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

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Based on the economic passage regarding the Insolvency and Bankruptcy Code (IBC), what was the main disadvantage faced by banks prior to its introduction?

Banks were forced to liquidate healthy companies without trying restructuring. Promoters could hold onto distressed assets indefinitely, leaving banks with minimal legal recourse. The RBI prohibited banks from declaring accounts as non-performing assets. Borrowers were allowed to set their own interest rates during distress periods.

Correct Answer:

Promoters could hold onto distressed assets indefinitely, leaving banks with minimal legal recourse.

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