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How does a rise in NPAs pressurizes the banks?1). Rise in NPAs will increase the drop put rates of the students from the public schools.2). Rise in NPAs will rank India at the last of the all the global economic development lists.3). Rise in NPAs will lead to inflation and currency depreciation. 4). Rise in NPAs reduces the customer’s confidence on the banks and affects the profitability of the bank which further hinders the returns to be received by the customers. |
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Answer» The correct answer is 4. As per the passage, a rise in NPAS pressurizes the BANKS to increase their capital base further. Lastly,the rise in NPAs reduces the CUSTOMER’s confidence on the banks. The rise in the NPAs affects the profitability of the bank which further hinders the returns to be received by the customers. The DECREASE in profits leads to a lower dividend pay-out by the banks and affects the ROI expectations of the customers. THUS, a rise in NPAs not only affects the performance of the banks but also affects the economy as a whole. |
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