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A central government guaranteed advance turns NPA only when the guarantee is:
AReallocated
BRecalculated
CRepudiated
DReactivated
Answer & Solution
Correct answer: C. Repudiated
1. Such an advance may be overdue and still stay standard.
2. The bank must first invoke the guarantee.
3. It becomes an NPA when the government repudiates it.
_Source: RBI Master Circular, Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances_
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