Recovery management chapter 6

Identify the action that would come top-most in the hierarchy of sacrifice by the bank in a negotiated settlement.

• Forgoing penal interest
• Forgoing interest to be charged from the date of NPA till the current date
• Forgoing unrealized interest
• Forgoing part of the principle amount

Which of the following factors would not be considered while calculating the negotiable amount by the bank?

• Profitability of the borrower's business
• Reasons for default
• Probability of recovery in the normal course
• Provisions made

If the balance in a shadow account is Rs. 358000 which includes principle of Rs. 300000 and a recovery of 320000 is made through an OTS, it would result in a

• Waiver
• Write off
• Review
• Full settlement

Identify the correct statement

• Banks have formed their own guidelines for OTS settlements
• OTS is not the same as negotiated settlement
• OTS can be granted irrespective of the impact on P&L
• OTS can be given even for accounts that are regular

If the balance in a shadow account is Rs. 358000 which includes principle of Rs. 300000 and a recovery of 250000 is made through an OTS, it would result in a

• Waiver and write off
• Waiver only
• Write off only
• Resolution of the account

Which of the following are not the reasons that lead to a compromise from the bank's side?

• Existing security value is higher than the outstanding amount
• Net worth of the borrower/guarantor is low
• Dispute in the title of the security
• Ensuring speedy recovery of accounts

Which of the following cannot be waived off with respect to negotiated settlement?

• Outstanding principle amount
• Penal interest
• Notional interest from date of NPA
• Legal or any out of pocket expenses

Which of the following accounts are not related to a negotiated settlement?

• P & L account
• Memorandum account
• Shadow account
• Real account

Which of the following is not true?

• OTS cannot be considered for a suit filed account
• There would be a time limit for the payment of dues under OTS
• Bank should have a buffer amount over and above the base negotiable amount calculated by the bank
• The compromise can be done through Lok Adalat for additional authenticity

Which of the following is not a type of settlement under OTS?

• Revival
• Full settlement
• Waiver
• Write off