CBI Credit Officer Practice Questions - Central Bank Of India Credit Officer Exam

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Read the following passage and answer the question: 'The implementation of the Insolvency and Bankruptcy Code (IBC) has significantly shifted the debtor-creditor relationship in India. Previously, promoters could retain control of distressed assets indefinitely, leaving banks with limited recourse. Under the IBC framework, a time-bound resolution process forces promoters to either restructure debt or face liquidation, enhancing credit discipline.' Which of the following best summarizes the primary shift described in the passage?

Promoters are now guaranteed to retain control of their distressed assets. The IBC has reduced the power of banks and increased debtor leverage. A time-bound resolution process has transferred balance of power towards creditors by enforcing discipline on promoters. Liquidation has become the mandatory first step for all distressed assets in India.

Correct Answer:

A time-bound resolution process has transferred balance of power towards creditors by enforcing discipline on promoters.

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