GATE Electrical 2020 | GA | Question: 6

Question

Non-performing Assets $\text{(NPAs)}$ 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 $\text{(RBI)}$ has changed the definition of $\text{NPA}$ 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 was four quarters $\text{(360 days)}$.

Based on the above paragraph, the holding period of loans in $\text{2004}$ after the third revision was ______ days.

• A. $45$
• B. $90$
• C. $135$
• D. $180$

Answer 1

Ans B.

As question says – holding period was reduced by one quarter each time. In 2004 – third revision.

In 1993 holding period – 360 days ( four quarters). One quarter – $\frac{1}{4} \times 360 = 90$. 

[quarter – each of four equal or corresponding parts into which something is or can be divided.]

First Time = $360 – 90 = 270$  (reduced by one quarter)

Second Time = $270 – 90 = 180$

Third Time = $180– 90 = 90$

Comments

Is it possible that in 1993, 4 quarter (360 days) is a 1st time revised holding period? Holding period was revised during 1993 to 2004, so it is safe to assume that the first revision was done in 1993?

Please let me know if/why my understanding is incorrect.