Non-performing Assets (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 (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 was four quarters (360 days). Based on the above paragraph, the holding period of loans in 2004 after the third revision was ________ days.

The correct answer is 90.

Step-by-Step Explanation:

1. Understand the Initial Given Data:

In 1993, the holding period for a loan to be classified as a Non-performing Asset (NPA) was set at 4 quarters, which is equal to 360 days.

Since 4 quarters equal 360 days, 1 quarter corresponds to:

$\frac{360\text{days}}{4\text{quarters}}=90\text{days per quarter}$

2. Account for the Revisions:

According to the given paragraph, the Reserve Bank of India (RBI) changed the definition of NPA thrice between 1993 and 2004.

Each revision reduced the holding period by one quarter (90 days):

• Initial state (1993): 4 quarters = 360 days

• 1st revision: 4 - 1 = 3 quarters

• 2nd revision: 3 - 1 = 2 quarters

• 3rd revision (2004): 2 - 1 = 1 quarter

3. Calculate the Final Holding Period in Days:

After the third revision, the holding period became 1 quarter.

Since 1 quarter is equal to 90 days, the holding period of loans in 2004 after the third revision was 90 days.