Statement–Courses of Action (bank NPAs and bad-debt prevention): To avoid repetition of bad debts by learning from past non-performing assets, decide which measures follow—(I) strictly evaluate loan eligibility before sanction, (II) closely and regularly supervise the work for which the loan was granted to ensure instalment payments—assessing prevention and monitoring.

Given data

• Problem: Mounting NPAs indicate weak credit appraisal and/or poor post-disbursal monitoring.
• Course I: Tighten pre-sanction eligibility checks.
• Course II: Conduct regular, minute post-sanction supervision of project use and cash flows.

Concept / ApproachReducing bad debts requires a two-gate control: prevention at entry (underwriting) and detection/mitigation after disbursal (monitoring).

Step-by-step evaluationStep 1: Course I addresses selection risk—only viable borrowers/projects pass.Step 2: Course II addresses moral hazard and execution risk—funds are used as intended and distress is caught early.Step 3: Together, they form a coherent risk-management loop; both follow logically.

Verification / Alternative checkIndustry practice couples credit appraisal (KYC, financials, collateral) with monitoring (site visits, statements, milestones).

Common pitfalls

• Relying only on pre-sanction checks while ignoring post-sanction behaviour.

Final AnswerBoth I and II follow.