What is sub-standard asset?
A substandard asset is an asset classified as an NPA for less than 12 months. A doubtful asset is an asset that has been nonperforming for more than 12 months. Loss assets are loans with losses identified by the bank, auditor, or inspector that need to be fully written off.
What is standard asset as per RBI?
Standard Asset is one which does not disclose any problems and which does not carry more than normal risk attached to the business. Such an asset should not be an NPA. i. With effect from March 31, 2005 an asset would be classified as sub-standard if it remained NPA for a period less than or equal to 12 months.
What is standard asset and sub-standard asset?
Standard asset for a bank is an asset that is not classified as an NPA. The asset exhibits no problem in the normal course other than the usual business risk. More specifically, according to RBI circular, sub-standard asset is an asset that has continued to remain an NPA for a period less than or equal to 1 year.
What are financial assets as per RBI?
Financial assets are held in currency, bank deposits, debt securities, mutual funds, insurance, pension funds and small savings.
What is standard and sub standard?
A standard is a quality by which something is judged, and sub can mean “under” like a submarine that goes under water. So things that are substandard fall below most people’s standards — they’re deficient in some way. A computer that stops working after two weeks is substandard. A car with faulty brakes is substandard.
What is the definition of sub standard?
Definition of substandard : deviating from or falling short of a standard or norm: such as. a : of a quality lower than that prescribed by law substandard housing.
Can you give examples of financial assets?
Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets. Unlike land, property, commodities, or other tangible physical assets, financial assets do not necessarily have inherent physical worth or even a physical form.
What is sub standard work?
Something substandard is below standard — it’s shoddy or inferior. If your final paper for honors English class is scribbled on a torn sheet of notebook paper, that’s substandard work that you’ll probably have to do over.
What is sub standard quality?
Legal Definition of substandard : deviating from or falling short of a standard or norm: as. a : of a quality lower than that prescribed by law.
What are the RBI circulars issued by the Reserve Bank of India?
As you are aware, the Reserve Bank of India has, from time to time, issued a number of circulars containing instructions/guidelines to banks on matters relating to prudential norms on income recognition, asset classification and provisioning.
Where can I find the updated RBI Master circular 2?
2. The Master Circular has now been suitably updated by incorporating instructions issued up to June 30, 2013 and is attached. It has also been placed on the RBI web-site ( http://www.rbi.org.in ). We advise that this revised Master Circular consolidates the instructions contained in the circulars listed in the Annex 7.
When is an asset classified as doubtful?
With effect from March 31, 2005, an asset would be classified as doubtful if it has remained in the sub standard category for a period of 12 months.
How to ensure proper asset classification in banks?
Responsibility and validation levels for ensuring proper asset classification may be fixed by the banks. The system should ensure that doubts in asset classification due to any reason are settled through specified internal channels within one month from the date on which the account would have been classified as NPA as per extant guidelines.