Rehabilitation Recovery Part 1
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Bank Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
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
What is meant by 'restructuring' of a loan account in the context of credit rehabilitation?
Restructuring involves modifying the terms and conditions of a loan — such as rescheduling repayments, reducing interest rates, or providing additional credit — to help a viable but stressed borrower recover without classifying the account as a loss.
What does 'WCTL' stand for in the context of rehabilitation lending?
Working Capital Term Loan to fund past operating losses
What is the role of the Corporate Debt Restructuring (CDR) mechanism in India?
The CDR mechanism provides a timely and transparent system for restructuring the debts of viable corporate entities facing financial difficulties outside the purview of BIFR, DRT, and other legal proceedings.
What is 'Funded Interest Term Loan (FITL)' used for in rehabilitation?
To convert accumulated unpaid interest into a separate term loan
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