Q. In the banking sector, what does the term “evergreening of loans” mean?

[A] These are renewing loans with updated interest rates.

[B] It refers to extending the loan tenure without addressing the underlying issues.

[C] It refers to offering loans with perpetually low interest rates.

[D] It means providing loans exclusively for sustainable projects.

Answer: B
Notes:

Explanation – Evergreening of loans refers to the practice of extending the loan tenure without addressing the underlying issues, such as the borrower’s inability to repay the loan or the deteriorating quality of the collateral. Evergreening involves renewing or rolling over a loan that is nearing maturity, without the borrower making any substantial repayments.

Source: Forum IAS

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