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

Sunrise Infra Ltd has an NPA account and wishes to submit a resolution plan, with the one-year NPA period already lapsed. Which action, taken before submission of the resolution plan, makes it eligible under the proviso to Section 29A(c)?

Eligibility is restored by paying all overdue amounts with interest and charges relating to the NPA accounts before submitting the resolution plan. Paying only principal, giving collateral or getting a creditors' NOC does not meet the proviso to Section 29A(c).

  1. APaying all overdue amounts with interest and charges relating to the NPA accountsCorrect
  2. BPaying only the principal outstanding on the NPA accounts
  3. COffering additional collateral to the lending bank
  4. DObtaining a no-objection certificate from the committee of creditors

Explanation

The proviso requires payment of all overdue amounts with interest thereon and charges relating to NPA accounts before submission of the plan. Paying only principal falls short because interest and charges are also required. Collateral and a creditors' NOC are not mentioned.

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