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

Vihaan Ltd acquired an NPA-classified account of a corporate debtor under a resolution plan approved by the Adjudicating Authority on 1 March 2024. Vihaan later wishes to submit a resolution plan for another corporate debtor. Under Explanation II to Section 29A(c), for how long from the date of approval does the NPA clause not apply to Vihaan with respect to that acquired account?

The NPA clause does not apply for three years from the date the Adjudicating Authority approved the earlier resolution plan. Explanation II to Section 29A(c) gives this relief where the NPA account was acquired under that prior approved plan.

  1. AThree yearsCorrect
  2. BOne year
  3. CTwo years
  4. DFive years

Explanation

Explanation II states that where the NPA account was acquired pursuant to a prior resolution plan approved under the Code, clause (c) does not apply for three years from the date of approval by the Adjudicating Authority. So the protection runs until 1 March 2027. One and two years are shorter, and five years is not stated.

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