Supriya has taken a loan from a bank by pledging her NSC (National Savings Certificate), which is eligible for surrender. The loan account currently…

CA Intermediate · Auditing and Ethics · RTP · September 2025
Supriya has taken a loan from a bank by pledging her NSC (National Savings Certificate), which is eligible for surrender. The loan account currently shows no signs of repayment delay, and the bank confirms that an adequate margin is available in the accounts. However, the loan has technically become overdue. How should the bank classify this loan account?
(A) The account must be classified as an NPA due to overdue status.
(B) The account should not be classified as an NPA since the adequate margin is available in the accounts.
(C) The account must be written off immediately.
(D) The account classification depends on the borrower's repayment history.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

The account should not be classified as an NPA since the adequate margin is available in the accounts.

Topics: Audit of Banks

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