1. What power does the Act give to banks when dealing with defaulting borrowers?
A. Seize and desist
B. Grant additional loans
C. Extend repayment period indefinitely
D. Waive off the entire debt
The Act gives banks the power to "seize and desist," allowing them to take specific actions against defaulting borrowers.
2. How many days does a borrower have to discharge liabilities after receiving a notice under Section 13(2)?
A. 30 days
B. 60 days
C. 90 days
D. 120 days
Under Section 13(2), the borrower has 60 days to discharge their liabilities after receiving the notice from the bank.
3. What actions can a bank take under Section 13(4) if the borrower fails to comply with the notice?
A. Take possession of the security
B. Sell or lease the security
C. Appoint someone to manage the security
D. All of the above
If the borrower fails to comply with the notice, the bank can take possession of the security, sell or lease it, or appoint someone to manage it under Section 13(4).
4. What is the primary role of Asset Reconstruction Companies (ARCs) under this Act?
A. To invest in public infrastructure
B. To acquire financial assets from banks and financial institutions
C. To provide loans to businesses
D. To regulate stock exchanges
Asset Reconstruction Companies (ARCs) are established to acquire financial assets from banks and financial institutions, playing a key role in managing distressed assets.
5. Which organization regulates Asset Reconstruction Companies (ARCs) in India?
A. SEBI
B. RBI
C. IRDAI
D. Ministry of Finance
Asset Reconstruction Companies (ARCs) in India are regulated by the Reserve Bank of India (RBI).
6. Real-Life Example: A bank has issued a 60-day notice to a borrower under Section 13(2), but the borrower fails to comply. What action can the bank take next?
A. Take possession of the security
B. Sell or lease the security
C. Appoint someone to manage the security
D. All of the above
If the borrower fails to comply with the 60-day notice, the bank can take possession of the security, sell or lease it, or appoint someone to manage it under Section 13(4).
7. What does the SARFAESI Act stand for?
A. Securitization and Recovery of Financial Assets and Enforcement of Securities Act
B. Securitization and Restructuring of Financial Assets and Execution of Security Interests
C. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act
D. Securities and Reconstruction of Financial Assets and Enforcement of Security Interests
The SARFAESI Act stands for "Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act."
8. Under the SARFAESI Act, when can a bank issue a notice under Section 13(2) after a borrower defaults?
A. Immediately after the default
B. After the account is classified as a Non-Performing Asset (NPA)
C. Within 30 days of the default
D. After 180 days of the default
Under the SARFAESI Act, a bank can issue a notice under Section 13(2) after the account has been classified as a Non-Performing Asset (NPA), typically after the borrower has defaulted and failed to make repayments for 90 days.
