IBPS PO NPA, SARFAESI, IBC

Stage 1 — Sub-Standard Asset: NPA for less than or equal to 12 months. Bank sets aside 15% provision on secured loans

NPA for MORE than 12 months

• Doubtful-1: 12 to 24 months NPA → 25% provision • Doubtful-2: 24 to 36 months NPA → 40% provision • Doubtful-3: More than 36 months NPA → 100% provision Stage 3 — Loss Asset: Loan is uncollectable. Full 100% provision required. May or may not be written off

NPA trigger = 90 days of non-payment (non-agri loans) Sub-Standard = NPA up to 12 months Doubtful = NPA beyond 12 months Loss = Declared uncollectable ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ PART 2 — SARFAESI ACT, 2002 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Full form: Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. In simple terms: If you do not repay your loan, the bank can TAKE your property and SELL it without filing a court case. This saves time and money for banks

• Bank sends a 60-day notice to the defaulter before taking action. • Applies only when loan amount is above Rs. 1 lakh (originally Rs. 1 lakh; later amended — important: for agriculture land, SARFAESI does NOT apply). • Borrower can approach Debt Recovery Tribunal (DRT) to challenge the bank's action. • Bank can take possession of collateral (security) and auction it. • SARFAESI does NOT apply to unsecured loans (loans with no property as security)

Buys bad loans from banks at a discount and tries to recover money. 2

Converts loans into securities.

• NCLT — National Company Law Tribunal: Handles corporate insolvency cases. • NCLAT — National Company Law Appellate Tribunal: Appeal body above NCLT. • IRP — Interim Resolution Professional: Takes control of the company during the process. • CoC — Committee of Creditors: Group of lenders who decide the company's fate. • Resolution Plan: A plan submitted by a buyer to revive the company

• Resolution must be completed in 180 days. • Can be extended by 90 days more (total 270 days max). • After 2019 amendment: Hard deadline of 330 days including court time. • Minimum default amount to file under IBC = Rs. 1 crore (raised from Rs. 1 lakh in March 2020 during COVID)

Base period = 180 days Extension = + 90 days Hard cap = 330 days (post-2019 amendment) Who can file under IBC? • Financial Creditor (like a bank) OR • Operational Creditor (like a supplier) OR • The Corporate Debtor itself. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

Count the days of non-payment. From 1 Jan 2023 to 1 March 2023 = 90 days → Becomes NPA on 1 April 2023 (approx).

How long has it been NPA? From April 2023 to March 2024 = approximately 11-12 months.

Apply classification rule. • NPA up to 12 months = Sub-Standard. • NPA beyond 12 months = Doubtful. Answer: The loan is at the boundary of Sub-Standard moving to Doubtful-1. It is classified as Sub-Standard Asset (just under 12 months as NPA). ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ WORKED EXAMPLE 2 — IBC TIMELINE ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Q: A company's insolvency process started on 1st June 2023. The basic resolution period ended without a plan. The creditors applied for an extension. By which date must the process be completed?

Basic period = 180 days from 1 June 2023 = 28 November 2023.

Extension allowed = +90 days = 27 February 2024.

As per hard cap = 330 days from start = 27 April 2024. Answer: Maximum deadline = 330 days from 1 June 2023 = approximately 27 April 2024. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ COMMON TRAP — #1 MISTAKE STUDENTS MAKE ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ TRAP: Students confuse SARFAESI notice period (60 days) with IBC timeline (180 days) and DRT appeal window (45 days). In exams, all three numbers appear in the same question as options. REMEMBER: • 60 days = SARFAESI notice to borrower • 45 days = DRT appeal window under SARFAESI • 90 days = NPA trigger (non-payment period) • 180 days = IBC base resolution period • 270 days = IBC with one extension • 330 days = IBC hard cap