A borrowal account of a bank became a non-performing asset on 30 June 2024 and has remained NPA continuously since then, with no upgradation. The security is fully realisable at its book value and no loss has been identified by the bank, the auditor or RBI inspectors. Under the RBI prudential norms on asset classification, what is its classification as at 31 March 2026?

Correct answer: D) Doubtful asset (doubtful for up to one year, D1)

Explanation

Under RBI norms, an asset is sub-standard if it has remained NPA for a period less than or equal to 12 months; here, from 30 June 2024 to 30 June 2025. An asset that has remained in the sub-standard category for 12 months becomes doubtful, so the account became doubtful on 30 June 2025. From 30 June 2025 to 31 March 2026 it has been doubtful for 9 months, which is within one year, so it is D1. It is not a loss asset because no loss has been identified and the security is realisable, and it cannot be standard while it remains NPA.