RBI prudential Norms related to Classification of an Asset into different Categories

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Accepted Answer

RBI has prudential norms for asset classification into different categories.

RBI has defined different categories of assets based on their quality and recovery prospects.
Assets are classified into four categories - Standard, Sub-standard, Doubtful, and Loss.
The classification is based on the period for which the asset has remained non-performing.
The classification determines the provisioning requirements for the bank.
For example, a standard asset requires no provisioning, while a loss asset requires 100% provisioning.
The norms aim to ensure that banks maintain adequate provisions to cover potential losses.

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