ASSET CLASSIFICATION : A recommendation of high level Committee on Financial System (Narasimham Committee) is that the policy of income recognition should be objectively based on record of recovery. International practice is that an asset is treated as non-performing when interest is overdue for at least 90 days. Recognising the need that a balance sheet should reflect a banks actual financial health, a system for recognition of income, classification of assets and provisioning for bad debts on a prudential basis was introduced. The assets portfolio of the banks is required to be classified as (1) standard assets (2) sub-standard assets (3) doubtful assets and (4) loss assets. Standard asset is one that does not disclose any problems and which does not carry more than normal risk attached to the business .An asset which has been classified as NPA for a period not exceeding 12 months is considered as sub-standard asset. Doubtful asset is one which has remained NPA for a period exceeding 12 months. An asset which is considered uncollectable and loss has been identified by the bank or internal or external auditors or the RBI inspection and the loss has not been written off is regarded as loss asset. Get trained by an expert Mr Anil Aggarwal(ex Chief Manager PNB) for forthcoming interviews. Call HIM@09811340788
Posted on: Sun, 24 Nov 2013 09:46:39 +0000
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