Q. Consider the following statements:
1.Evergreening of loans is a standard and legitimate practice in the banking industry, aimed at providing borrowers with flexible repayment options and assisting them in managing their financial obligations effectively.
2.Evergreening of loans can help banks to attract businesses and investments.
Select the correct answer form the code given below:
Answer: B
Notes:
Explanation –
Statement 1 is incorrect. Evergreening of loan refers to giving a fresh loan to a borrower to pay up an old loan. It is a practice that is done to save the previous loan from defaulting, so that it does not appear as a non-performing asset (NPA) on a bank’s books.
Statement 2 is correct. Evergreening of loans are done by banks to attract businesses and investments.
Source: ForumIAS
