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CS Professional · Banking and Insurance - Laws and Practice · Performing and Non Performing Assets

Under the RBI's prudential framework for resolution of stressed assets, a lender decides to implement a resolution plan for a borrower that has defaulted. Which statement correctly describes the review period concept for the account?

Under the RBI's 2019 prudential framework, lenders must carry out a review within 30 days of default, the review period, to decide the resolution strategy, including the implementation path. The older 180-day timeline was withdrawn, and open-ended time is not permitted.

  1. ALenders get a review period of 30 days from default to decide the resolution plan, and an implementation period afterwardsCorrect
  2. BLenders get a review period of 180 days to decide the plan and no implementation timeline
  3. CLenders can take unlimited time if the borrower cooperates
  4. DThe review period applies only to accounts already declared fraud

Explanation

Under the June 2019 framework, lenders must undertake a prima facie review of the borrower account within 30 days of default, which is the review period, and then decide the resolution strategy and implement it within the prescribed timeline. The earlier 180-day timeline was discarded. Unlimited time is not permitted.

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