Non-performing Assets (NPA) of a bank in India is defined as an asset, which remains unpaid by a borrower for a certain period of time in terms of interest, principal, or both. Reserve Bank of India (RBI) has changed the definition of NPA thrice during 1993-2004, in terms of the holding period of loans. The holding period was reduced by one quarter each time. In 1993 the holding period of loans was four quarters (360 days).
Based on the above paragraph, the holding period of loans in 2004 after the third revision was _______ days.
A. 45
B. 90
C. 135
D. 180
GATE 2020 · General Aptitude · Passage Reading · medium
Answer: The holding period of loans in 2004 after the third revision was 90 days. Answer: B.
Identify initial holding period in quarters: In 1993, holding period = 4 quarters. One quarter = 360/4 = 90 days.
Apply three reductions of one quarter each: After Revision 1: 4 - 1 = 3 quarters. After Revision 2: 3 - 1 = 2 quarters. After Revision 3 (2004): 2 - 1 = 1 quarter.
Convert final quarters to days: 1 quarter × 90 days/quarter = 90 days.