Consider the following regarding the term lsquo Sustainable Structuring of Stressed Assets rsquo 1 n...........

Economic Affairs Types of Banks and Banking

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Consider the following regarding the term ‘Sustainable Structuring of Stressed Assets’:

1. An independent agency hired by the banks will decide on how much of the stressed debt of a company is ‘sustainable’.

2. The sustainable part of the stressed debt will be converted into equity and preference shares.

3. The unsustainable part of the stressed debt will be converted into equity and preference shares.

4. This arrangement involves no change in the ownership of the company.

Select the correct statement from the following codes:

1, 2 and 4 only

1, 3 and 4 only

1 and 2 only

1 and 3 only

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Explanation:

Sustainable Structuring of Stressed Assets (S4A): Under this arrangement, introduced in June 2016, an independent agency hired by the banks will decide on how much of the stressed debt of a company is ‘sustainable’. The rest (‘unsustainable’) will be converted into equity and preference shares. Unlike the SDR arrangement, this involves no change in the ownership of the company