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GATE 2020 EE GA Q.6: solution and answer

GATE 2020 · EEGA Q.6 · 2 marks · MCQ

Non-performing Assets (NPAs) of a bank in India is defined as an asset, which remains unpaid by a borrower for a certain period of time in terms of interest, principal, or both. Reserve Bank of India (RBI) has changed the definition of NPA thrice during 1993-2004, in terms of the holding period of loans. The holding period was reduced by one quarter each time. In 1993, the holding period was four quarters (360 days).

Based on the above paragraph, the holding period of loans in 2004 after the third revision was ______ days.

  1. (A)

    45

  2. (B)

    90

  3. (C)

    135

  4. (D)

    180

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Answer and solution

ANSWER

The holding period in 2004 after the third revision was 90 days, option (B).

Official answer: BSource: Official answer key, GATE 2020 EE (IIT Delhi)

  1. Read the unit from the passage. The holding period is counted in quarters, and "four quarters (360 days)" gives .

  2. So "reduced by one quarter each time" means one quarter (90 days) comes off at each revision. It does not mean the period is cut by 25%.

  3. The passage says RBI changed the definition "thrice", so there are three reductions between 1993 and 2004. The question asks for the period after the third revision.

  4. Apply the reductions one at a time: quarter, i.e. .

  5. Or in one line: .

  6. Check the other reading. Cutting by 25% each time gives . That is not an option, which supports the one-quarter-of-time reading. The answer is 90 days, option (B).

KEY IDEA

The passage sets its own unit: "four quarters (360 days)" makes one quarter 90 days. Three revisions, each taking off one quarter, bring the period from 4 quarters down to 1 quarter, which is 90 days.

WATCH OUT FOR

Reading "reduced by one quarter" as a 25% cut compounded three times, which gives 151.875 days and matches no option. Another slip is stopping after two revisions (180 days, option D), or making four cuts in place of the three that "thrice" means (0 days), or halving the period each time (45 days, option A).

From the GATE 2020 EE paper. Every question of this paper · Download the full paper · All 18 Reading questions, with notes

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