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Rehabilitation Recovery Part 1
What is the primary objective of rehabilitation of a sick industrial unit?
The primary objective is to revive the unit and restore it to viability by providing financial restructuring, operational support, and management improvements so it can repay its dues over time.
What is the meaning of 'cash accrual' in assessing repayment capacity during rehabilitation?
Net profit plus depreciation available for debt servicing
Under RBI guidelines, when is a borrowal account classified as a Non-Performing Asset (NPA)?
An account is classified as NPA when interest or principal remains overdue for more than 90 days in case of a term loan, or when the cash credit/overdraft account remains out of order for more than 90 days.
What is a 'Debt-Equity Ratio' target typically set during rehabilitation of a sick unit?
Usually 2:1 or lower to ensure financial viability
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