Rehabilitation Recovery
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 to a viable state so that it can repay its dues to lenders and contribute to the economy, preserving employment and productive assets.
What is the minimum percentage of promoters' contribution required in a rehabilitation package?
Promoters must contribute at least 25% of the required funds.
Which RBI guidelines govern the rehabilitation and restructuring of stressed assets in India?
The RBI's Prudential Framework for Resolution of Stressed Assets (2019) and earlier guidelines such as the CDR mechanism and JLF framework govern rehabilitation and restructuring of stressed assets.
What is the purpose of a 'moratorium period' granted during rehabilitation of a sick unit?
It temporarily suspends repayment obligations to ease cash flow.
What is the meaning of 'viability' in the context of a rehabilitation package for a sick unit?
Viability means the unit, after restructuring and support, is capable of generating sufficient cash flows to service its debt, meet operational expenses, and sustain operations over the long term.
What is meant by 'credit enhancements' in a debt restructuring arrangement?
Additional security or guarantees provided to improve repayment prospects.
What is a Techno-Economic Viability (TEV) study and why is it critical before rehabilitation?
A TEV study is an independent assessment of a sick unit's technical feasibility and economic sustainability; it is critical because it determines whether rehabilitation is worthwhile or liquidation is preferable.
What is 'Sustainable Debt' in the context of RBI's restructuring framework?
The portion of debt the borrower can service from operating cash flows.
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