alleryStart learning →How do non-performing loans mainly hurt a bank?
AThey raise deposits
BThey reduce profitability
CThey cut branch numbers
DThey lower capital norms
Answer & Solution
Correct answer: B. They reduce profitability
Unpaid loans earn no interest, so NPLs reduce profitability.
Keep practising Audit of Banks
Browse all Audit of Banks questions for CA Inter, or explore more Auditing topics.
Related questions
The RBI's main supervisory aim covers which institutions?What was the Sovereign Gold Bond meant to reduce?What does securitization of NPLs involve?What is another name for a bad bank in NPL management?A loan is generally non-performing when interest and principal are overdue by how long?From which date did NEFT become available 24x7?Which 2007 Act gives the RBI oversight of payment systems?What does the RBI's Banking Ombudsman Scheme provide for?