RAS question
Asset Quality Review (AQR) was conducted by RBI in:
Correct answer: (D) 2015.
The Reserve Bank of India conducted the Asset Quality Review from April 1, 2015, to make banks recognise masked stress in their balance sheets.
Explanation
RBI conducted the Asset Quality Review in 2015 under Governor Raghuram Rajan. The RBI Bulletin source states that the Reserve Bank announced the AQR from April 1, 2015, after creating the Central Repository of Information on Large Credits and ending asset-classification forbearance for restructured accounts. Its objective was to make banks recognise stress that had been masked in their balance sheets. That is why AQR is linked with the sudden rise in reported gross NPAs: the exercise did not create bad loans, but forced recognition of loans already under stress. In the 4R strategy for stressed assets, this was the Recognition step.
Why the other options are wrong
- (A) 2019 is too late, because the cited RBI Bulletin states that AQR was announced from April 1, 2015.
- (B) 2017 is not the year of AQR; by the 2017 RBI Bulletin account, the AQR had already been announced from April 1, 2015 and was complete.
- (C) 2013 is too early, because the AQR followed later asset-quality measures and was announced from April 1, 2015.
Concept
This tests banking-sector stress resolution, especially NPA recognition and the regulatory response after hidden stress in bank balance sheets. RAS repeats this area because it connects RBI supervision, public sector bank health and the 4R framework used in Indian Economy.