CA Sargun is conducting statutory audit of branch of KBC Bank. During the course of audit, it is noticed that one borrower has availed a housing…

CA Intermediate · Auditing and Ethics · RTP · September 2024
CA Sargun is conducting statutory audit of branch of KBC Bank. During the course of audit, it is noticed that one borrower has availed a housing loan and a car loan from the branch. Housing loan EMIs are overdue for 120 days as on date of Balance sheet. Car loan EMIs are overdue for 60 days as on date of Balance sheet. Which of the following statements is appropriate?
(A) (A) Housing Loan should be classified as “Non-Performing Asset" in accordance with RBI norms on asset classification. However, Car loan should be classified as Standard asset.
(B) (B) Car Loan should be classified as "Non-Performing Asset" in accordance with RBI norms on asset classification. However, Housing Loan should be classified as Standard asset.
(C) (C) Both Housing loan as well as car loan should be classified as "Non-Performing Assets" in accordance with RBI norms on asset classification.
(D) (D) Both Housing as well as car loans should be classified as Standard assets.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

(C) Both Housing loan as well as car loan should be classified as "Non-Performing Assets" in accordance with RBI norms on asset classification.

Topics: Audit of Banks

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic