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. ✓ UPSC's answer
- (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.
Why the answer is (b)
• S4A (June 2016) was an RBI scheme allowing banks to split a large stressed loan (over ₹500 crore, in projects that had begun operations) into a sustainable portion serviceable from current cash flows and an unsustainable portion converted into equity or quasi-equity — option (b).
• It aimed to rescue viable but over-leveraged big corporates; it was withdrawn in 2018 with the RBI's revised stressed-assets framework.
• It is not an environmental procedure (a), a disinvestment plan (c) or part of the IBC (d).
• Hence option (b).
Why the other options are wrong
- (a) It is a procedure for considering ecological costs of developmental schemes formulated by…
- S4A is a banking scheme, not an ecological procedure.
- (c) It is a disinvestment plan of the Government regarding Central Public Sector Undertakings.
- S4A is not about disinvestment.
- (d) It is an important provision in 'The Insolvency and Bankruptcy Code' recently implemented…
- S4A was an RBI scheme, separate from the IBC.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2017, held on 18 June 2017. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.