[Jan] Asset Quality Review (AQR)

Question 1

Why?

Answer 1

rising level of NPAs has tempted the RBI to come out with additional inspections on the balance sheets of the banks to check the genuine nature of bank assets.

Question 2

What is it?how has it came in existence?

Answer 2

The RBI during 2015 has conducted inspection of selected banks’ balance sheets in random. The report from such inspection is termed as Asset Quality Review (AQR). So, AQR is the result of asset quality inspection by the RBI on commercial banks. Main feature of AQR is that it may not be periodic and rather it is random check.