Non-Performing Assets Questions and Answers

Multiple Choice Questions and Answers  (MCQs) on Non-Performing Assets For Civil Services

Question 1 : The Indian banking sector is facing the problem of heavy NPAs. Which among the following industries has contributed least to the level of NPAs ?

a) Real estate sector

b) Iron and steel

c) Software and BPO

d) Infrastructural development

Answer : c

Question 2 : Which of the following is not part of criteria laid down by RBI for NPA ?

a) Interest on loan remains overdue for a period of 90 days.

b) Interest on loan taken for a long-duration agricultural crop remains unpaid for one crop season.

c) Interest on loan taken for a short duration agricultural crop remains unpaid for two crop seasons.

d) Interest on loan taken to purchase personal asset remains overdue for 60 days.

Answer : d

Question 3 : Which of the following statements is correct regarding Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 ?

a) The act enables banks to recover NPAs through easy disposal of secured assets.

b) The act enables banks to do multiple lending on deposits received by the public.

c) The act requires courts to give priority to cases involving NPAs of banks.

d) None of the above .

Answer : a

Question 4 : Economic Survey 2017 has recommended establishment of Public Asset Rehabilitation Agency. What will be the function of this agency ?

a) The agency will sell assets of loss making PSUs.

b) The agency will collect the payments due towards electricity boards.

c) The agency will guide and chart out the path for loss-making PSUs.

d) The agency will take over the non-performing assets of banks.

Answer : d

Question 5 : Anchor Banks refer to

a) Public-sector banks that will drive the consolidation process among the state-owned banks.

b) Public-sector banks that are providing most of the infrastructural financing.

c) Public-sector banks that will coordinate banking activities in a district.

d) Public-sector banks that have been classified as Domestic Systemically Important Banks (D-SIBs).

Answer : a

Question 6 : The government has launched Mission Indradhanush as a seven-pronged plan to resolve the problems faced by public-sector banks. Which of the following recommendation is not part of mission Indradhanush ?

a) Capital infusion in public-sector banks

b) Regular gyan sangam to discuss state of banks

c) Infusion of technology in functioning of banks

d) Reduction in government interference in the appointments of public-sector banks

Answer : c

Question 7 : Which of the following statements is/are correct regarding monetary transmission?

  1. It refers to the process by which a central bank’s monetary policy decisions are passed on to the financial markets.
  2. Rising non-performing assets (NPAs) and higher returns on small saving schemes may hinder effective monetary transmission.
  3. Lowering of CRR and SLR requirements may help ensure effective monetary transmission.

Select the correct answer using the codes given below :

a) 1 and 3 only

b) 2 and 3 only

c) 1 and 2 only

d) 1, 2, and 3

Answer : d

Question 8 : Which of the following are probable benefits of securitization, in which assets are transformed into security?

  1. For the owner of the asset, it improves the liquidity position as the future receivables are replaced by cash.
  2. It improves the channelization of money in the economy.

Which of the statements given above is/are correct ?

a) 1 only

b)  2 only

c) Both 1 and 2

d) Neither 1 nor 2

Answer : c

Question 9 : What is the purpose of forming Banks Board Bureau ?

  1. The bureau will recommend appointment of senior officials in public-sector banks and thus, will insulate public-sector banks from government interference .
  2. The bureau will inspect the level of NPAs of public-sector banks.
  3. The bureau will identify the best practices in private-sector banks and seek their implementation in public sector banks.

Select the correct answer using the codes given below :

a) 1 only

b) 2 and 3 only

c) 1 and 2 only

d) 1, 2, and 3

Answer : a

Question 10 : Consider the following statements regarding Basel norms :

  1. Basel norms are standards of capital adequacy for banks across the world.
  2. At present, banks are adhering to Basel III norms.
  3. Basel norms are mandatory for banks in India.

Select the correct answer using the codes given below :

a) 1 only

b) 2 and 3 only

c) 1 and 3 only

d) 1, 2, and 3

Answer : c