Q13. Consider the following statements about Special Mention Account:

1. Before a loan account turns into an NPA, banks are required to identify incipient stress in the account.

2. SMA-0 is an account in which principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress.

Which of the following statements are correct?

a) 1 only

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b) 2 only

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c) Both 1 and 2

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d) Neither 1 nor 2

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Solution

The correct option is C
c) Both 1 and 2

Special Mention Account (SMA)

Before a loan account turns into an NPA, banks are required to identify incipient stress in the account by creating three sub-categories under the SMA category.

SMA-0 Principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress

SMA-1 Principal or interest payment overdue between 31-60 days

SMA-2 Principal or interest payment overdue between 61-90 days.

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Similar questions

Q5. Consider the following statements:

1. According to RBI norms, if the principal or interest is overdue for one day to 30 days, the account is identified as Special Mention Account – 0 (SMA-0) category.

2. If a loan is not repaid for more than 60 days, it is classified as non-performing asset (NPA).

Which of the above statements are correct?

Q. 3. Strategic debt restructuring (SDR) is one of the steps taken by RBI to control the NPA problem. Consider the following statements about it:
1.Under SDR, banks get the right to convert the full or part of their loans into equity shares.
2. SDR initiative can be taken by the particular bank.
3. SDR initiative can be taken if the account of a borrower is classified as Special Mention Account.
Which of the above statement(s) is/are correct?

Q. An important consideration before sourcing an accounting software is flexibility.
This Statement is true for which of the following factor taken in considerations before sourcing an accounting software.

Q. NPA is a loan or an advance where interest and/or installment of principal remain overdue for a period of more than ______ days in respect of a term loan.

State whether the following statements are True or False.

1) Prepaid insurance is nominal account.
2) Personal transactions of proprietor are recorded in the books of account of business.
3) Every debit has equal and corresponding credit.
4) Loan account is personal account.
5) Drawing account is a real account.
6) Commission received is a nominal account.
7) Outstanding wages is a nominal account.
8) Bank of India is an example of real account.
9) An order placed for the goods, entry is passed/recorded in the book of account.
10 Every transaction has only on effect

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