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Options
-
Interest rates are low
Correct answer
- B
Interest rates are high
- C
Inflation is high
- D
None of the above
Why this is the answer
When interest rates are low, borrowing costs decrease, making it easier for both businesses and individuals to repay loans. This reduces the likelihood of defaults, resulting in fewer NPAs for banks. Higher interest rates increase debt servicing costs, potentially causing more defaults. While inflation affects the economy broadly, it does not directly determine NPAs in this context.
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