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CMA Final · Risk Management in Banking and Insurance · Management of Non-Performing Assets (NPAs)

Rohan's company has an account classified as a non-performing asset (NPA) by a bank. A corporate insolvency resolution process (CIRP) of another company commenced 14 months after that classification, and Rohan wants to submit a resolution plan. Under Section 29A(c), which statement is correct?

Rohan is eligible if he pays all overdue amounts with interest and charges relating to the NPA accounts before submitting the resolution plan. Although the NPA is over one year old at CIRP commencement, the proviso to Section 29A(c) cures the disqualification through full payment.

  1. AHe is ineligible in all cases because the account was an NPA for over one year
  2. BHe is eligible only if the NPA was classified by the RBI and not by any other regulator
  3. CHe is eligible if he pays all overdue amounts with interest and charges relating to the NPA accounts before submitting the planCorrect
  4. DHe is eligible only after three years from the date of NPA classification

Explanation

Section 29A(c) bars a person whose account has been an NPA for at least one year before CIRP commencement. The proviso lets the person become eligible by paying all overdue amounts with interest and charges before submitting the plan. Hence the absolute bar in the first option is wrong.

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