Question : Which of the following is a feature of a non-performing asset (NPA)?
Option 1: High credit rating
Option 2: Low risk
Option 3: Interest income is not received for a certain period of time
Option 4: None of the above
Correct Answer: Interest income is not received for a certain period of time
Solution : The correct answer is (c). Interest income is not received for a certain period of time is a feature of a non-performing asset (NPA).
A non-performing asset refers to a loan or advance where the borrower has failed to make interest or principal payments for a specified period, typically 90 days or more. When an asset is classified as an NPA, the lender, such as a bank, may stop receiving interest income from that asset until the borrower resolves the outstanding payments. This interruption in interest income is a key characteristic of an NPA.
