Sentence Elimination -Non-Performing Assets

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Sentence Elimination- Non-Performing Assets

  1. The biggest fallout of NPA accumulation, particularly in the public sector banks, is that industrial credit growth rate has plunged in the last few years.
  2. Without doubt, there are cases of bad loans where the debt repayment problems have been caused by diversion of funds.
  3. Non-performing assets (NPAs) or bad loans in the Indian banking system have arisen primarily for reasons beyond the control of public sector bank management.
  4. But the bulk of the problem has been caused by unexpected changes in the economic environment: timetables, exchange rates, and growth rate assumptions going wrong.

 

  • Correct Answer
    Choice A

Detailed Solution

The option to be eliminated is A, which talks of the effect of NPA accumulation – a plunge in industrial credit growth rate. None of the other sentences relate to this.

B is slightly tricky to place right away, so let's look at C and D.

C states that NPAs have arisen in the Indian banking system due to reasons beyond the control of public sector banks. So what are the reasons for this problem? D provides the answers. So, D follows C.

Now, according to B, there are cases of bad loans where the repayment problems have been caused by "diversion of funds". Clearly, B relates to the idea in C and D, as it talks of why loans turn bad. B concedes that some bad loans are caused by diversion of funds. D, on the other hand, states the reasons for the bulk of the problem. So, D follows B.

CBD makes a cogent paragraph. The option to be eliminated is A.

Correct Answer: Choice (A)



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