of 9% p.a. from Cosmos Bank, Cochin for buying a XYZ Brand Vehicle. The loan was taken on 15th February, 2020 repayable in 10 Years' EMIs and is against Hypothecation of the vehicle. She serviced the EMIs up to 15th June, 2022, promptly. However, she was laid off by the company in July, 2022 and lost her job. The EMIs could not be serviced thereafter. The loan became overdue. Answer the following questions, with reference to the above situation, considering the Income Recognition & Asset Classification (IRAC) norms issued by RBI : When will it fall under NPA category of Sub-standard Asset ?

Answer & Explanation:

As per RBI IRAC norms: A term loan becomes NPA when interest or principal remains overdue for more than 90 days. EMI due on 15 July 2022 90 days completed on 13 October 2022 Therefore, loan becomes NPA (Sub-standard Asset) on 14 October 2022 Initially, all NPAs are classified as Sub-standard Assets.

Topics: Banking Operations

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