Which
of the following statements best describes the term ‘Scheme for Sustainable
Structuring of Stressed Assets (S4A)’, recently seen in the news?
(a) It is a procedure for considering ecological costs of developmental schemes formulated by the Government.
(b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.
(c) It is a disinvestment plan of the Government regarding Central Public Sector Undertakings.
(d) It is an important provision in ‘The Insolvency and Bankruptcy Code’ recently implemented by the Government.
Solution: (b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.
The Reserve Bank of India (RBI) has issued guidelines called Scheme for Sustainable Structuring of Stressed Assets (S4A) as an optional framework to manage bad loans.
Under this scheme, large ticket loans are restructured by separating a sustainable loan from an unsustainable loan.
The lenders are required to make this classification. Sustainable level of debt is one which the banks think the stressed borrower can service with its current cash flows.
https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=10446&Mode=0
(a) It is a procedure for considering ecological costs of developmental schemes formulated by the Government.
(b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.
(c) It is a disinvestment plan of the Government regarding Central Public Sector Undertakings.
(d) It is an important provision in ‘The Insolvency and Bankruptcy Code’ recently implemented by the Government.
Solution: (b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.
The Reserve Bank of India (RBI) has issued guidelines called Scheme for Sustainable Structuring of Stressed Assets (S4A) as an optional framework to manage bad loans.
Under this scheme, large ticket loans are restructured by separating a sustainable loan from an unsustainable loan.
The lenders are required to make this classification. Sustainable level of debt is one which the banks think the stressed borrower can service with its current cash flows.
https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=10446&Mode=0